G.R. No.

131903 June 26, 2008
OSCAR R. BADILLO, GIOVANNI C. ONG, EDGAR A. RAGASA represented by
heirs CYNTHIA G. RAGASA, and their children JOSEPH, CATHERINE and
CHARMAINE all surnamed RAGASA, ROLANDO SANCADA, and DIONISIO
UMBALIN, petitioners, vs. COURT OF APPEALS, REGISTER OF DEEDS OF
QUEZON CITY, GOLDKEY DEVELOPMENT CORPORATION, JOSEFA
CONEJERO, IGNACIO D. SONORON, PEDRO DEL ROSARIO, and DOWAL
REALTY AND MANAGEMENT SYSTEM COMPANY, respondents.
The Case
Petitioners prayed that the sales made in favor of Conejero, Sonoron, and Goldkey
and the partition of the road lot be declared void.8
In its Comment, Goldkey alleged that the Housing and Land Use Regulatory Board
(HLURB) has exclusive jurisdiction over the cases mentioned in Section 1 of
Presidential Decree No. (PD) 1344.9 Goldkey argued that the Court of Appeals
correctly dismissed petitioners’ appeal because petitioners merely assigned an error
involving a pure question of law. Goldkey added that petitioners are using the present
petition as a substitute for an already lost appeal since petitioners’ counsel had
received the decision on 17 October 1997 and the present petition was posted only
on 16 December 1997.10

This petition for certiorari 1 assails the 17 September 1997 Decision2 of the Court of
Appeals in CA-G.R. CV No. 50035. The Court of Appeals dismissed the appeal filed
by petitioners Oscar R. Badillo, Giovanni C. Ong, Edgar A. Ragasa, Rolando
Sancada, and Dionisio Umbalin (petitioners) questioning the 5 June 1995 Order 3 of
Branch 222 of the Regional Trial Court of Quezon City in Civil Case No. Q-91-10510
for Annulment of Documents with Prayer for Issuance of Prohibitory and Mandatory
Injunction and Damages.
The Facts
Petitioners alleged that they are the registered owners of several lots adjoining a road
lot known as Lot 369-A-29 or Apollo Street of subdivision plan Psd-37971 (road lot).
The road lot is a short access road which connects petitioners’ properties to the main
road known as Road 20. The road lot is covered by Transfer Certificate of Title (TCT)
No. RT-20895 (22682) and registered in the name of respondent Pedro del Rosario
(del Rosario). Annotated at the back of TCT No. RT-20895 is a court-ordered Entry
No. 605/T-22655 which reads as follows: "It is hereby made of record that as per
order of the Court, the street lot covered by this title shall not be closed or disposed of
by the registered owner without previous approval of the court."4
Petitioners alleged that in gross violation of the court order, del Rosario sold an
unsegregated portion of the road lot to his co-respondents Josefa Conejero
(Conejero) and Ignacio Sonoron (Sonoron) without obtaining prior court approval. Del
Rosario, Conejero, and Sonoron then entered into a partition agreement to divide the
road lot into four lots which resulted in the partial cancellation of TCT No. RT-20895
and the subsequent issuance of TCT Nos. 35899 and 35100 in the name of Conejero,
TCT No. 35101 in the name of del Rosario, and TCT No. 35102 in the name of
Sonoron.5
Petitioners stated that del Rosario sold TCT No. 35101 to Goldkey Development
Corporation (Goldkey).6
Petitioners alleged that the Register of Deeds violated the court order when it allowed
the registration of the sales and the subsequent issuance of new titles without first
obtaining judicial approval. Petitioners claimed that Goldkey had built cement fences
on the lot, thus blocking the ingress and egress of petitioners.7
In May 1991, petitioners filed an initial complaint with the Office of the Building Official
(building official) of Quezon City, docketed as Building Case No. R-10-91-006 entitled
Giovanni C. Ong, et al. v. Manuel Chua (building case).11Petitioners, who initiated the
building case when Goldkey started putting up fences in some portions of the
property, claimed that the parcel of land was a road lot.12
On 10 September 1991, the HLURB issued a Development Permit to Goldkey
allowing it to develop the land into residential townhouse units. The permit also
mentioned that the project is classified as "Residential Townhouse Subdivision" and,
as evaluated, the same is "in accordance with the Zoning Ordinance of Quezon
City."13
On 4 November 1991,14 petitioners filed a case for Annulment of Title and
Damages15 with the Regional Trial Court of Quezon City.
Subsequently, the building official of Quezon City resolved the building case against
petitioners and this decision became final and executory. 16 The ruling held that the
property is not a road lot but a residential lot.17
On 5 June 1995, Branch 222 of the Regional Trial Court (trial court) of Quezon City
issued an order dismissing the case for lack of jurisdiction over the subject matter.
The Ruling of the Trial Court
The trial court dismissed petitioners’ case for lack of jurisdiction over the subject
matter. The trial court pointed out that there was a decision rendered by the building
official of Quezon City declaring the disputed property a residential lot and not a road
lot; hence, the building official issued a building permit. The HLURB also issued a
permit for the development of the land into a townhouse project. Petitioners did not
appeal both rulings. The trial court stated that petitioners’ contention that the property
is a road lot had been rendered moot by the finding of the building official which made
the contrary declaration. If petitioners had any objection to the ruling, they should
have appealed the same to the Secretary of Public Works and Highways as provided
in Section 307 of Executive Order No. (EO) 1096. The findings of administrative
agencies which have expertise are generally accorded not only respect but even
finality.
The trial court also stated that the property had been approved by the HLURB for
development into a townhouse project. The subject land was therefore removed from
the jurisdiction of the regular courts. The HLURB’s decision was also not appealed to
the Office of the President as provided in Section 4 of PD 1344 which gave the
HLURB quasi-judicial powers.
The Ruling of the Appellate Court
On 17 September 1997, the Court of Appeals dismissed the appeal on the ground
that it has no jurisdiction to entertain the same. The appellate court stated that the
original and amended complaints filed by petitioners were both premised on the claim
that the subject parcels of land were subdivision road lots that were illegally converted
into residential lots and thereafter disposed by del Rosario, the subdivision developer.
Therefore, petitioners’ complaints were filed for the purpose of enforcing a contractual
and statutory obligation of del Rosario to preserve a subdivision road lot for street
purposes. As such, the agency with jurisdiction is the HLURB, pursuant to the
provisions of PD 957, 1216, and 1344, EO 648 dated 7 February 1981 and EO 90
dated 17 December 1986.
Further, the appellate court ruled that the error assigned by petitioners involves the
issue on what law will apply to determine the jurisdiction of a tribunal over the subject
matter of the complaints. Petitioners’ assigned error involves a pure question of law;
hence, petitioners appealed to the wrong forum. Petitioners should have elevated
their appeal to the Supreme Court and not to the Court of Appeals by way of a simple
appeal.
Hence, this petition.
The Issues
Petitioners raise three issues in this petition:
1. Whether the appellate court acted without or in excess of jurisdiction or
with grave abuse of discretion by dismissing petitioners’ appeal on the
ground that jurisdiction does not lie with the regular courts but with the
HLURB;
2. Whether the Court of Appeals acted without or in excess of jurisdiction or
grave abuse of discretion by dismissing petitioners’ appeal on the ground
that petitioners did not assign any error of fact; and
3. Whether a petition for certiorari under Rule 65 of the 1997 Rules of Civil
Procedure is the proper remedy for petitioners.
The Ruling of the Court
The petition lacks merit.
The HLURB is the sole regulatory body for housing and land development. 18 The
extent to which an administrative agency may exercise its powers depends on the
provisions of the statute creating such agency. 19 Courts will not determine a
controversy where the issues for resolution demand the exercise of sound
administrative discretion.20
Jurisdiction Lies with the HLURB
PD 957,21 otherwise known as "The Subdivision and Condominium Buyers’ Protective
Decree," granted the National Housing Authority (NHA) the exclusive jurisdiction to
regulate the real estate business. The scope of the regulatory authority lodged in the
NHA is indicated in the second whereas clause which states:
"WHEREAS, numerous reports reveal that many real estate subdivision
owners, developers, operators, and/or sellers have reneged on their
representations and obligations to provide and maintain properly
subdivision roads, drainage, sewerage, water systems, lighting systems,
and other similar basic requirements, thus endangering the health and safety
of home and lot buyers," (Emphasis supplied)
Thus, Section 22 of PD 957 provides:
Sec. 22. Alteration of Plans. — No owner or developer shall change or
alter the roads, open spaces, infrastructures, facilities for public use and/or
other form of subdivision development as contained in the approved
subdivision plan and/or represented in its advertisements, without the
permission of the Authority and the written conformity or consent of
the duly organized homeowners association, or in the absence of the
latter, by the majority of the lot buyers in the subdivision. (Emphasis
supplied)
PD 134422 amended PD 957 by empowering the NHA to issue writs of execution in
the enforcement of its decisions. Section 1 of PD 1344 states:
Section 1. In the exercise of its functions to regulate the real estate trade and
business and in addition to its powers provided for in Presidential Decree No. 957, the
National Housing Authority shall have exclusive jurisdiction to hear and decide
cases of the following nature:
a. Unsound real estate business practices;
b. Claims involving refund and any other claims filed by subdivision lot or
condominium unit buyer against the project owner, developer, dealer, broker
or salesman; and
c. Cases involving specific performance of contractual and statutory
obligations filed by buyers of subdivision lot or condominium unit
against the owner, developer, dealer, broker or salesman. (Emphasis
supplied)
Under EO 648,23 the NHA’s functions were transferred to the Human Settlement
Regulatory Commission. Section 8 of EO 648 provides:
Section 8. Transfer of Functions. — The regulatory functions of the National
Housing Authority pursuant to Presidential Decrees No. 957, 1216, 1344 and
other related laws are hereby transferred to the Commission, together with
such applicable personnel, appropriation, records, equipment and property
necessary for the enforcement and implementation of such functions. Among
these regulatory functions are: (1) Regulation of the real estate trade and
business; (2) Registration of subdivision lots and condominium projects; (3)
Issuance of license to sell subdivision lots and condominium units in the
registered units; (4) Approval of performance bond and the suspension of
license to sell; (5) Registration of dealers, brokers and salesmen engaged in
the business of selling subdivision lots or condominium units; (6) Revocation
of registration of dealers, brokers and salesmen; (7) Approval or mortgage
on any subdivision lot or condominium unit made by the owner or developer;
(8) Granting of permits for the alteration of plans and the extension of period
for completion of subdivision or condominium projects; (9) Approval of the
conversion to other purposes of roads and open spaces found within
the project which have been donated to the city or municipality concerned;
(10) Regulation of the relationship between lessors and lessees; and
(11) Hear and decide cases on unsound real estate business practices;
claims involving refund filed against project owners, developers, dealers,
brokers or salesmen and cases of specific performance.(Emphasis
supplied)
EO 9024 renamed the Human Settlement Regulatory Commission the Housing and
Land Use Regulatory Board. The HLURB retained the regulatory and adjudicatory
functions of the NHA.
Clearly, the scope and limitation of the HLURB’s jurisdiction are well-defined. The
HLURB’s jurisdiction to hear and decide cases is determined by the nature of the
cause of action, the subject matter or property involved, and the parties. 25 In the
present case, petitioners are the registered owners of several lots adjoining a
subdivision road lot connecting their properties to the main road. Petitioners allege
that the subdivision lot owners sold the road lot to a developer who is now
constructing cement fences, thus blocking the passageway from their lots to the main
road. In sum, petitioners are enforcing their statutory and contractual rights against
the subdivision owners. This is a specific performance case which falls under the
HLURB’s exclusive jurisdiction.
In Osea v. Ambrosio,26 the Court held that the provisions of PD 957 were intended to
encompass all questions relating to subdivisions. This intention was aimed to provide
for an appropriate government agency, which is the HLURB, to which all parties
aggrieved in the implementation of provisions and the enforcement of contractual
rights with respect to said category of real estate may take recourse.
Petitioners claim that respondents violated the annotation at the back of TCT No. RT-
20895 by selling an unsegregated portion of the lot without obtaining prior court
approval. The date of entry of this annotation is 18 August 1953. When PD 957, PD
1344, and EO 648 were enacted in 1976, 1978, and 1981, respectively, this
annotation was impliedly modified such that the conversion of the road lot in the
subdivision plan would fall under the HLURB’s jurisdiction pursuant to these laws.
Petitioners argue that they can file a specific performance case to compel
respondents to comply with their contractual and statutory obligation to maintain the
road lot. However, petitioners can only be granted complete relief if the subject sales
are declared void and the subsequent partition is declared illegal. Petitioners further
contend that the HLURB, having only the jurisdiction to hear and decide specific
performance cases, can only compel petitioners to file a case for annulment of title
and prosecute the action. Petitioners insist that in the final analysis, a case for
annulment of title would still have to be filed with the ordinary courts.27
In Peña v. GSIS,28 the Court ruled that when an administrative agency is conferred
quasi-judicial functions, all controversies relating to the subject matter pertaining to its
specialization are deemed to be included within its jurisdiction. Split jurisdiction is not
favored.
As observed in C.T. Torres Enterprises, Inc. v. Hibionada:29
The argument that only courts of justice can adjudicate claims resoluble
under the provisions of the Civil Code is out of step with the fast-changing
times. There are hundreds of administrative bodies now performing this
function by virtue of a valid authorization from the legislature. This quasi-
judicial function, as it is called, is exercised by them as an incident of the
principal power entrusted to them of regulating certain activities falling under
their particular expertise.
In the Solid Homes case for example the Court affirmed the competence of
the Housing and Land Use Regulatory Board to award damages although
this is an essentially judicial power exercisable ordinarily only by the courts
of justice. This departure from the traditional allocation of governmental
powers is justified by expediency, or the need of the government to respond
swiftly and competently to the pressing problems of the modern world.
Finally, in Cristobal v. Court of Appeals,30 we held that "questions relating to non-
compliance with the requisites for conversion of subdivision lots are properly
cognizable by the NHA, now the HLURB, pursuant to Section 22 of PD 957 and not
by the regular courts."
Appeal by Certiorari Involving Questions of Law
Section 2, Rule 41 of the Rules of Court states:
Sec. 2. Mode of appeal.—
(a) Ordinary Appeal. — The appeal to the Court of Appeals in cases decided
by the Regional Trial Court in the exercise of its original jurisdiction shall be
 taken by filing a notice of appeal with the court which rendered the judgment
or final order appealed from and serving a copy thereof upon the adverse
party. No record on appeal shall be required except in special proceedings
and other cases of multiple or separate appeals where the law or these
Rules so require. In such cases, the record on appeal shall be filed and
served in like manner.
(b) Petition for Review. — The appeal to the Court of Appeals in cases
decided by the Regional Trial Court in the exercise of its appellate
jurisdiction shall be by petition for review in accordance with Rule 42.
(c) Appeal by certiorari. — In all cases where only questions of law are
raised or involved, the appeal shall be to the Supreme Court by petition
for review on certiorari in accordance with Rule 45.(Emphasis supplied)
In Sevilleno v. Carilo,31 citing Macawiwili Gold Mining and Development Co., Inc. v.
Court of Appeals, this Court summarized the rule on appeals:
(1) In all cases decided by the RTC in the exercise of its original jurisdiction,
appeal may be made to the Court of Appeals by mere notice of appeal where
the appellant raises questions of fact or mixed questions of fact and law;
(2) In all cases decided by the RTC in the exercise of its original
jurisdiction where the appellant raises only questions of law, the
appeal must be taken to the Supreme Court on a petition for review on
certiorari under Rule 45.
(3) All appeals from judgments rendered by the RTC in the exercise of its
appellate jurisdiction, regardless of whether the appellant raises questions of
fact, questions of law, or mixed questions of fact and law, shall be brought to
the Court of Appeals by filing a petition for review under Rule 42. (Emphasis
supplied)
In First Bancorp, Inc. v. Court of Appeals,32 this Court also explained the two modes of
appeal from a final order of the trial court in the exercise of its original jurisdiction:
(1) by writ of error under Section 2(a), Rule 41 of the Rules of Court if
questions of fact or questions of fact and law are raised or involved; or
(2) appeal by certiorari under Section 2(c), Rule 41, in relation to Rule
45, where only questions of law are raised or involved. (Emphasis
supplied)
In the present case, petitioners raised only one issue in their Appellants’ Brief —
whether "the Honorable Trial Court a quo seriously erred in holding that it has no
jurisdiction over the subject matter of the case when in fact it has already acquired
jurisdiction over the persons of the defendants and the subject matter of the case."
The question on jurisdiction is undoubtedly one of law. We have held that "a question
of law exists when the doubt or controversy concerns the correct application of law or
jurisprudence to a certain set of facts; or when the issue does not call for an
examination of the probative value of the evidence presented, the truth or falsehood
of facts being admitted."33 Consequently, it is not disputed that the issue brought by
petitioners to the Court of Appeals involves solely the trial court’s jurisdiction over the
subject matter of the case. The appellate court can determine the issue raised without
reviewing or evaluating the evidence.
As petitioners’ appeal solely involves a question of law, the appellate court did not err
in dismissing the appeal on the ground of lack of jurisdiction pursuant to Section 2,
Rule 50 of the Rules of Court which provides:
Sec. 2. Dismissal of improper appeal to the Court of Appeals. — An appeal
under Rule 41 taken from the Regional Trial Court to the Court of
Appeals raising only questions of law shall be dismissed, issues purely
of law not being reviewable by said court. Similarly, an appeal by notice of
appeal instead of by petition for review from the appellate judgment of a
Regional Trial Court shall be dismissed.
An appeal erroneously taken to the Court of Appeals shall not be transferred
to the appropriate court but shall be dismissed outright. (Emphasis supplied)
Rule 65 is not a remedy for lost appeal.
Petitioners should have directly taken their appeal to this Court by filing a petition for
review on certiorari under Rule 45 and not an ordinary appeal with the Court of
Appeals under Rule 41 nor a petition for certiorari with this Court under Rule 65.
As held in Balayan v. Acorda,34 "the special civil action for certiorari is a limited form of
review and is a remedy of last recourse." It lies only where there is no appeal or plain,
speedy, and adequate remedy in the ordinary course of law.
In the present case, petitioners chose the wrong mode of appeal. Hence, the instant
petition cannot prevail since a petition for certiorari is not a substitute for a lost
appeal, especially if the loss or lapse was an error in petitioners’ choice of remedy.
We have held in David v. Cordova35 that:
A petition for certiorari cannot be a substitute for an appeal from a lower
court decision. Where appeal is available to the aggrieved party, the action
for certiorari will not be entertained. The remedies of appeal (including
petitions for review) and certiorari are mutually exclusive, not alternate or
successive. Hence, certiorari is not and cannot be a substitute for an
appeal, especially if one’s own negligence or error in one’s choice of
remedy occasioned such loss or lapse. One of the requisites of certiorari
is that there be no available appeal or any plain, speedy and adequate
remedy. Where an appeal is available, certiorari will not prosper, even if the
ground therefore is grave abuse of discretion. (Emphasis supplied)
There were instances when the Court has relaxed the rule on the special civil action
for certiorari as a substitute for failure to file a timely petition for review
on certiorari under Rule 45 such as where the application of this rule would result in a
manifest failure or miscarriage of justice. 36 Although the Court has the discretion to
treat a petition for certiorari as having been filed under Rule 45, there is nothing in the
present case to warrant a liberal application of the rules.
WHEREFORE, we DISMISS the petition. We AFFIRM the 17 September 1997
Decision of the Court of Appeals. Costs against petitioners. SO ORDERED.
G.R. No. 164026 December 23, 2008
SECURITIES AND EXCHANGE COMMISSION, petitioner,
vs. GMA NETWORK, INC., respondent.
DECISION
TINGA, J.:
Petitioner Securities and Exchange Commission (SEC) assails the Decision1 dated
February 20, 2004 of the Court of Appeals in CA-G.R. SP No. 68163, which directed
that SEC Memorandum Circular No. 1, Series of 1986 should be the basis for
computing the filing fee relative to GMA Network, Inc.’s (GMA’s) application for the
amendment of its articles of incorporation for purposes of extending its corporate
term.
The undisputed facts as narrated by the appellate court are as follows:
On August 19, 1995, the petitioner, GMA NETWORK, INC., (GMA, for
brevity), a domestic corporation, filed an application for collective approval of
various amendments to its Articles of Incorporation and By-Laws with the
respondent Securities and Exchange Commission, (SEC, for brevity). The
amendments applied for include, among others, the change in the corporate
name of petitioner from "Republic Broadcasting System, Inc." to "GMA
Network, Inc." as well as the extension of the corporate term for another fifty
(50) years from and after June 16, 2000.
Upon such filing, the petitioner had been assessed by the SEC’s Corporate
and Legal Department a separate filing fee for the application for extension
of corporate term equivalent to 1/10 of 1% of its authorized capital stock plus
20% thereof or an amount of P1,212,200.00.
On September 26, 1995, the petitioner informed the SEC of its intention to
contest the legality and propriety of the said assessment. However, the
petitioner requested the SEC to approve the other amendments being
requested by the petitioner without being deemed to have withdrawn its
application for extension of corporate term.
On October 20, 1995, the petitioner formally protested the assessment
amounting to P1,212,200.00 for its application for extension of corporate
term.
On February 20, 1996, the SEC approved the other amendments to the
petitioner’s Articles of Incorporation, specifically Article 1 thereof referring to
the corporate name of the petitioner as well as Article 2 thereof referring to
the principal purpose for which the petitioner was formed.
On March 19, 1996, the petitioner requested for an official opinion/ruling
from the SEC on the validity and propriety of the assessment for application
for extension of its corporate term.
Consequently, the respondent SEC, through Associate Commissioner Fe
Eloisa C. Gloria, on April 18, 1996, issued its ruling upholding the validity of
the questioned assessment, the dispositive portion of which states:
"In light of the foregoing, we believe that the questioned assessment is
in accordance with law. Accordingly, you are hereby required to
comply with the required filing fee."
An appeal from the aforequoted ruling of the respondent SEC was
subsequently taken by the petitioner on the ground that the assessment of
filing fees for the petitioner’s application for extension of corporate term
equivalent to 1/10 of 1% of the authorized capital stock plus 20% thereof is
not in accordance with law.
On September 26, 2001, following three (3) motions for early resolution filed
by the petitioner, the respondent SEC En Banc issued the assailed order
dismissing the petitioner’s appeal, the dispositive portion of which provides
as follows:
WHEREFORE, for lack of merit, the instant Appeal is hereby dismissed.
SO ORDERED.2
In its petition for review3 with the Court of Appeals, GMA argued that its application for
the extension of its corporate term is akin to an amendment and not to a filing of new
articles of incorporation. It further averred that SEC Memorandum Circular No. 2,
Series of 1994, which the SEC used as basis for assessing P1,212,200.00 as filing
fee for the extension of GMA’s corporate term, is not valid.
The appellate court agreed with the SEC’s submission that an extension of the
corporate term is a grant of a fresh license for a corporation to act as a juridical being
endowed with the powers expressly bestowed by the State. As such, it is not an
ordinary amendment but is analogous to the filing of new articles of incorporation.
However, the Court of Appeals ruled that Memorandum Circular No. 2, Series of 1994
is legally invalid and ineffective for not having been published in accordance with law.
The challenged memorandum circular, according to the appellate court, is not merely
an internal or interpretative rule, but affects the public in general. Hence, its
publication is required for its effectivity.
The appellate court denied reconsideration in a Resolution4 dated June 9, 2004.
In its Memorandum5 dated September 6, 2005, the SEC argues that it issued the
questioned memorandum circular in the exercise of its delegated legislative power to
fix fees and charges. The filing fees required by it are allegedly uniformly imposed on
the transacting public and are essential to its supervisory and regulatory functions.
The fees are not a form of penalty or sanction and, therefore, require no publication.
For its part, GMA points out in its Memorandum, 6 dated September 23, 2005, that
SEC Memorandum Circular No. 1, Series of 1986 refers to the filing fees for amended
articles of incorporation where the amendment consists of extending the term of
corporate existence. The questioned circular, on the other hand, refers only to filing
fees for articles of incorporation. Thus, GMA argues that the former circular, being the
one that specifically treats of applications for the extension of corporate term, should
apply to its case.
Assuming that Memorandum Circular No. 2, Series of 1994 is applicable, GMA avers
that the latter did not take effect and cannot be the basis for the imposition of the fees
stated therein for the reasons that it was neither filed with the University of the
Philippines Law Center nor published either in the Official Gazette or in a newspaper
of general circulation as required under existing laws.
It should be mentioned at the outset that the authority of the SEC to collect and
receive fees as authorized by law is not in question. 7 Its power to collect fees for
examining and filing articles of incorporation and by-laws and amendments thereto,
certificates of increase or decrease of the capital stock, among others, is recognized.
Likewise established is its power under Sec. 7 of P.D. No. 902-A to recommend to the
President the revision, alteration, amendment or adjustment of the charges which it is
authorized to collect.
The subject of the present inquiry is not the authority of the SEC to collect and receive
fees and charges, but rather the validity of its imposition on the basis of a
memorandum circular which, the Court of Appeals held, is ineffective.
Republic Act No. 3531 (R.A. No. 3531) provides that where the amendment consists
in extending the term of corporate existence, the SEC "shall be entitled to collect and
receive for the filing of the amended articles of incorporation the same fees collectible
under existing law as the filing of articles of incorporation."8 As is clearly the import of
this law, the SEC shall be entitled to collect and receive the same fees it assesses
and collects both for the filing of articles of incorporation and the filing of an amended
articles of incorporation for purposes of extending the term of corporate existence.
The SEC, effectuating its mandate under the aforequoted law and other pertinent
laws,9 issued SEC Memorandum Circular No. 1, Series of 1986, imposing the filing
fee of 1/10 of 1% of the authorized capital stock but not less than P300.00 nor more
than P100,000.00 for stock corporations, and 1/10 of 1% of the authorized capital
stock but not less than P200.00 nor more than P100,000.00 for stock corporations
without par value, for the filing of amended articles of incorporation where the
amendment consists of extending the term of corporate existence.
Several years after, the SEC issued Memorandum Circular No. 2, Series of 1994,
imposing new fees and charges and deleting the maximum filing fee set forth in SEC
Circular No. 1, Series of 1986, such that the fee for the filing of articles of
incorporation became 1/10 of 1% of the authorized capital stock plus 20% thereof but
not less than P500.00.
A reading of the two circulars readily reveals that they indeed pertain to different
matters, as GMA points out. SEC Memorandum Circular No. 1, Series of 1986 refers
to the filing fee for the amendment of articles of incorporation to extend corporate life,
while Memorandum Circular No. 2, Series of 1994 pertains to the filing fee for articles
of incorporation. Thus, as GMA argues, the former circular, being squarely applicable
and, more importantly, being more favorable to it, should be followed.
What this proposition fails to consider, however, is the clear directive of R.A. No. 3531
to impose the same fees for the filing of articles of incorporation and the filing of
amended articles of incorporation to reflect an extension of corporate term. R.A. No.
3531 provides an unmistakable standard which should guide the SEC in fixing and
imposing its rates and fees. If such mandate were the only consideration, the Court
would have been inclined to rule that the SEC was correct in imposing the filing fees
as outlined in the questioned memorandum circular, GMA’s argument
notwithstanding.
However, we agree with the Court of Appeals that the questioned memorandum
circular is invalid as it does not appear from the records that it has been published in
the Official Gazette or in a newspaper of general circulation. Executive Order No. 200,
which repealed Art. 2 of the Civil Code, provides that "laws shall take effect after
fifteen days following the completion of their publication either in the Official Gazette
or in a newspaper of general circulation in the Philippines, unless it is otherwise
provided."
In Tañada v. Tuvera,10 the Court, expounding on the publication requirement, held:
We hold therefore that all statutes, including those of local application and
private laws, shall be published as a condition for their effectivity, which shall
begin fifteen days after publication unless a different effectivity date is fixed
by the legislature.
Covered by this rule are presidential decrees and executive orders
promulgated by the President in the exercise of legislative powers whenever
the same are validly delegated by the legislature, or, at present, directly
conferred by the Constitution. Administrative rules and regulations must also
 be published if their purpose is to enforce or implement existing law pursuant
also to a valid delegation.

Interpretative regulations and those merely internal in nature, that is,

regulating only the personnel of the administrative agency and not the
public, need not be published. Neither is publication required of the so-called
letters of instructions issued by administrative superiors concerning the rules
or guidelines to be followed by their subordinates in the performance of their
duties.11

The questioned memorandum circular, furthermore, has not been filed with the Office
of the National Administrative Register of the University of the Philippines Law Center
as required in the Administrative Code of 1987.12

In Philsa International Placement and Services Corp. v. Secretary of Labor and

Employment,13 Memorandum Circular No. 2, Series of 1983 of the Philippine
Overseas Employment Administration, which provided for the schedule of placement
and documentation fees for private employment agencies or authority holders, was
struck down as it was not published or filed with the National Administrative Register.

The questioned memorandum circular, it should be emphasized, cannot be construed

as simply interpretative of R.A. No. 3531. This administrative issuance is an
implementation of the mandate of R.A.

No. 3531 and indubitably regulates and affects the public at large. It cannot, therefore,
be considered a mere internal rule or regulation, nor an interpretation of the law, but a
rule which must be declared ineffective as it was neither published nor filed with the
Office of the National Administrative Register.

A related factor which precludes consideration of the questioned issuance as

interpretative in nature merely is the fact the SEC’s assessment amounting
to P1,212,200.00 is exceedingly unreasonable and amounts to an imposition. A filing
fee, by legal definition, is that charged by a public official to accept a document for
processing. The fee should be just, fair, and proportionate to the service for which the
fee is being collected, in this case, the examination and verification of the documents
submitted by GMA to warrant an extension of its corporate term.

Rate-fixing is a legislative function which concededly has been delegated to the SEC
by R.A. No. 3531 and other pertinent laws. The due process clause, however, permits
the courts to determine whether the regulation issued by the SEC is reasonable and
within the bounds of its rate-fixing authority and to strike it down when it arbitrarily
infringes on a person’s right to property.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-
G.R. SP No. 68163, dated February 20, 2004, and its Resolution, dated June 9, 2004,
are AFFIRMED. No pronouncement as to costs.

SO ORDERED.
G.R. No. 183173 August 24, 2016
THE CHAIRMAN and EXECUTIVE DIRECTOR, PALAWAN COUNCIL FOR
SUSTAINABLE DEVELOPMENT, and THE PALAWAN COUNCIL FOR
SUSTAINABLE DEVELOPMENT, Petitioners vs. EJERCITO LIM DOING BUSINESS
AS BONANZA AIR SERVICES, AS REPRESENTED BY HIS ATTORNEY-IN-FACT,
CAPT. ERNESTO LIM, Respondent
DECISION
BERSAMIN, J.:
This appeal seeks the reversal of the decision promulgated on May 28,
2008, 1 whereby the Court of Appeals (CA) granted the petition for prohibition of the
respondent,2 and enjoined the petitioners from enforcing Administrative Order (A.O.)
No. 00-05, Series of 2002; Resolution No. 03- 211; any and all of their revisions; and
the Notice of Violation and Show Cause Order for being null and void.
Antecedents
Petitioners Ex.ecutive Director and Chairman of the Palawan Council for Sustainable
Development (PCSD), Messrs. Winston G. Arzaga and Vicente A. Sandoval,
respectively, were the public officials tasked with the duty of executing and
implementin A.O. No. 00-05 and the Notice of Violation and Show Cause Order, while
the PCSD was the government agency responsible for the governance,
implementation, and policy direction of the Strategic Environment Plan (SEP) for Pala
wan. On the other hand, the respondent was the operator of a domestic air carrier
doing business under the name and style Bonanza Air Services, with authority to
engage in nonscheduled air taxi transportation of passengers and cargo for the
public. His business operation was primarily that of transporting live fish from Palawan
to fish traders.3
The PCSD issued A.O. No. 00-05 on February 25, 2002 to ordain that the transport of
live fish from Palawan would be allowed only through traders and carriers who had
sought and secured accreditation from the PCSD. On September 4, 2002, the Air
Transportation Office (ATO) sent to the PCSD its communication to the effect that A
TO-authorized carriers were considered common carriers, and, as such, should be
exempt from the PCSD accreditation requirement. It attached to the communication a
list of its authorized carriers, which included the respondent's air transport service.4
The respondent asserted that he had continued his trade without securing the PCSD-
required accreditation; that the PCSD Chairman had started harassing his clients by
issuing Memorandum Circular No. 02, Series of 2002, which contained a penal clause
imposhig sanctions on the availment of transfer services by unaccredited aircraft
carriers such as cancellation of the PCSD accreditation and perpetual disqualification
from engaging in live fish trading in Palawan; that due to the serious effects of the
memorandum, the respondent had sent a grievance letter to the Office of the
President; and that the PCSD Chairman had nonetheless maintained that the
respondent's business was not a common carrier, and should comply with the
requirement for PCSD accreditation.
In disregard of the prohibition, the respondent continued his business operation in
Palawan until a customer showed him the Notice of Violation and Show Cause Order
issued by the PCSD to the effect that he had still made 19 flights in October 2002
despite his failure to secure accreditation from the PCSD; and that he should explain
his actuations within 15 days, otherwise, he would be sanctioned with a fine of
₱50,000.00. 5
According to the respondent, he had not received the Notice of Violation and Show
Cause Order. 6
The respondent filed a petition for prohibition in the CA, which issued a temporary
restraining order (TRO) upon his application after finding that there were sufficient
grounds to issue the TR0. 7 After the petitioners did not file their comment despite
notice, the CA issued the writ of preliminary injunction upon his posting of the
injunction bond for P.50,000.00.8
The petitioners countered that the petition for prohibition should have been dismissed
because A.O. No. 00-05 was in accord with the mandate of the Constitution and of
Republic Act No. 7611 (Strategic Environmental Plan for Palawan Act);9 that
Resolution No. 03-211 had meanwhile amended or repealed portions of A.O. No. 00-
05, thereby rendering the issues raised by the petition for prohibition moot and
academic; 10 that by virtue of such developments, the PCSD accreditation was now
required for all carriers, except those belonging to the Government; that on August
18, 2003, the respondent had received another notice regarding the enactment of
Resolution No. 03-211; and that they had subsequently dispatched to the respondent
on September 9, 2003 another show cause order in view of his continued non-
compliance with Resolution No. 03-211. 11
The salient portions of Resolution No 03-211 read:
SECTION 3. A new Paragraph 1.5 is hereby added to Section 1 of Administrative
Order No. 00-05, as amended, as follows:
"CARRIER - any natural or juridical person or entity, except the Government, that is
engaged or involved in the transportation of live fish or any other aquatic fresh or
saltwater products, whether or not on a daily or regular manner or schedule and
whether or not for compensation, from any point within or out of the Province of
Palawan under a contract or transportation, whether or not in writing, through the use
of aircrafts, seacrafts, land vehicles or any other mode of transportation, whether or
not registered, mechanical or motorized in nature, and whether or not such persons
or entities are common carriers or not as defined by law and regardless of the place
of registration of such persons or entities as well as the crafts and vehicles used or
employed by them."
xxxx
SECTION 5. The new section 2 for Administrative Order No. 00- 05, as amended,
shall read as follows:
"Section 2. Accreditation. Before it can proceed with the transport or carriage of live
fish or any other aquatic fresh or saltwater products within or out of the Province of
Palawan, a CARRIER must secure a CERTIFICATE OF ACCREDITATION from the
PCSD." 12
The respondent then filed a supplemental petition alleging that due to the
implementation of Resolution No. 03-211, his carriers were forbidden to transport or
deliver fish from Palawan to his clients resulting in loss of income amounting to
₱132,000.00; and that such supervening event was a mere scheme to circumvent the
TRO and the writ of preliminary injunction issued by the CA.
As stated, the CA promulgated its assailed decision on May 28, 2008, disposing as
follows:
WHEREFORE, the instant petition is GRANTED. Administrative Order No. 00-05,
Series of 2002, Resolution No. 03-211, and any and all of its revisions, and
the Notice of Violation and Show-Cause Order are declared NULL and VOID. The
injunctive writ previously issued by this Court prohibiting the Respondents from
implementing or enforcing the said issuance(s) is declared PERMANENT. Costs
against the Respondents.
SO ORDERED. 13
Hence, this appeal by the petitioners.
Issues
The sole issue for determination is whether or not the CA erred in declaring A.O. No.
00-05, Series of 2002; Resolution No. 03-211; and the the Notice of Violation and
Show Cause Order null and void for having been issued in excess of the PCSD’s
authoity.
The petitioners submit the following grounds for consideration, to wit:
I
THE COURT OF APPEALS ERRED IN INTERPRETING SECTIONS 4, 6, 16, AND 19
OF RA 7611 AS LIMITATIONS TO THE POWER OF THE PCSD TO PROMULGATE
ADMINISTRATIVE ORDER NO 00-05.
II
THE COURT OF APPEALS ERRED IN HOLDING THAT THE PCSD'S ISSUANCE
OF ADMINISTRATIVE ORDER NO. 05 (sic) IS AN ENCROACHMENT OF THE
LEGISLATIVE FUNCTION OF THE SANGGUNIANG PANLALA WIGAN OF PALA
WAN,
A. ADMINISTRATIVE ORDER NO. 00-05 AND ITS REVISIONS WERE
PROMULGATED PURSUANT TO THE RULE-MAKING POWER OF THE PCSD.
B. ADMINISTRATIVE ORDER NO. 00-05 AND ITS REVISIONS POSSESS ALL THE
REQUISITES OF A VALID ADMINISTRATIVE REGULATION.
III
THE COURT OF APPEALS ERRED IN RULING THAT THE PROMULGATION OF
ADMINISTRATIVE ORDER NO. 00-05 AND ITS REVISIONS IS VESTED SOLELY IN
THE SANGGUNIANG PANLALAWIGAN OF PALAWAN. 14
Ruling of the Court
We grant the petition for review on certiorari, and reverse the decision of the CA
1. Procedural Matters
We first deal with the propriety of the petition for prohibition for the purpose of
annulling the challenged administrative issuances.
Administrative agencies possess two kinds of powers, the quasi-legislative or rule-
making power, and the quasi-judicial or administrative adjudicatory power. The first is
the power to make rules and regulations that results in delegated legislation that is
within the confines of the granting statute and the doctrine of non-delegability and
separability of powers. 15 The issuance of the assailed A.O. No. 00-05, Resolution.
No. 03-211 and the other issuances by the PCSD was in the exercise of the agency's
quasilegislative powers. The second is the power to hear and determine questions of
fact to which the legislative policy is to apply and to decide in accordance with the
standards laid down by the law itself in enforcing and administering the same law. The
administrative body exercises its quasi-judicial power when it performs in a judicial
manner an act that is essentially of an executive or administrative nature, where the
power to act in such manner is incidental to or reasonably necessary for the
performance of the executive or administrative duty entrusted to it. 16
The challenge being brought by the petitioners rests mainly on the theory that the CA
should not have interpreted the functions of the PCSD, particularly those provided for
in Sections 4, 6, 16, and 19 of R.A. No. 7611, as limitations on the power of the PCSD
to promulgate A.O. No. 00-05. Clearly, what was assailed before the CA was the
validity or constitutionality of a rule or regulation issued by the PCSD as an
administrative agency in the performance of its quasi-legislative function. The
question thus presented was a matter incapable of pecuniary estimation, and
exclusively and originally pertained to the proper Regional Trial Court pursuant to
Section 19(1) of Batas Pambansa Blg. 129. Indeed, Section 1, Rule 63 of the Rules
of Court expressly states that any person "whose rights are affected by a statute,
executive order or regulation, ordinance, or any other governmental regulation" may
bring an action in the appropriate Regional Trial Court "to determine any question of
construction or validity arising, and for a declaration of his rights or duties,
thereunder." The judicial course to raise the issue against such validity should have
adhered to the doctrine of hierarchy of courts except only if the respondent had
sufficient justification to do otherwise. Yet, he utterly failed to show justification to
merit the exception of bypassing the Regional Trial Court. Moreover, by virtue of
Section 5, Article VIII of the Constitution,17 the Court's power to evaluate the validity of
an implementing rule or regulation is generally appellate in nature.
In this regard, the Court has categorically observed in Smart Communications, Inc. v.
National Telecommunications Commission 18 that if what is being assailed is the
validity or constitutionality of a rule or regulation issued by an administrative agency in
the performance of its quasi-legislative functions, then the Regional Trial Court has
jurisdiction to pass upon the same. The determination of whether a specific rule or set
of rules issued by an administrative agency contravenes the law or the Constitution is
within the jurisdiction of the Regional Trial Court. 19
To accord with the doctrine of hierarchy of courts, therefore, the petition for prohibition
should have been originally brought in the proper Regional Trial Court as a petition for
declaratory relief.
We also need to remind that a petition for prohibition is not the proper remedy to
assail an administrative order issued in the exercise of a quasilegislative function.
Prohibition is an extraordinary writ directed against any tribunal, corporation, board,
officer or person, whether exercising judicial, quasi-judicial or ministerial functions,
ordering said entity or person to desist from further proceedings when said
proceedings are without or in excess of said entity's or person's jurisdiction, or are
accompanied with grave abuse of discretion, and there is no appeal or any other
plain, speedy and adequate remedy in the ordinary course of law. 20 Its lies against
the exercise of judicial or ministerial functions, not against the exercise of legislative
or quasi-legislative functions. Generally, the purpose of the writ of prohibition is to
keep a lower court within the limits of its jurisdiction in order to maintain the
administration of justice in orderly channels. 21 In other words, prohibition is the proper
remedy to afford relief against usurpation of jurisdiction or power by an inferior court,
or when, in the exercise of jurisdiction in handling matters clearly within its cognizance
the inferior court transgresses the bounds prescribed to it by the law, or where there is
no adequate remedy available in the ordinary course of law by which such relief can
be obtained.22
Nevertheless, the Court will not shirk from its duty to rule on this case on the merits if
only to facilitate its speedy resolution. In proper cases, indeed, the rigidity of
procedural rules may be relaxed or suspended in the interest of substantial justice.
The power of the Court to except a particular case from its rules whenever the
purposes of justice so require cannot be questioned. 23
2. ubstantive Matters
Were A.O. No. 00-05, Series of 2002; Resolution No. 03-211; and the the Notice of
Violation and Show Cause Order null and void for having been issued in excess of the
PCSD's authority?
We answer the query in the negative.
R.A. No. No. 7611 has adopted the Strategic Environmental Plan (SEP) for Palawan
consistent with the declared policy of the State to protect, develop, and conserve its
natural resources. The SEP is a comprehensive framework for the sustainable
development of Palawan to protect and enhance the Province's natural resources and
endangered environment.
Towards this end, the PCSD was established as the administrative machinery for the
SEP' s implementation.1avvphi1 The creation of the PCSD has been set forth in
Section 16 ofR.A. No. 7611, to wit:
SEC. 16. Palawan Council for Sustainable Development. - The governance,
implementation and policy direction of the Strategic Environmental Plan shall be
exercised by the herein created Palawan Council for Sustainable Development
(PCSD), hereinafter referred to as the Council, which shall be under the Office of the
President. x x x
The functions of the PCSD are specifically enumerated in Section 19 of R.A. No.
7611, which relevantly provides:
SEC. 19. Powers and Functions. - In order to successfully implement the provisions
of this Act, the Council is hereby vested with the following powers and functions:
1. Formulate plans and policies as may be necessary to carry out the provisions of
this Act;
2. Coordinate with the local governments to ensure that the latter's plans, programs
and projects are aligned with the plans, programs and policies of the SEP;
3. Call on any department, bureau, office, agency or instrumentality of the
Government, and on private entities and organizations for cooperation and assistance
in the performance of its functions;
4. Arrange, negotiate for, and accept donations, grants, gifts, loans, and other funding
from domestic and foreign sources to carry out the activities and purposes of the
SEP;
5. Recommend to the Congress of the Philippines such matters that may require
legislation in support of the objectives of the SEP;
6. Delegate any or all of its powers and functions to its support staffs, as hereinafter
provided, except those which by provisions of law cannot be delegated;
7. Establish policies and guidelines for employment on the basis of merit, technical
competence and moral character and prescribe a compensation and staffing pattern;

8. Adopt, amend and rescind such rules and regulations and impose
penalties therefor for the effective implementation of the SEP and the other
provisions of this Act;

9. Enforce the provisions of this Act and other existing laws, rules and regulations
similar to or complementary with this Act;

10. Perform related functions which shall promote the development, conservation,
management, protection, and utilization of the natural resources of Palawan; and

11. Perform such other powers and functions as may be necessary in carrying out its
functions, powers, and the provisions of this Act.1âwphi1 (Emphasis supplied)

Accordingly, the PCSD had the explicit authority to fill in the details as to how to carry
out the objectives of R.A. No. 7611 in protecting and enhancing Palawan's natural
resources consistent with the SEP. In that task, the PCSD could establish a
methodology for the effective implementation of the SEP. Moreover, the PCSD was
expressly given the authority to impose penalties and sanctions in relation to the
implementation of the SEP and the other provisions of R.A. No. 7611. As such, the
PCSD's issuance of A.O. No. 00-95 and Resolution No. 03-211 was well within its
statutory authority.

WHEREFORE, the Court GRANTS the petition for review

on certiorari; ANNULS and SETS ASIDE the decision promulgated on May 28,
2008; DECLARES VALID and EFFECTIVE Administrative Order No. 00-05, Series of
2002; Resolution No. 03-211; and all their revisions, as well as the Notice of Violation
and Show Cause Order issued to the respondent; LIFTS the permanent injunction
issued by the Court of Appeals enjoining petitioner Palawan Council for Sustainable
Development from enforcing Administrative Order No. 00-05, Series of 2002;
Resolution No. 03-211; and all their revisions, as well as the Notice of Violation and
Show Cause Order issued to the respondent; and ORDERS the respondent to pay
the costs of suit.

SO ORDERED.
G.R. No. 162784 June 22, 2007
NATIONAL HOUSING AUTHORITY, petitioner, vs. SEGUNDA ALMEIDA, COURT
OF APPEALS, and RTC of SAN PEDRO, LAGUNA, BR. 31, respondents.
DECISION
PUNO, C.J.:
This is a Petition for Review on Certiorari under Rule 45 filed by the National Housing
Authority (NHA) against the Court of Appeals, the Regional Trial Court of San Pedro
Laguna, Branch 31, and private respondent Segunda Almeida.
On June 28, 1959, the Land Tenure Administration (LTA) awarded to Margarita
Herrera several portions of land which are part of the Tunasan Estate in San Pedro,
Laguna. The award is evidenced by an Agreement to Sell No. 3787. 1 By virtue of
Republic Act No. 3488, the LTA was succeeded by the Department of Agrarian
Reform (DAR). On July 31, 1975, the DAR was succeeded by the NHA by virtue of
Presidential Decree No. 757.2 NHA as the successor agency of LTA is the petitioner in
this case.
The records show that Margarita Herrera had two children: Beatriz Herrera-Mercado
(the mother of private respondent) and Francisca Herrera. Beatriz Herrera-Mercado
predeceased her mother and left heirs.
Margarita Herrera passed away on October 27, 1971.3
On August 22, 1974, Francisca Herrera, the remaining child of the late Margarita
Herrera executed a Deed of Self-Adjudication claiming that she is the only remaining
relative, being the sole surviving daughter of the deceased. She also claimed to be
the exclusive legal heir of the late Margarita Herrera.
The Deed of Self-Adjudication was based on a Sinumpaang Salaysay dated October
7, 1960, allegedly executed by Margarita Herrera. The pertinent portions of which are
as follows:
SINUMPAANG SALAYSAY
SA SINO MAN KINAUUKULAN;
Akong si MARGARITA HERRERA, Filipina, may 83 taong gulang, balo,
kasalukuyang naninirahan at tumatanggap ng sulat sa Nayon ng San
Vicente, San Pedro Laguna, sa ilalim ng panunumpa ay malaya at kusang
loob kong isinasaysay at pinagtitibay itong mga sumusunod:
1. Na ako ay may tinatangkilik na isang lagay na lupang tirikan (SOLAR),
tumatayo sa Nayon ng San Vicente, San Pedro, Laguna, mayroong PITONG
DAAN AT PITUMPU'T ISANG (771) METRONG PARISUKAT ang laki,
humigit kumulang, at makikilala sa tawag na Lote 17, Bloke 55, at pag-aari
ng Land Tenure Administration;
2. Na ang nasabing lote ay aking binibile, sa pamamagitan ng paghuhulog
sa Land Tenure Administration, at noong ika 30 ng Julio, 1959, ang
Kasunduang sa Pagbibile (AGREEMENT TO SELL No. 3787) ay ginawa at
pinagtibay sa Lungsod ng Maynila, sa harap ng Notario Publico na si G.
Jose C. Tolosa, at lumalabas sa kaniyang Libro Notarial bilang Documento
No. 13, Pagina No. 4; Libro No. IV, Serie ng 1959;
3. Na dahilan sa ako'y matanda na at walang ano mang hanap buhay, ako
ay nakatira at pinagsisilbihan nang aking anak na si Francisca Herrera, at
ang tinitirikan o solar na nasasabi sa unahan ay binabayaran ng kaniyang
sariling cuarta sa Land Tenure Administration;
4. Na alang-alang sa nasasaysay sa unahan nito, sakaling ako'y bawian na
ng Dios ng aking buhay, ang lupang nasasabi sa unahan ay aking
ipinagkakaloob sa nasabi kong anak na FRANCISCA HERRERA, Filipina,
nasa katamtamang gulang, kasal kay Macario Berroya, kasalukuyang
naninirahan at tumatanggap ng sulat sa Nayong ng San Vicente, San Pedro
Laguna, o sa kaniyang mga tagapagmana at;
5. Na HINIHILING KO sa sino man kinauukulan, na sakaling ako nga ay
bawian na ng Dios ng aking buhay ay KILALANIN, IGALANG at
PAGTIBAYIN ang nilalaman sa pangalan ng aking anak na si Francisca
Herrera ang loteng nasasabi sa unahan.
SA KATUNAYAN NG LAHAT, ako ay nag-didiit ng hinlalaki ng kanan kong
kamay sa ibaba nito at sa kaliwang gilid ng unang dahon, dito sa Lungsod
ng Maynila, ngayong ika 7 ng Octubre, 1960.4
The said document was signed by two witnesses and notarized. The witnesses
signed at the left-hand side of both pages of the document with the said document
having 2 pages in total. Margarita Herrera placed her thumbmark5above her name in
the second page and at the left-hand margin of the first page of the document.
The surviving heirs of Beatriz Herrera-Mercado filed a case for annulment of the Deed
of Self-Adjudication before the then Court of First Instance of Laguna, Branch 1 in
Binan, Laguna (now, Regional Trial Court Branch 25). The case for annulment was
docketed as Civil Case No. B-1263.6
On December 29, 1980, a Decision in Civil Case No. B-1263 (questioning the Deed of
Self-Adjudication) was rendered and the deed was declared null and void.7
During trial on the merits of the case assailing the Deed of Self-Adjudication,
Francisca Herrera filed an application with the NHA to purchase the same lots
submitting therewith a copy of the "Sinumpaang Salaysay" executed by her mother.
Private respondent Almeida, as heir of Beatriz Herrera-Mercado, protested the
application.
In a Resolution8 dated February 5, 1986, the NHA granted the application made by
Francisca Herrera, holding that:
From the evidence of the parties and the records of the lots in question, we
gathered the following facts: the lots in question are portions of the lot
awarded and sold to the late Margarita Herrera on July 28, 1959 by the
defunct Land Tenure Administration; protestant is the daughter of the late
Beatriz Herrera Mercado who was the sister of the protestee; protestee and
Beatriz are children of the late Margarita Herrera; Beatriz was the transferee
from Margarita of Lot Nos. 45, 46, 47, 48 and 49, Block 50; one of the lots
transferred to Beatriz, e.g. Lot 47, with an area of 148 square meters is in
the name of the protestant; protestant occupied the lots in question with the
permission of the protestee; protestee is a resident of the Tunasan Homesite
since birth; protestee was born on the lots in question; protestee left the
place only after marriage but resided in a lot situated in the same Tunasan
Homesite; her (protestee) son Roberto Herrera has been occupying the lots
in question; he has been there even before the death of the late Margarita
Herrera; on October 7, 1960, Margarita Herrera executed a
"Sinumpaang Salaysay" whereby she waived or transferred all her
rights and interest over the lots in question in favor of the protestee ;
and protestee had paid the lots in question in full on March 8, 1966 with the
defunct Land Tenure Administration.
This Office finds that protestee has a better preferential right to purchase the lots in
question.9
Private respondent Almeida appealed to the Office of the President. 10 The NHA
Resolution was affirmed by the Office of the President in a Decision dated January
23, 1987.11
On February 1, 1987, Francisca Herrera died. Her heirs executed an extrajudicial
settlement of her estate which they submitted to the NHA. Said transfer of rights was
approved by the NHA.12 The NHA executed several deeds of sale in favor of the heirs
of Francisca Herrera and titles were issued in their favor. 13 Thereafter, the heirs of
Francisca Herrera directed Segunda Mercado-Almeida to leave the premises that she
was occupying.
Feeling aggrieved by the decision of the Office of the President and the resolution of
the NHA, private respondent Segunda Mercado-Almeida sought the cancellation of
the titles issued in favor of the heirs of Francisca. She filed a Complaint on February
8, 1988, for "Nullification of Government Lot's Award," with the Regional Trial
Court of San Pedro, Laguna, Branch 31.
In her complaint, private respondent Almeida invoked her forty-year occupation of the
disputed properties, and re-raised the fact that Francisca Herrera's declaration of self-
adjudication has been adjudged as a nullity because the other heirs were
disregarded. The defendant heirs of Francisca Herrera alleged that the complaint was
barred by laches and that the decision of the Office of the President was already final
and executory.14 They also contended that the transfer of purchase of the subject lots
is perfectly valid as the same was supported by a consideration and that Francisca
Herrera paid for the property with the use of her own money. 15 Further, they argued
that plaintiff's occupation of the property was by mere tolerance and that they had
been paying taxes thereon.16
The Regional Trial Court issued an Order dated June 14, 1988 dismissing the case
for lack of jurisdiction.17 The Court of Appeals in a Decision dated June 26, 1989
reversed and held that the Regional Trial Court had jurisdiction to hear and decide the
case involving "title and possession to real property within its jurisdiction." 18 The case
was then remanded for further proceedings on the merits.
A pre-trial was set after which trial ensued.
On March 9, 1998, the Regional Trial Court rendered a Decision setting aside the
resolution of the NHA and the decision of the Office of the President awarding the
subject lots in favor of Francisca Herrera. It declared the deeds of sale executed by
NHA in favor of Herrera's heirs null and void. The Register of Deeds of Laguna,
Calamba Branch was ordered to cancel the Transfer Certificate of Title issued.
Attorney's fees were also awarded to private respondent.
The Regional Trial Court ruled that the "Sinumpaang Salaysay" was not an
assignment of rights but a disposition of property which shall take effect upon death. It
then held that the said document must first be submitted to probate before it can
transfer property.
Both the NHA and the heirs of Francisca Herrera filed their respective motions for
reconsideration which were both denied on July 21, 1998 for lack of merit. They both
appealed to the Court of Appeals. The brief for the heirs of Francisca Herrera was
denied admission by the appellate court in a Resolution dated June 14, 2002 for
being a "carbon copy" of the brief submitted by the NHA and for being filed seventy-
nine (79) days late.
On August 28, 2003, the Court of Appeals affirmed the decision of the Regional Trial
Court, viz:
There is no dispute that the right to repurchase the subject lots was awarded
to Margarita Herrera in 1959. There is also no dispute that Margarita
executed a "Sinumpaang Salaysay" on October 7, 1960. Defendant NHA
claims that the "Sinumpaang Salaysay" is, in effect, a waiver or transfer of
rights and interest over the subject lots in favor of Francisca Herrera. This
Court is disposed to believe otherwise. After a perusal of the "Sinumpaang
Salaysay" of Margarita Herrera, it can be ascertained from its wordings
taken in their ordinary and grammatical sense that the document is a simple
 disposition of her estate to take effect after her death. Clearly the Court finds
that the "Sinumpaang Salaysay" is a will of Margarita Herrera. Evidently, if
the intention of Margarita Herrera was to merely assign her right over the lots
to her daughter Francisca Herrera, she should have given her "Sinumpaang
Salaysay" to the defendant NHA or to Francisca Herrera for submission to
the defendant NHA after the full payment of the purchase price of the lots or
even prior thereto but she did not. Hence it is apparent that she intended the
"Sinumpaang Salaysay" to be her last will and not an assignment of rights as
what the NHA in its resolution would want to make it appear. The intention of
Margarita Herrera was shared no less by Francisca Herrera who after the
former's demise executed on August 22, 1974 a Deed of Self-Adjudication
claiming that she is her sole and legal heir. It was only when said deed was
questioned in court by the surviving heirs of Margarita Herrera's other
daughter, Beatriz Mercado, that Francisca Herrera filed an application to
purchase the subject lots and presented the "Sinumpaang Salaysay" stating
that it is a deed of assignment of rights.19
The Court of Appeals ruled that the NHA acted arbitrarily in awarding the lots to the
heirs of Francisca Herrera. It upheld the trial court ruling that the "Sinumpaang
Salaysay" was not an assignment of rights but one that involved disposition of
property which shall take effect upon death. The issue of whether it was a valid will
must first be determined by probate.
Petitioner NHA elevated the case to this Court.
Petitioner NHA raised the following issues:
A. WHETHER OR NOT THE RESOLUTION OF THE NHA AND THE
DECISION OF THE OFFICE OF THE PRESIDENT HAVE ATTAINED
FINALITY, AND IF SO, WHETHER OR NOT THE PRINCIPLE OF
ADMINISTRATIVE RES JUDICATA BARS THE COURT FROM FURTHER
DETERMINING WHO BETWEEN THE PARTIES HAS PREFERENTIAL
RIGHTS FOR AWARD OVER THE SUBJECT LOTS;
B. WHETHER OR NOT THE COURT HAS JURISDICTION TO MAKE THE
AWARD ON THE SUBJECT LOTS; AND
C. WHETHER OR NOT THE AWARD OF THE SUBJECT LOTS BY THE
NHA IS ARBITRARY.
We rule for the respondents.
Res judicata is a concept applied in review of lower court decisions in accordance
with the hierarchy of courts. But jurisprudence has also recognized the rule of
administrative res judicata: "the rule which forbids the reopening of a matter once
judicially determined by competent authority applies as well to the judicial and quasi-
judicial facts of public, executive or administrative officers and boards acting within
their jurisdiction as to the judgments of courts having general judicial powers . . . It
has been declared that whenever final adjudication of persons invested with power to
decide on the property and rights of the citizen is examinable by the Supreme Court,
upon a writ of error or a certiorari, such final adjudication may be pleaded as res
judicata."20 To be sure, early jurisprudence were already mindful that the doctrine of
res judicata cannot be said to apply exclusively to decisions rendered by what are
usually understood as courts without unreasonably circumscribing the scope thereof
and that the more equitable attitude is to allow extension of the defense to decisions
of bodies upon whom judicial powers have been conferred.
In Ipekdjian Merchandising Co., Inc. v. Court of Tax Appeals,21 the Court held that
the rule prescribing that "administrative orders cannot be enforced in the courts in the
absence of an express statutory provision for that purpose" was relaxed in favor of
quasi-judicial agencies.
In fine, it should be remembered that quasi-judicial powers will always be subject to
true judicial power—that which is held by the courts. Quasi-judicial power is defined
as that power of adjudication of an administrative agency for the "formulation of a final
order."22 This function applies to the actions, discretion and similar acts of public
administrative officers or bodies who are 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. 23 However, administrative
agencies are not considered courts, in their strict sense. The doctrine of separation of
powers reposes the three great powers into its three (3) branches—the legislative, the
executive, and the judiciary. Each department is co-equal and coordinate, and
supreme in its own sphere. Accordingly, the executive department may not, by its own
fiat, impose the judgment of one of its agencies, upon the judiciary. Indeed, under the
expanded jurisdiction of the Supreme Court, it is empowered to "determine whether or
not there has been grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the Government." 24 Courts
have an expanded role under the 1987 Constitution in the resolution of societal
conflicts under the grave abuse clause of Article VIII which includes that duty to check
whether the other branches of government committed an act that falls under the
category of grave abuse of discretion amounting to lack or excess of jurisdiction.25
Next, petitioner cites Batas Pambansa Blg. 129 or the Judiciary Reorganization Act of
198026 where it is therein provided that the Intermediate Appellate Court (now, Court
of Appeals) shall exercise the "exclusive appellate jurisdiction over all final judgments,
decisions, resolutions, orders or awards, of the Regional Trial Courts and Quasi-
Judicial agencies, instrumentalities, boards or commissions, except those falling
within the jurisdiction of the Supreme Court in accordance with the
Constitution…"27 and contends that the Regional Trial Court has no jurisdiction to rule
over awards made by the NHA.
Well-within its jurisdiction, the Court of Appeals, in its decision of August 28, 2003,
already ruled that the issue of the trial court's authority to hear and decide the instant
case has already been settled in the decision of the Court of Appeals dated June 26,
1989 (which has become final and executory on August 20, 1989 as per entry of
judgment dated October 10, 1989).28 We find no reason to disturb this ruling. Courts
are duty-bound to put an end to controversies. The system of judicial review should
not be misused and abused to evade the operation of a final and executory
judgment.29 The appellate court's decision becomes the law of the case which must
be adhered to by the parties by reason of policy.30
Next, petitioner NHA contends that its resolution was grounded on meritorious
grounds when it considered the application for the purchase of lots. Petitioner argues
that it was the daughter Francisca Herrera who filed her application on the subject lot;
that it considered the respective application and inquired whether she had all the
qualifications and none of the disqualifications of a possible awardee. It is the position
of the petitioner that private respondent possessed all the qualifications and none of
the disqualifications for lot award and hence the award was not done arbitrarily.
The petitioner further argues that assuming that the "Sinumpaang Salaysay" was a
will, it could not bind the NHA. 31That, "insofar as [the] NHA is concerned, it is an
evidence that the subject lots were indeed transferred by Margarita Herrera, the
original awardee, to Francisca Herrera was then applying to purchase the same
before it."32
We are not impressed. When the petitioner received the "Sinumpaang Salaysay," it
should have noted that the effectivity of the said document commences at the time of
death of the author of the instrument; in her words "sakaling ako'y bawian na ng Dios
ng aking buhay…" Hence, in such period, all the interests of the person should cease
to be hers and shall be in the possession of her estate until they are transferred to her
heirs by virtue of Article 774 of the Civil Code which provides that:
Art. 774. Succession is a mode of acquisition by virtue of which the
property, rights and obligations to the extent of the value of the
inheritance, of a person are transmitted through his death to another or
others either by his will or by operation of law.33
resolution by the NHA. For as it stands, NHA cannot make another contract to sell to
other parties of a property already initially paid for by the decedent. Such would be an
act contrary to the law on succession and the law on sales and obligations.38
When the original buyer died, the NHA should have considered the estate of the
decedent as the next "person"39likely to stand in to fulfill the obligation to pay the rest
of the purchase price. The opposition of other heirs to the repurchase by Francisca
Herrera should have put the NHA on guard as to the award of the lots. Further, the
Decision in the said Civil Case No. B-1263 (questioning the Deed of Self-
Adjudication) which rendered the deed therein null and void 40 should have alerted the
NHA that there are other heirs to the interests and properties of the decedent who
may claim the property after a testate or intestate proceeding is concluded. The NHA
therefore acted arbitrarily in the award of the lots.
We need not delve into the validity of the will. The issue is for the probate court to
determine. We affirm the Court of Appeals and the Regional Trial Court which noted
that it has an element of testamentary disposition where (1) it devolved and
transferred property; (2) the effect of which shall transpire upon the death of the
instrument maker.41
IN VIEW WHEREOF, the petition of the National Housing Authority is DENIED. The
decision of the Court of Appeals in CA-G.R. No. 68370 dated August 28, 2003,
affirming the decision of the Regional Trial Court of San Pedro, Laguna in Civil Case
No. B-2780 dated March 9, 1998, is hereby AFFIRMED.
No cost.
SO ORDERED.

By considering the document, petitioner NHA should have noted that the original
applicant has already passed away. Margarita Herrera passed away on October 27,
1971.34 The NHA issued its resolution35 on February 5, 1986. The NHA gave due
course to the application made by Francisca Herrera without considering that the
initial applicant's death would transfer all her property, rights and obligations to the
estate including whatever interest she has or may have had over the disputed
properties. To the extent of the interest that the original owner had over the property,
the same should go to her estate. Margarita Herrera had an interest in the property
and that interest should go to her estate upon her demise so as to be able to properly
distribute them later to her heirs—in accordance with a will or by operation of law.

The death of Margarita Herrera does not extinguish her interest over the property.
Margarita Herrera had an existing Contract to Sell36 with NHA as the seller. Upon
Margarita Herrera's demise, this Contract to Sell was neither nullified nor revoked.
This Contract to Sell was an obligation on both parties—Margarita Herrera and NHA.
Obligations are transmissible.37 Margarita Herrera's obligation to pay became
transmissible at the time of her death either by will or by operation of law.

If we sustain the position of the NHA that this document is not a will, then the interests
of the decedent should transfer by virtue of an operation of law and not by virtue of a
G.R. No. 140656 September 13, 2007
MAYOR FELIPE K. CONSTANTINO, petitioner, vs. HON. SANDIGANBAYAN (FIRST
DIVISION) and THE PEOPLE OF THE PHILIPPINES, respondents.
x-----------------------------------------------------------------------------x
G.R. No. 154482 September 13, 2007
NORBERTO N. LINDONG, petitioner, vs.PEOPLE OF THE PHILIPPINES and
SANDIGANBAYAN, respondents.
DECISION
TINGA, J.:
Before us are two (2) consolidated petitions, the determination of both rests ultimately
on whether Felipe K. Constantino (Constantino), mayor of Malungon, Sarangani
Province, was indeed guilty beyond reasonable doubt of violating Section 3(e) of
Republic Act No. 3019 (R.A. No. 3019), otherwise known as The Anti-Graft and
Corrupt Practices Act.
In G.R. No. 140656, Constantino filed a petition for review on certiorari under Rule 45
of the 1997 Rules of Civil Procedure, assailing the 15 November 1999 decision 1 and
the 15 March 2000 resolution2 of the Sandiganbayan (First Division) in Criminal Case
No. 23433 finding him and his co-accused, petitioner Norberto N. Lindong (Lindong)
guilty beyond reasonable doubt of violating Section 3(e) of R.A. No. 3019.
On the other hand, G.R. No. 154482 is a petition for certiorari with prayer for
preliminary injunction under Rule 65 of the 1997 Rules of Civil Procedure, filed by
Lindong questioning three (3) orders3 of the Sandiganbayan (First Division) relative to
the execution of judgment against him also in Criminal Case No. 23433.
The Antecedents
In an Information dated 31 July 1996, Constantino, in his capacity as mayor of
Malungon, Sarangani Province, together with his co-accused Lindong, was charged
with violation of Section 3 (e) of R.A. No. 3019 before the Sandiganbayan, to wit:
That on or about February 28, 1996, in Davao City, Philippines, and within
the jurisdiction of this Honorable Court, accused Felipe K. Constantino, a
public officer, being then the Mayor of the Municipality of Malungon,
Sarangani Province, committing the crime herein-charged in relation to,
while in the performance and taking advantage of his official functions, with
evident bad faith, manifest partiality or through gross inexcusable
negligence, and conspiring and confederating with accused Norberto N.
Lindong, President and Chairman of the Board of the Norlovanian
Corporation, Davao City, did then and there wil[l]fully, unlawfully and
criminally enter into a Lease Agreement for the rental of various heavy
equipments (sic) for a period of six (6) years for and in consideration of the
sum of PESOS: TWO HUNDRED FIFTY-SEVEN THOUSAND ONE
HUNDRED ELEVEN and 11/100 (P257,111.11) per month or a total
consideration of PESOS: EIGHTEEN MILLION FIVE HUNDRED ELEVEN
THOUSAND NINE HUNDRED NINETY-NINE and 92/100
(P18,511,999.92) and a guaranty deposit of PESOS: ONE MILLION SEVEN
HUNDRED EIGHTY THOUSAND (P1,780,000.00) contrary to the express
mandate of Resolution No. 2, series of 1995, of the Municipal Planning and
Development Council implementing Sangguniang Bayan Resolution No.
198, series of 1995 and Sangguniang Bayan Resolution No. 21 dated
February 22, 1996 authorizing the Municipal Mayor of Malungon to enter into
an agreement for the purchase of heavy equipments (sic) on a five-year term
basis for and in consideration of the amount of PESOS: TWO MILLION
TWO HUNDRED THOUSAND (P2,200,000.00) per year or a total
consideration of only PESOS: ELEVEN MILLION (P11,000,000.00), thus,
giving said Norlovanian Corporation, which was fully paid for the Guaranty
Deposit and was actually paid heavy equipment rentals for the period March
5 to May 6,
1996 in the aggregate sum of PESOS: TWO MILLION ONE HUNDRED
SEVENTY-SEVEN THOUSAND NINETY and 91/100 (P2,177,090.91),
unwarranted benefits and advantage and causing undue injury to the
government.
CONTRARY TO LAW.4
Both accused pleaded not guilty to the charge. In the ensuing trial, the prosecution
presented Nazario B. Tomanan (Tomanan), Commission on Audit (COA) Auditor III of
the COA Regional Office No. XI. In rebuttal, it presented Benjamin C. Asgapo
(Asgapo), councilor of Malungon, Sarangani Province and one of the complainants
below. The prosecution sought to establish the facts as follows:
The Municipality of Malungon listed as one of its priority programs, the acquisition of a
fleet of heavy equipment needed by the municipality in its development projects. 5 For
this purpose, it appropriated an amount of P2.2 Million per annum for a period of five
(5) years beginning in 1996 for the amortization of such purchase. 6 Pursuant thereto,
the municipality conducted two (2) public biddings for suppliers of the required fleet of
heavy equipment. Both attempts, however, failed. Hence, the Sangguniang
Bayan instead passed Resolution No. 21 on 22 February 1996, authorizing petitioner
Constantino to enter into a negotiated contract for the lease/purchase of the needed
fleet of heavy equipment.7
On 28 February 1996, Constantino entered into a Lease Agreement8 with Norlovanian
Corporation, represented by Lindong. The agreement required, among others, the
municipality to provide Norlovanian Corporation with a guaranty deposit. The following
day, Lindong appeared before the Sangguniang Bayan to discuss the Lease
Agreement. Not one of the members of the Sanggunian questioned the legality of the
agreement.9
The seven (7) units of heavy equipment subject of the agreement were thus delivered
to the municipality on 4 March 1996.10 On 6 March 1996, the Municipality of Malungon
paid Norlovanian Corporation a total amount of P2,177,090.91 representing the
guaranty deposit as well as the rental for the period of 5 March 1996 to 5 April 1996
and partial rental for the period of 5 April 1996 to 6 May 1996.11
Thereafter, on 18 April 1996, the Sangguniang Bayan unanimously passed Resolution
No. 3812 requesting petitioner to operate the newly acquired fleet of heavy equipment.
The municipality subsequently utilized the fleet.13
However, only five (5) days later, or on 23 April 1996, Sanggunian members Benjamin
C. Asgapo, Rafael J. Suson, Sr. (Suson), Leo G. Ingay (Ingay), Pablo V. Octavio
(Octavio) and Wilfredo P. Espinosa (Espinosa), and Vice Mayor Primitiva L. Espinosa
(Vice Mayor Espinosa) filed a formal complaint against petitioners Constantino and
Lindong for violation of R.A. No. 3019.
On 6 June 1996, the Sangguniang Bayan passed Resolution No. 47, urging the
municipality to "stop all forms of unauthorized payment/expenditure relative to the
illegally acquired pool of heavy equipment by the Municipality of Malungon."14
In particular, Tomanan testified that he was directed by the COA Regional Office XI to
conduct a special and comprehensive audit of the municipality of Malungon for the
period of 1 May 1995 to 31 May 199615 in view of a complaint filed by certain officials
therein. In January 1997, Tomanan submitted his report detailing the following
adverse findings relative to the purchase of the subject fleet of heavy equipment: (a)
the lease/purchase contract was disadvantageous to the municipal government
because of the rigid terms and conditions therein required of the municipality before
the latter could acquire ownership over the pool of heavy equipment; (b) Norlovanian
Corporation had no proof of ownership of the fleet of equipment as the audit revealed
that title to the equipment was in the name of Lindong; (c) the lease/purchase
procedure violated Sections 27 and 28 of the Rules and Regulations on Supply and
Property Management in Local Governments;16 and (d) the lease/purchase procedure
utilized by the municipality was uneconomical and resulted to a wastage
of P9,658,000.00 of government funds.17
Asgapo, on the other hand, testified that he was present during the 29 February 1996
meeting where Lindong appeared before the Sanggunian. The witness asserted that
the lease contract was never concurred in by the municipal council as required by
Resolution No. 21. He admitted, however, that neither was there any resolution
passed opposing, objecting to or rejecting the lease contract. Moreover, Asgapo
alleged that at the time he first obtained a copy of the lease contract from the
municipal treasurer on 6 March 1996, he did not see the Undertaking dated 28
February 199618 attached or annexed thereto. He was only able to get a copy of the
latter document about three (3) or four (4) days thereafter, following an inquiry with
the provincial auditor.19
The defense presented Lindong as its sole witness. According to Lindong, after
negotiations between himself and petitioner Constantino, together with some
members of the Sanggunian, the parties agreed to a lease/purchase scheme in
accordance with the mandate of Resolution No. 21. They agreed that since the
municipality did not have sufficient funds to buy the fleet of heavy equipment outright
at P8.9 Million, the latter would purchase the subject equipment on installment basis
but with allowance for Norlovanian Corporation to recover some incremental cost.
Thus, on the very same day, 28 February 1996, Lindong as representative of
Norlovanian Corporation and Constantino as representative of the municipality
entered into the lease/purchase agreement. They contemporaneously executed the
Lease Agreement and Undertaking in the presence of the members of
the Sanggunian who accompanied the mayor.20
Lindong further testified that he attended the municipal council meeting on 29
February 1996 to provide the members thereof with a copy of the lease contract and
to explain the transaction. Moreover, he explained that notwithstanding the fact that
the main agreement was captioned only as a "Lease Agreement," the same being a
standard pre-printed form of his corporation, the intent of the parties was to enter into
a lease/purchase agreement. Hence, he clarified that the Undertaking he executed
bound him to convey ownership over the fleet of heavy equipment to the municipality
upon the full payment thereof.21
Finally, Lindong averred that more than two (2) months after he delivered the fleet of
equipment to the municipality, he received a Certificate of Concurrence dated 9 May
1996 issued by Nemesio Liray, Chairman of the Committee of Finance of
the Sangguniang Bayan, certifying that the Lease Agreement was concurred in by the
members of the Committee on 29 February 1996. Likewise, he received a
Certification dated 17 May 1996 from the Pre-Qualification, Bids and Awards
Committee of the Municipality of Malungon, that the members thereof approved,
concurred in and signed the contract of lease between the municipality and
Norlovanian Corporation.22
Finding that the prosecution had proven beyond reasonable doubt the guilt of
Constantino and Lindong of the offense as charged, the Sandiganbayan rendered the
assailed decision sentencing them both, thus:
WHEREFORE, judgment is hereby rendered finding accused FELIPE K.
CONSTANTINO and NORBERTO N. LINDONG GUILTY beyond reasonable
doubt of the crime of violation of Section 3 (e) of R.A. No. 3019, otherwise
known as "The Anti-Graft and Corrupt Practices Act," and said accused are
hereby sentenced, as follows:
(a) to suffer an indeterminate sentence of imprisonment for a period of six (6)
years and one (1) month as minimum to twelve (12) years and one (1) month
as maximum;
(b) to suffer perpetual disqualification from public office;
 (c) to jointly and severally indemnify the Municipality of Malungon, Province
of Sarangani the sum of Two Million One Hundred Seventy-Seven Thousand
[sic] and 91/1000 [sic] Pesos (P2,177,090.91), representing the amount
actually paid to Norlovanian Corporation, with interest at the legal rate
computed from March 6, 1996 until fully paid; and
(d) to pay the costs of suit.
SO ORDERED.23
The Sandiganbayan held that neither manifest partiality nor evident bad faith attended
the commission of the offense. However, it found that petitioner Constantino caused
undue injury to the Municipality of Malungon through his gross inexcusable
negligence in executing only a lease agreement over the fleet of heavy equipment.
Anent Lindong, the graft court upheld his culpability as co-conspirator of Constantino
despite its finding that the latter violated the anti-graft law through negligence only.
The Sandiganbayan ratiocinated that since the law violated is a special law, proof that
he intended to commit the particular offense was not essential, as it otherwise would
have been for a felony punishable by the Revised Penal Code. The Sandiganbayan
ruled that it was sufficient for the prosecution to have proven, as it did, that Lindong
allowed or failed to prevent Constantino from entering into an agreement which was
clearly contrary to law. Thus, even if petitioner was found guilty of causing undue
injury to the municipality through gross inexcusable negligence, the anti-graft court
concluded that his co-conspirator could likewise be held liable.24
It appears that during trial, both accused were represented by the same counsel.
However, after judgment was rendered against them, Constantino and Lindong filed
separate appeals to the Supreme Court which have taken disparate routes. On 25
April 2006, during the pendency of his present appeal, Constantino passed away.25
Lindong himself likewise filed a petition for review on certiorari, docketed as G.R. No.
142379, to seek a reversal of the Sandiganbayan decision finding him guilty as
Constantino’s co-conspirator. On 10 July 2000, this Court denied Lindong’s petition
for failure to state the material date of receipt of the assailed decision of the
Sandiganbayan. His subsequent attempts for reconsideration proved futile. On 25
July 2001, the Court issued the Entry of Judgment in the case.
Thereafter, the Sandiganbayan (First Division) issued three (3) orders relative to the
execution of judgment against Lindong, all of which are assailed by the latter, in his
petition for certiorari in G.R. No. 154482, for having been issued with grave abuse of
discretion. The Sandiganbayan issued on 16 May 2002 the first challenged order
which directed petitioner Lindong to appear before it in person for the execution of
judgment. On 6 June 2002, the respondent court issued a resolution, the second
assailed order herein, denying Lindong’s urgent motion to defer execution of
judgment. The third assailed order, a resolution issued on 3 July 2002, directed the
issuance of a bench warrant against petitioner Lindong and the confiscation of his
cash bond for provisional liberty pending appeal, and required him to surrender his
person to the court and explain why judgment should not be rendered against the
cash bond.
With the demise of Constantino during the pendency of his appeal, the same should
normally be regarded as moot and academic following the norm that the death of the
accused marks the extinction of his criminal liability.26However, the present two
petitions are so intertwined that the absolution of Constantino is ultimately
determinative of the absolution of Lindong. Indeed, the exoneration of Constantino
will necessarily signify the injustice of carrying out the penalty imposed on Lindong.
Thus, the Court in this instance has to ascertain the merits of Constantino’s appeal to
prevent a developing miscarriage of justice against Lindong.
The "moot and academic" principle is not a magical formula that can automatically
dissuade the courts in resolving a case. Courts will decide cases, otherwise moot and
academic, if: First, there is a grave violation of the Constitution; 27 Second, the
exceptional character of the situation and the paramount public interest is
involved;28Third, when constitutional issue raised requires formulation of controlling
principles to guide the bench, the bar, and the public; 29 and Fourth, the case is
capable of repetition yet evading review.30 In the instant case, the exceptional
character of the appeals of Constantino and Lindong in relation to each other, as well
as the higher interest of justice, requires that the Court determine the merits of the
petition and not dismiss the same outright on the ground of mootness.
The Ruling of the Court
G.R. No. 140656
Petitioner Constantino impugned his conviction and asserted that the Sandiganbayan
erred in convicting him based on its finding that he violated Resolution No. 21 by
entering into a "Lease Agreement" with the Norlovanian Corporation and for his failure
to sign the accompanying "Undertaking." Likewise, he argued that the evidence
adduced by the prosecution was insufficient to overcome the constitutional
presumption of innocence in his favor. Finally, Constantino contended that it was error
for the Sandiganbayan to disregard the findings of the Supreme Court en banc in the
earlier case of Constantino v. Hon. Ombudsman Desierto.31
Constantino’s petition would have been granted and he would have been absolved of
criminal liability had he been still alive today. This is why it is so.
Section 3(e) of R.A. No. 3019 provides:
SEC. 3. Corrupt practices of public officers. — In addition to acts or
omissions of public officers already penalized by existing law, the following
shall constitute corrupt practices of any public officer and are hereby
declared to be unlawful:
xxxx
(e) Causing any undue injury to any party, including the Government, or
giving any private party any unwarranted benefits, advantage, or preference
in the discharge of his official, administrative or judicial functions through
manifest partiality, evident bad faith or gross inexcusable negligence. This
 provision shall apply to officers and employees of offices or government
corporations charged with the grant of licenses or permits or other
concessions.
In order to be liable for violating the law, the following elements must concur: (1) the
accused is a public officer or a private person charged in conspiracy with the former;
(2) he or she causes undue injury to any party, whether the government or a private
party; (3) the said public officer commits the prohibited acts during the performance of
his or her official duties or in relation to his or her public positions; (4) such undue
injury is caused by giving unwarranted benefits, advantage or preference to such
parties; and (5) the public officer has acted with manifest partiality, evident bad faith or
gross inexcusable negligence.32
There are two (2) modes of committing the offense, thus: (1) the public officer caused
any undue injury to any party, including the government; or (2) the public officer gave
any private party unwarranted benefits, advantage or preference in the discharge of
his functions.33 An accused may be charged under either mode 34 or under both should
both modes concur.35
Additionally, Section 3(e) poses the standard of manifest partiality, evident bad faith or
gross inexcusable negligence before liability can be had under the provision. Manifest
partiality is characterized by a clear, notorious or plain inclination or predilection to
favor one side rather than the other.36 Evident bad faith connotes a manifest
deliberate intent on the part of the accused to do wrong or cause damage. 37 Gross
inexcusable negligence is defined as negligence characterized by the want of even
slight care, acting or omitting to act in a situation where there is a duty to act, not
inadvertently but willfully and intentionally with a conscious indifference to
consequences insofar as other persons may be affected.38 Mere bad faith or partiality
and negligence per se are not enough for one to be held liable under the law since
the act of bad faith or partiality must in the first place be evident or manifest,
respectively, while the negligent deed should both be gross and inexcusable.39
As discussed previously, the Sandiganbayan held that manifest partiality could not be
rightfully imputed to Constantino.40 The prosecution did not present proof that he was
actuated with malice or fraud sufficient to meet the requirement of proof beyond
reasonable doubt.41 However, the respondent court found that Constantino’s act of
entering into a purportedly pure lease agreement instead of a lease/purchase
agreement was a flagrant violation of Resolution No. 21. In view of the rigid terms of
the subject contract to which Constantino assented, coupled by his failure to secure
the concurrence of the Sangguniang Bayan before entering into the agreement, the
Sandiganbayan found that his conduct constituted gross inexcusable
negligence.42 Likewise, the anti-graft court ruled that Constantino’s acts resulted in
undue injury to the Municipality of Malungon. 43 Notably, in the course of trial, the
prosecution admitted that it had no proof that unwarranted benefits and advantage
had been given to Norlovanian Corporation.44
Undoubtedly, the standard of culpability imposed by Section 3 of R.A. No. 3019 is
quite high which, in this case, was not hurdled by the evidence presented against
Constantino. Verily, the prosecution failed to satisfy the requisite proof to demonstrate
Constantino’s guilt beyond reasonable doubt. While Constantino should have
exercised more prudence when he transacted with Norlovanian Corporation, he could
not however be held liable for "gross inexcusable negligence" as contemplated in
R.A. No. 3019. Indeed, in the earlier case of Constantino v. Desierto,45the Court had
already made an express finding that petitioner Constantino did not violate the
mandate of Resolution No. 21 but instead merely carried out its directive.
That case was a special civil action for certiorari filed by Constantino to seek the
invalidation of the resolution of the Ombudsman finding him guilty of grave
misconduct prejudicial to the best interest of the service and/or gross neglect of duty,
and on that account, dismissing him from service. The controversy arose from the
same transaction entered into between Constantino and Norlovanian Corporation and
involved the same subject matter as in the case at bar. The administrative complaint
was initiated through a letter-complaint and joint affidavit signed by Vice Mayor
Espinosa and to it was appended a certification signed by the Vice Mayor and
Councilors Suson, Ingay, Asgapo, Espinosa and Octavio.
In exonerating Constantino from the administrative charges, the Court found that the
evidence against him was inadequate to warrant his dismissal from service on the
grounds of grave misconduct, conduct prejudicial to the best interest of the service
and gross neglect of duty. More particularly, we made the following pronouncements:
The explicit terms of Resolution No. 21, Series of 1996 clearly authorized
Mayor Constantino to "lease/purchase one (1) fleet of heavy equipment"
composed of seven (7) generally described units, through a "negotiated
contract." That resolution, as observed at the outset, contained no
parameters as of rate of rental, period of lease, purchase price. Pursuant
thereto, Mayor Constantino, representing the Municipality of Malungon, and
Norberto Lindong, representing the Norlovanian Corporation, executed two
written instruments of the same date and occasion, viz.:
One — an agreement(on a standard printed form) dated Febr[ua]ry 28, 1996
for the lease by the corporation to the municipality of heavy equipment of the
number and description required by Resolution no. 21, and
Two — an undertaking for the subsequent conveyance and transfer of
ownership of the equipment to the municipality at the end of the term of the
lease.
That the Members of the Sangguniang Bayan knew of this "lease/purchase"
is evident from Resolution No. 38, Series of 1996 unanimously enacted by
them shortly after delivery of the equipment. In that resolution they (1)
declared that "the Municipal Government ** has just acquired its fleet of
heavy equipment leased/purchased from the Norlovanian Corporation," and
(2) requested Mayor Constantino "to operate the newly acquired heavy
equipment ** leased/purchase from the Norlovanian Corporation." The
Resolution is consistent with the allegations of Mayor Constantino — which
in any event are not denied by the Councilors or Vice-Mayor Espinosa —
that:
1) the equipment was delivered to the Municipality by Norlovanian
Corporation on February 28, 1996 and duly inspected by Councilors Guilley,
Ruñez, Nallos and Liray, as well as the Municipal Engineer and the
Municipal Treasurer;
2) prior to the delivery of the units, the Vice Mayor and other Members of the
Sanguniang Bayan had opportunity to read the "Lease Agreement" as well
as the "Undertaking" but then raised no objections thereto;
3) neither did they raise any objections (a) at the session of the Municipal
Council on February 29, 1996, when Norberto Lindong explained the terms
of the "negotiated contract" of "lease/purchase," or (b) at the time that the
units were delivered and inspected by designated minicipal officials.
Now, it is germane to advert to the deplorable inaccuracies in the Joint
Affidavit of private respondents (P.L. Espinosa, Suson, Sr., Ingay, W. P.
Espinosa, Octavio, Asgapo) submitted as part of their complaint in the
Ombudsman’s Office. The affidavit contains a clearly distorted version of
Resolution No. 21 of February 22, 1996. In that document of the affiants
described Resolution No. 21 as authorizing Mayor Constantino "to purchase
and acquire ** heavy equipments (sic) to be paid within five (5) years at the
yearly amortization of P2.2 million **." This is a misleading reading of
Resolution No. 21. As the most cursory perusal of that resolution at once
discloses, what the Mayor was thereby empowered to do was "to enter into
a negotiated contract" in the Municipality’s behalf with "interested parties," in
line with the expressed wish of the Municipality to "lease/purchase one (1)
fleet of heavy equipment **" —not simply to "purchase and acquire" said
equipment (as complainant Councilors aver). Neither does Resolution No. 21
state (contrary to complainant’s description of it) that the price shall be "paid
within five (5) years at the yearly amortization of P2.2 million **;" indeed, as
already above stressed, the resolution is completely silent as regards any
terms and conditions of the "negotiated contract" that the Mayor was
assigned to execute in the town’s behalf. Such obvious distortions cannot
but erode the complainant councilors’ credibility and bona fides.
It is also relevant to draw attention to the flagrantly inaccurate statements
and inferences about the Mayor’s "negotiated contract" regarding the heavy
equipment, contained in Resolution No. 47 approved only by four (4)
Members of the Municipal Council at its session of June 6, 1996 (the four (4)
being Councilors Octavio, Espinosa, Asgapo and Ingay). That Resolution
No. 47, it will be recalled, stopped all "rental payment/expenditures relative
to the pool of heavy equipment of the Norlovanian Company." The stoppage
was based on prior resolutions of the Council — allegedly setting down the
terms under which the heavy equipment should be acquired, and which
terms were supposedly violated by the Mayor. but — unaccountably and
again indicative of bad faith, if not malice, on the part of private respondents
— Resolution No. 47 made absolutely no reference to two (2) resolution
which on their face justify the Mayor’s contract with Norlovanian Corporation,
to wit: (1) Resolution No. 21 which, having been enacted after the cited
resolutions, must be deemed to have superseded them, and which, to
repeat, motivated and constitutes the justification for the lease-
purchase agreement entered into by the Mayor and Norlovanian
Corporation, and (2) Resolution No. 38 in which the Councilors not only
expressly aknowledged that "the municipal government ** (had) just
acquired its fleet of heavy equipment leased/purchased from the Norlovanian
Corporation," but also "requested ** (the) Mayor ** to operate the newly
acquired heavy equipment of the municipality leased/purchased from the
Norlovanian Corporation."
In light of the forego[i]ng facts, which appear to the Court to be quite
apparent on the record, it is difficult to perceive how the Office of the
Ombudsman could have arrived at a conclusion of any wrongdoing by
the Mayor in relation to the transaction in question. It is difficult to see
how the transaction between the Mayor and Norlovanian
Corporation — entered into pursuant to Resolution No. 21 — and tacitly
accepted and approved by the town Council through its Resolution No.
38 —could be deemed an infringement of the same Resolution No. 21.
In truth, an examination of the pertinent writings (the resolution, the
two (2) instruments constituting the negotiated contract, and the
certificate of delivery) unavoidably confirms their integrity and
congruity. It is in fine, difficult to see how those pertinent written
instrument, could establish a prima facie case to warrant the
preventive suspension of Mayor Constantino. A person with the most
elementary grasp of the English language would, from merely scanning
those material documents, at once realize that the Mayor had done
nothing but carry out the expressed wishes of the Sangguniang Bayan.
xxxx
The investigator also opined that Resolution No. 21 should be interpreted in
light of other official documents, executed a year earlier. He [Graft
Prosecutor Buena] does not explain why he did not adopt the more obvious
construction of Resolution No. 21 indicated by the elementary doctrine that it
is within the power and prerogative of the town council to repeal its prior
acts, either expressly, or by the passage of essentially inconsistent
resolutions. When the town council passed Resolution No. 21 without
any mention whatever of those prior official documents respecting the
acquisition to heavy equipment, the evident intention was to supersede
them and to have such acquisition governed solely by Resolution No.
21. This conclusion is strongly supported by the fact that the
Sanggunian expressly admitted — in the Second Whereas Clause of its
Resolution No. 21 — that there had been a "failure of bidders to submit
bids despite of two biddings ... public announcement" [sic] — the two
biddings being obviously related to said earlier official acts of the town
council. The conclusion is further bolstered by the fact that the Council
(with full awareness of said "negotiated contract,") and of the delivery
of equipment thereunder, had requested the Mayor to put the
equipment into operation for the town projects. The Court is thus
satisfied that it was in fact the Council’s intention, which it expressed
in clear language, to confer on the Mayor ample discretion to execute a
 "negotiated contract" with any interested party, without regard to any
official acts of the Council prior to Resolution No. 21.
It is also difficult to see why the patent inaccuracies in the affidavit-complaint
and Resolution No. 47 were ignored — as difficult to understand how the
execution of two writings to embody one contract of "lease/purchase" could
be regarded as fatally defective, and even indicative of a criminal conspiracy,
or why said two writings should be interpreted in such a way as to magnify
their seeming inconsistencies. The fundamental and familiar legal
principle — which the Office of the Ombudsman ignored — is that it is
perfectly legitimate for a bilateral contract to be embodied in two or
more separate writings, and that in such an event the writings should
be read and interpreted together in such a way as to eliminate seeming
inconsistencies and render the parties’ intention effectual.
The statement in the appealed Resolution — as to the absence of prior
consent of the Council to the "negotiated contract" executed by Mayor
Constantino and Norlovanian Corporation — flies in the teeth of the
evidence; there is unrebutted proof that the heavy equipment delivered to
the Municipality pursuant to the contract, was inspected by designated
councilors and municipal officers; that shortly thereafter, the negotiated
contract — composed of two documents — was explained and discussed at
the session of the town Council of February 29, 1996; and that afterwards
the Council requested Mayor Constantino to put the equipment into
operation. (Emphasis supplied)46
Although the instant case involves a criminal charge whereas Constantino involved an
administrative charge, still the findings in the latter case are binding herein because
the same set of facts are the subject of both cases. What is decisive is that the issues
already litigated in a final and executory judgment preclude— by the principle of bar
by prior judgment, an aspect of the doctrine of res judicata, and even under the
doctrine of "law of the case," —the re-litigation of the same issue in another action. 47 It
is well established that when a right or fact has been judicially tried and determined
by a court of competent jurisdiction, so long as it remains unreversed, it should be
conclusive upon the parties and those in privity with them. 48 The dictum therein laid
down became the law of the case and what was once irrevocably established as the
controlling legal rule or decision continues to be binding between the same parties as
long as the facts on which the decision was predicated continue to be the facts of the
case before the court. Hence, the binding effect and enforceability of that dictum can
no longer be resurrected anew since such issue had already been resolved and
finally laid to rest, if not by the principle of res judicata, at least by conclusiveness of
judgment.49
It may be true that the basis of administrative liability differs from criminal liability as
the purpose of administrative proceedings on the one hand is mainly to protect the
public service, based on the time-honored principle that a public office is a public
trust. On the other hand, the purpose of the criminal prosecution is the punishment of
crime.50 However, the dismissal by the Court of the administrative case against
Constantino based on the same subject matter and after examining the same crucial
evidence operates to dismiss the criminal case because of the precise finding that the
act from which liability is anchored does not exist.
It is likewise clear from the decision of the Court in Constantino that the level of proof
required in administrative cases which is substantial evidence was not mustered
therein. The same evidence is again before the Court in connection with the appeal in
the criminal case. Ineluctably, the same evidence cannot with greater reason satisfy
the higher standard in criminal cases such as the present case which is evidence
beyond reasonable doubt.
The elementary principle is that it is perfectly legitimate for a bilateral contract to be
embodied in two or more separate writings, and that in such an event the writings
should be read and interpreted together in such a way as to eliminate seeming
inconsistencies and render the intention of the parties effectual. 51 In construing a
written contract, the reason behind and the circumstances surrounding its execution
are of paramount importance to place the interpreter in the situation occupied by the
parties concerned at the time the writing was executed. 52Construction of the terms of
a contract, which would amount to impairment or loss of right, is not favored.
Conservation and preservation, not waiver, abandonment or forfeiture of a right, is the
rule.53 In case of doubts in contracts, the same should be settled in favor of the
greatest reciprocity of interests.54
G.R. No. 154482
Lindong ascribes grave abuse of discretion on the part of respondent court in issuing
the challenged orders. He argues that the Sandiganbayan erred in not holding in
abeyance the execution of judgment against him in light of the pending petition for
review by his co-accused before this Court of the same decision for which he was
convicted. Should the decision be set aside by the Supreme Court, petitioner Lindong
contends, he will be benefited to the extent that there can no longer be any judgment
to legally execute against both himself and Constantino.
The virtual acquittal of Constantino inevitably puts a welcome end to the tribulations
of Lindong. Thus, we grant the petition.
One of the essential elements for violating Section 3(e) of R.A. No. 3019 is that the
respondent is a public officer discharging administrative, judicial or official functions,
or that he or she is a private individual in conspiracy with such public officer. In the
instant case, the essential acquittal of Constantino, as presaged in G.R. No.
140656 and presented in the disquisition, renders an absence in the critical requisite
of a public officer with whom Lindong, the private individual, allegedly conspired to
commit the crime charged.
Hence, we now have before us an incongruous situation where execution of judgment
has been entered against a private person accused with conspiring with a public
officer for violation of the anti-graft law, but at the same time said public officer would
unequivocably be entitled to exoneration had he not died in the meantime. Yet, it is
utterly illogical to absolve Constantino who entered into the contract on behalf of the
government and send the private person to prison.
The case of Marcos v. Sandiganbayan (1st Division)55 is instructive. Here, the Court
granted the motion for reconsideration filed by former First Lady Imelda Marcos and
acquitted her of the charge of violating Section 3(g) of R.A. No. 3019. Her acquittal
was based on the finding that she signed the subject lease agreement not as a public
officer, but as a private person. Thus, the Court found that the first element of the
offense, i.e., that the accused is a public officer, was lacking. However, the acquittal of
the former First Lady was taken in conjunction with the acquittal of the public officer
with whom she was accused.56
The case of Go v. The Fifth Division, Sandiganbayan, et al.57 further elucidates the
matter as illustrated in Marcos, to wit:
x x x [T]he acquittal of the former First Lady should be taken in the context of
the Court’s Decision dated January 29, 1198, in Dans, Jr. v. People, which
the former First Lady sought to reconsider and, finding merit in her motion,
gave rise to the Court’s Resolution in Marcos. In Dans, the Information filed
against the former First Lady and Jose P. Dans, Jr., then Minister of
Transportation and Communications, for violation of Section 3(g) of R[.]A[.]
[No.] 3019, alleged that they were both public officers and, conspiring with
each other, entered into the subject lease agreement covering the LRTA
property with the PGHFI, a private entity, under terms and conditions
manifestly and grossly disadvantageous to the government.
The Court in its original decision affirmed the former First Lady’s conviction
for violation of Section 3(g) of R[.]A[.] [No.] 3019 but acquitted her co-
accused, Dans, Jr., of the said offense. As stated earlier, upon the former
First Lady’s motion for reconsideration, the Court reversed her conviction in
its Resolution in Marcos.
SEC. 11. Effect of appeal by any of several accused.—
(a) An appeal taken by one or more of several accused shall not affect those
who did not appeal, except insofar as the judgment of the appellate court is
favorable and applicable to the latter.
Although the rule states that a favorable judgment shall benefit those who did not
appeal, we have held that a literal interpretation of the phrase "did not appeal" will not
give justice to the purpose of the provision. It should be read in its entirety and should
not be myopically construed so as to defeat its reason, i.e., to benefit an accused who
did not join in the appeal of his co-accused in case where the appellate judgment is
favorable.58
In fact, the Court has at various times applied the foregoing provision without regard
to the filing or non-filing of an appeal by a co-accused, so long as the judgment was
favorable to him. In such cases, the co-accused already withdrew his appeal, 59 failed
to file an appellant’s brief,60 or filed a notice of appeal with the trial court but eventually
withdrew the same.61 Even more, in these cases, all the accused appealed from the
judgment of conviction but for one reason or another, their conviction had already
become final and executory. Nevertheless, the Court still applied to them the
favorable judgment in favor of their co-accused.62 Therefore, we cannot find a reason
to treat Lindong differently, especially so in this case where the public officer accused
of violating the anti-graft law has been acquitted, and the appeal by Lindong was
dismissed on a technicality.
WHEREFORE, the petition in G.R. No. 140656, although meritorious, is DENIED on
the ground of mootness. The petition in G.R. No. 154482 is GRANTED. The
challenged orders of the

It can be gleaned from the entire context of Marcos and Dans that the Sandiganbayan in Criminal Case No. 23433 are NULLIFIED and SET ASIDE. The
reversal of the former First Lady’s conviction was based on the fact that it Sandiganbayan is permanently enjoined from executing said orders.
was later held that she signed the subject lease agreement as a private
person, not a public officer. However, this acquittal should also be taken in
conjunction with the fact that the public officer with whom she had SO ORDERED.
supposedly conspired, her co-accused Dans, had earlier been acquitted. In
other words, the element that the accused is a public officer, was
totally wanting in the former First Lady’s case because Dans, the
public officer with whom she had allegedly conspired in committing
Section 3(g) of R[.]A[.] [No.] 3019, had already been acquitted.
Obviously, the former First Lady could not be convicted, on her own as
a private person, of the same offense. (Emphasis supplied)

It is therefore apparent that in light of the prevailing milieu in the instant case, we
cannot sustain the execution of judgment against Lindong. The reversal of the
decision of the Sandiganbayan in Criminal Case No. 23433 makes it legally absurd to
execute any such judgment against him.

Moreover, Rule 122, Section 11(a) of the Revised Rules of Criminal Procedure
operates in his favor. The Rule provides:
G.R. No. 160876 January 18, 2008
AZUCENA MAGALLANES, EVELYN BACOLOD and HEIRS OF JUDITH
COTECSON, petitioners, vs. SUN YAT SEN ELEMENTARY SCHOOL, PAZ GO,
ELENA CUBILLAN, WILLY ANG GAN TENG, BENITO ANG, and TEOTIMO
TAN, respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:
For our resolution is the instant Petition for Review on Certiorari seeking to reverse
the Resolution of the Court of Appeals (Seventh Division) dated October 29, 2001 in
CA-G.R. SP No. 67068; its Resolution of May 8, 2003 denying the motion for
reconsideration; and its Resolution of October 10, 2003, denying the motion for
reconsideration of the Resolution of May 8, 2003.
The facts of the case are:
Azucena Magallanes, Evelyn Bacolod, Judith Cotecson (represented by her heirs),
petitioners, Grace Gonzales, and Bella Gonzales were all employed as teachers in
the Sun Yat Sen Elementary School in Surigao City.
Paz Go and Elena Cubillan are principals of the said school. Willy Ang Gan Teng and
Benito Ang are its directors, while Teotimo Tan is the school treasurer. They are all
respondents herein.
On May 22, 1994, respondents terminated the services of petitioners. Thus, on
August 3, 1994, they filed with the Sub-Regional Arbitration Branch No. X, National
Labor Relations Commission (NLRC), Butuan City, complaints against respondents
for illegal dismissal, underpayment of wages, payment of backwages, 13 th month pay,
ECOLA, separation pay, moral damages, and attorney’s fees. Likewise, on August 22,
1994, petitioner Cotecson filed a separate complaint praying for the same reliefs.
On June 3, 1995, Labor Arbiter Rogelio P. Legaspi rendered a Decision declaring that
petitioners were illegally dismissed from the service and ordering respondents to
reinstate them to their former or equivalent positions without loss of seniority rights,
and to pay them their backwages, salary differential, 13 th month pay differential, and
service incentive leave benefits "as of June 20, 1995." Respondents were likewise
directed to pay petitioners moral and exemplary damages.
On appeal by respondents, the NLRC, in its Decision dated February 20, 1996,
reversed the Arbiter’s judgment, holding that petitioners are contractual employees
and that respondents merely allowed their contracts to lapse.
Petitioners timely filed a motion for reconsideration, but it was denied by the NLRC in
its Resolution dated April 17, 1996.
Petitioners then filed with the Court of Appeals a petition for certiorari, docketed as
CA-G.R. SP No. 50531.
On October 28, 1999, the Court of Appeals (Special Sixteenth Division) rendered its
Decision,1 the dispositive portion of which reads:
WHEREFORE, the instant petition is GRANTED with respect to petitioners
Cotecson, Bacolod, and Magallanes, the questioned Resolutions of the
NLRC dated February 20 and April 1996 are hereby REVERSED and SET
ASIDE as to them.
The Decision dated July 3, 1995 of the Labor Arbiter is hereby REINSTATED
as to the said petitioners except as to the award of moral and exemplary
damages which is hereby DELETED.
SO ORDERED.
The Court of Appeals (Special Sixteenth Division) ruled that in lieu of reinstatement,
petitioners Cotecson, Bacolod, and Magallanes "shall be entitled to separation pay
equivalent to one month salary and backwages computed from the time of their illegal
dismissal up to the time of the promulgation of its Decision." With respect to Bella
Gonzales and Grace Gonzales, the Court of Appeals found that that they have not
acquired the status of regular employees having rendered only two years of service.
Consequently, their dismissal from the service is valid. Under the Manual of
Regulations for Private Schools, only full-time teachers who have rendered three (3)
years of consecutive service shall be considered permanent.
Respondents filed a motion for reconsideration but it was denied by the appellate
court in its Resolution dated January 13, 2000.
Respondents then filed with this Court a petition for certiorari, docketed as G.R. No.
142270. However, it was dismissed for lack of merit in a Minute Resolution dated April
12, 2000. Their motion for reconsideration was denied with finality by this Court on
July 19, 2000.
Meanwhile, on October 4, 2000, petitioners filed with the Labor Arbiter a motion for
execution of his Decision as modified by the Court of Appeals.
In an Order dated January 8, 2001, the Labor Arbiter computed the petitioners’
monetary awards reckoned from the time of their illegal dismissal in June 1994 up to
October 29, 1999, pursuant to the Decision of the Court of Appeals (Special Sixteenth
Division) in CA-G.R. SP No. 50531. Respondents interposed an appeal to the NLRC
(docketed as NLRC Case No. M-006176-2001), contending that the computation
should only be up to June 20, 1995 (the date indicated in the Labor Arbiter’s
Decision).
In an Order dated March 30, 2001, the NLRC modified the Labor Arbiter’s
computation and ruled that the monetary awards due to petitioners should be
computed from June 1994 up to June 20, 1995.
Petitioners then filed a petition for certiorari with the Court of Appeals, docketed as
CA-G.R. SP No. 67068, raffled off to the Seventh Division. However, in its Resolution
of October 29, 2001, the petition was dismissed outright for their failure to attach to
their petition copies of the pleadings filed with the Labor Arbiter, thus:
No copies of the pleadings filed before the Labor Arbiter appear to have
been attached to the petition in violation of the provisions of Section 1, Rule
65 and Section 3, Rule 46 of the 1997 Rules of Civil Procedure, as
amended, which requires that the petition:
x x x shall be accompanied by a clearly legible duplicate original or
certified true copy of the judgment, order, resolution or ruling
subject thereof, such material portions of the record as are referred
to therein and other documents relevant or pertinent thereto x x x
WHEREFORE, the instant petition is DISMISSED OUTRIGHT pursuant to
Section 3, Rule 46 of the 1997 Rules of Civil Procedure.
SO ORDERED.
Petitioners filed a motion for reconsideration, but they erroneously indicated therein
the case number as CA-G.R. SP No. 50531, instead of CA-G.R. SP No. 67068. Their
error was compounded by stating that the petition was with the Special Sixteenth
Division, instead of the Seventh Division. As a result, the Special Sixteenth Division
issued a Minute Resolution dated April 22, 2002 which merely noted the motion, thus:
The petitioners’ motion for reconsideration dated November 22, 2001 and
filed by registered mail on November 26, 2001 is merely noted since there
was no October 29, 2001 resolution that was issued in this case which the
motion for reconsideration seeks to be reconsidered.
On realizing their mistake, petitioners then filed with the Seventh Division a Motion to
Transfer The Case to it.
In a Resolution promulgated on May 8, 2003, the Seventh Division denied petitioners’
Motion To Transfer The Case on the ground, among others, that the motion is "non-
existent" since it does not bear the correct case number, hence, could not be attached
to the records of CA-G.R. SP No. 67068.
Unfazed, petitioners filed a motion for reconsideration, but it was denied by the
Seventh Division in its Resolution of October 10, 2003.
At first glance, the petition before us appears to be a futile attempt to revive an extinct
motion denied by the appellate court (Seventh Division) by reason of technicality. But
in the interest of speedy administration of justice, we should not only delve in
technicalities. We shall then address these two issues: (1) whether the Court of
Appeals (Seventh Division) erred in holding that affixing a wrong docket number on a
motion renders it "non-existent;" and (2) whether the issuance by the NLRC of the
Order dated March 30, 2001, amending the amounts of separation pay and
backwages, awarded by the Court of Appeals (Sixteenth Division) to petitioners and
computed by the Labor Arbiter, is tantamount to grave abuse of discretion amounting
to lack or excess of jurisdiction.
On the first issue, the Court of Appeals (Seventh Division) is correct when it ruled that
petitioners’ motion for reconsideration of its Resolution dated October 29, 2001 in CA-
G.R. SP No. 67068 is "non-existent." Petitioners’ counsel placed a wrong case
number in their motion, indicating CA-G.R. SP No. 50531 (Special Sixteenth Division)
instead of CA-G.R. SP No. 50531 (Seventh Division), the correct case number.
In Llantero v. Court of Appeals,2 we ruled that where a pleading bears an erroneous
docket number and thus "could not be attached to the correct case," the said pleading
is, for all intents and purposes, "non-existent." As aptly stated by the Special
Sixteenth Division, it has neither the duty nor the obligation to correct the error or to
transfer the case to the Seventh Division. In Mega Land Resources and Development
Corporation v. C-E Construction Corporation,3 which likewise involves a wrong docket
number in a motion, we ruled that the duty to correct the mistake falls solely on the
party litigant whose fault caused the anomaly. To hold otherwise would be to impose
upon appellate courts the burden of being nannies to appellants, ensuring the
absence of pitfalls that hinder the perfection of petitions and appeals. Strictly
speaking, it is a dogma that the mistake or negligence of counsel binds the
clients4 and appellate courts have no share in that burden.
However, we opt for liberality in the application of the rules to the instant case in light
of the following considerations. First, the rule that negligence of counsel binds the
client may be relaxed where adherence thereto would result in outright deprivation of
the client’s liberty or property or where the interests of justice so require. 5 Second,
this Court is not a slave of technical rules, shorn of judicial discretion – in rendering
justice, it is guided by the norm that on the balance, technicalities take a backseat
against substantive rights. Thus, if the application of the rules would tend to frustrate
rather than promote justice, it is always within this Court’s power to suspend the rules
or except a particular case from its application.6
This case involving a labor dispute has dragged on for over a decade now. Petitioners
have waited too long for what is due them under the law. One of the original
petitioners, Judith Cotecson, died last September 28, 2003 and has been substituted
by her heirs. It is time to write finis to this controversy. The Labor Code was
promulgated to promote the welfare and well-being of the working man. Its spirit and
intent mandate the speedy administration of justice, with least attention to
technicalities but without sacrificing the fundamental requisites of due process.7
We recall that in CA-G.R. SP No. 50531, the Court of Appeals (Special Sixteenth
Division) held that petitioners Cotecson, Bacolod, and Magallanes "shall be entitled to
separation pay equivalent to one month salary and backwages computed from the
time of their illegal dismissal up to the time of the promulgation of this
decision." This Decision was promulgated on October 28, 1999. The respondents’
motion for reconsideration was denied by the Court of Appeals (Former Special
Sixteenth Division) on January 13, 2000. On April 12, 2000, this Court dismissed
respondents’ petition for certiorari, docketed as G.R. No. 142270, and denied their
motion for reconsideration with finality as early as July 19, 2000.
Clearly, the Decision in CA-G.R. SP No. 50531 had long become final and executory.
The Labor Arbiter computed the monetary awards due to petitioners corresponding to
the period from June 1994 to October 28, 1999, in accordance with the Decision of
the Court of Appeals (Special Sixteenth Division). The award for backwages and
money claims is in the total sum of P912,086.15.
It does not escape our attention that upon respondents’ appeal from the Labor
Arbiter’s Order computing the benefits due to petitioners, the NLRC modified the
final and executory Decision of the Court of Appeals (Special Sixteenth
Division) when it decreed that the monetary award due to petitioners should be
computed up to June 20, 1995 only (not October 28, 1999), thus, amounting to a
lesser amount of P147,673.16.
We sustain petitioners’ contention that the NLRC, in modifying the award of the Court
of Appeals, committed grave abuse of discretion amounting to lack or excess of
jurisdiction. Quasi-judicial agencies have neither business nor power to modify
or amend the final and executory Decisions of the appellate courts. Under the
principle of immutability of judgments, any alteration or amendment which
substantially affects a final and executory judgment is void for lack of jurisdiction.8 We
thus rule that the Order dated March 30, 2001 of the NLRC directing that the
monetary award should be computed from June 1994, the date petitioners were
dismissed from the service, up to June 20, 1995 only, is void.
WHEREFORE, we GRANT the petition. The challenged Resolutions dated October
29, 2001, May 8, 2003, and October 10, 2003 in CA-G.R. SP No. 67068
are REVERSED. The Order of the NLRC dated March 30, 2001 in NLRC Case No.
M-006176-2001 is SET ASIDE. The Order of the Labor Arbiter dated January 8, 2001
is REINSTATED.
SO ORDERED.
RACHEL BEATRIZ RUIVIVAR, G.R. No. 165012
Petitioner, Present:
- versus - QUISUMBING, J., Chairperson,
OFFICE OF THE OMBUDSMAN CARPIO-MORALES,
and DR. CONNIE BERNARDO, TINGA,
Respondents. VELASCO, JR., and
Brion, jj.
Promulgated:
September 16, 2008
x-----------------------------------------------------------------------------------------------------------------------------
Before us is the petition for review on certiorari under Rule 45 of the Rules of
Court commenced by Rachel Beatriz Ruivivar (petitioner). It seeks to set
aside:
(a) the Decision of the Court of Appeals (CA)1 dated May 26,
20042 dismissing the petition for certiorari filed by the petitioner and affirming
the Decision dated November 4, 20023(November 4, 2002 Decision) and the
Order dated February 12, 20034 (February 12, 2003 Order) of the Office of
the Ombudsman (Ombudsman); the Ombudsman's Decision and Order
found the petitioner administratively liable for discourtesy in the course of
official duties as Chairperson of the Land Transportation Office (LTO)
Accreditation Committee on Drug Testing, and imposed on her the penalty of
reprimand; and
(b) the CA Resolution dated August 20, 2004 5 which denied the petitioner's
subsequent motion for reconsideration.
THE ANTECEDENTS
On May 24, 2002, the private respondent filed an Affidavit-Complaint
charging the petitioner before the Ombudsman of serious misconduct,
conduct unbecoming of a public official, abuse of authority, and violations of
the Revised Penal Code and of the Graft and Corrupt Practices Act.6 The
private respondent stated in her complaint that she is the President of the
Association of Drug Testing Centers (Association) that conducts drug testing
and medical examination of applicants for driver’s license. In this capacity,
she went to the Land Transportation Office (LTO) on May 17, 2002 to meet
with representatives from the Department of Transportation and
Communication (DOTC) and to file a copy of the Association’s request to lift
the moratorium imposed by the LTO on the accreditation of drug testing
clinics. Before proceeding to the office of the LTO Commissioner for these
purposes, she passed by the office of the petitioner to conduct a follow up on
the status of her company’s application for accreditation. While there, the
petitioner -- without provocation or any justifiable reason and in the presence
of other LTO employees and visitors -- shouted at her in a very arrogant and
insulting manner, hurled invectives upon her person, and prevented her from
entering the office of the LTO Commissioner. The petitioner also accused the
private respondent of causing intrigues against her at the DOTC. To prove
her allegations, the private respondent presented the affidavits of three
witnesses.7
The Ombudsman furnished the petitioner a copy of the Complaint-Affidavit
and required her to file her counter-affidavit. In her Counter-Affidavit, the
petitioner denied the private respondent's allegations and claimed that she
merely told the private respondent to bring her request to the LTO Assistant
Secretary who has the authority to act on the matter, not to the DOTC. 8 The
petitioner also claimed that the private respondent also asked her to lift the
moratorium and pressured her to favorably act on the private respondent’s
application for accreditation. To prove these claims, petitioner presented the
affidavits of her two witnesses.9
The Ombudsman called for a preliminary conference that the parties
attended. The petitioner manifested her intent to submit the case for
resolution. The Ombudsman then directed the parties to submit their
respective memoranda. Only the petitioner filed a Memorandum where she
stressed that the complaint is not properly substantiated for lack of
supporting affidavits and other evidence.10
The Office of the Ombudsman
The Ombudsman rendered the November 4, 2002 Decision based on the
pleadings and the submitted affidavits. It found the petitioner administratively
liable for discourtesy in the course of her official functions and imposed on
her the penalty of reprimand.
The Ombudsman ruled that the petitioner's verbal assault on the private
respondent was sufficiently established by the affidavits of the private
respondent’s witnesses who had not been shown by evidence to have any
motive to falsely testify against petitioner. In contrast, the petitioner’s
witnesses, as her officemates, were likely to testify in her favor. Given that
the incident happened at the LTO and that the petitioner had authority to act
on the private respondent’s application for accreditation, the Ombudsman
also found that the petitioner's ascendancy over the private respondent
made the petitioner’s verbal assault more likely. The Ombudsman concluded
that such verbal assault might have been caused by the private respondent’s
decision to air the LTO moratorium issue (on accreditation for drug testing
centers) before the DOTC; this decision also negated the petitioner’s
defense that the case was filed to exert pressure on her to act favorably on
private respondent’s application for accreditation.
The petitioner filed a Motion for Reconsideration arguing that she was
deprived of due process because she was not furnished copies of the
affidavits of the private respondent’s witnesses.11 In the same motion,
petitioner questioned the Ombudsman’s disregard of the evidence she had
presented, and disagreed with the Ombudsman’s statement that she has
ascendancy over the private respondent.
The Ombudsman responded to the petitioner’s motion for reconsideration by
ordering that the petitioner be furnished with copies of the affidavits of the
private respondent’s witnesses. 12 The Ombudsman’s order also contained
the "directive to file, within ten (10) days from receipt of this Order, such
pleading which she may deem fit under the circumstances."
Records show that the petitioner received copies of the private respondent’s
witnesses’ affidavits but she did not choose to controvert these affidavits or
to file a supplement to her motion for reconsideration. She simply maintained
in her Manifestation that her receipt of the affidavits did not alter the fact the
she was deprived of due process nor cure the irregularity in the November 4,
2002 Decision.
Under these developments, the Ombudsman ruled that the petitioner was
not denied due process. It also maintained the findings and conclusions in its
November 4, 2002 Decision, declaring them supported by substantial
evidence.13
The Court of Appeals
The petitioner’s chosen remedy, in light of the Ombudsman ruling, was to file
a petition for certiorari (docketed as CA-GR SP No. 77029) with the CA. In its
Decision dated May 26, 2004, the CA dismissed the petition on the ground
that the petitioner used the wrong legal remedy and failed to exhaust
administrative remedies before the Ombudsman.14 The CA said:
"… as held in Fabian v. Desierto, a party aggrieved by the decision of the
Office of the Ombudsman may appeal to this Court by way of a petition for
review under Rule 43. As succinctly held by the Supreme Court:
‘As a consequence of our ratiocination that Section 27 of Republic Act No.
6770 should be struck down as unconstitutional, and in line with regulatory
philosophy adopted in appeals from quasi-judicial agencies in the 1997
Revised Rules of Civil Procedure, appeals from decision of the Office of the
Ombudsman in administrative disciplinary cases should be taken to the CA
under the provisions of Rule 43.’
Even assuming, argumentatis, that public respondent committed grave
abuse of discretion, such fact is not sufficient to warrant the issuance of the
extraordinary writ of certiorari, as was held in Union of Nestle Workers
Cagayan de Oro Factory vs. Nestle Philippines, Inc.:
‘x x x .For certiorari to prosper, it is not enough that the trial court committed
grave abuse of discretion amounting to lack or excess of jurisdiction, as
alleged by petitioners. The requirement that there is no appeal nor any plain,
speedy and adequate remedy in the ordinary course of law must likewise be
satisfied. x x x’
Petitioner was given the opportunity by public respondent to rebut the
affidavits submitted by private respondent, in its Order dated January 17,
2003. Petitioner, therefore, had a speedy and adequate remedy, but she
failed to avail thereof for reasons only known to her.
xxx
Moreover, instead of filing a petition for review under Rule 43, she filed the
present petition for certiorari under Rule 65. In view of our above disquisition,
We find no further reason to discuss the merits of the case. Petitioner having
resorted to the wrong remedy, the dismissal of the present petition is in
order.15
After the CA’s negative ruling on the motion for reconsideration, the
petitioner filed the present petition for review on certiorari with this Court,
raising the following issues:
THE ISSUES
I. WHETHER OR NOT A PETITION FOR CERTIORARI UNDER RULE 65 IS
THE PROPER AND ONLY AVAILABLE REMEDY WHEN THE PENALTY
IMPOSED IN AN ADMINISTRATIVE COMPLAINT WITH THE OFFICE OF
THE OMBUDSMAN IS CONSIDERED FINAL AND UNAPPEALABLE.
II. WHETHER OR NOT PETITIONER WAS DENIED OF (sic) THE
CONSTITUTIONAL GUARANTEE TO DUE PROCESS WHEN SHE WAS
DEPRIVED OF HER RIGHT TO CONFRONT THE EVIDENCE SUBMITTED
AGAINST HER BEFORE THE DECISION OF THE OFFICE OF THE
OMBUDSMAN WAS RENDERED.
On the first issue, the petitioner argued that the ruling in Fabian v.
Desierto16 can only be applied when the decision of the Ombudsman is
appealable. The ruling in Fabian is not applicable to the Ombudsman rulings
under the express provisions of Section 27 of Republic Act (R.A.) No.
677017 and Section 7, Rule III of Administrative Order (A.O.) No. 7 18 since the
penalty of reprimand imposed is final and unappealable. The appropriate
remedy, under the circumstances, is not the appellate remedy provided by
Rule 43 of the Rules of Court but a petition for certiorari under Rule 65 of
these Rules.
On the second issue, the petitioner maintained that she was denied due
process because no competent evidence was presented to prove the charge
against her. While she was belatedly furnished copies of the affidavits of the
private respondent’s witnesses, this was done after the Ombudsman had
rendered a decision. She posited that her belated receipt of the affidavits
and the subsequent proceedings before the Ombudsman did not cure the
irregularity of the November 4, 2002 Decision as she was not given the
opportunity to refute the private respondent’s evidence before the
Ombudsman’s decision was rendered. The petitioner advanced the view that
on this ground alone, she should be allowed to question the arbitrary
exercise of the Ombudsman’s discretion.
The Ombudsman’s Comment,19 filed through the Office of the Solicitor
General, maintained that the proper remedy to assail the November 4, 2002
Decision and February 12, 2003 Order was to file a petition for review under
Rule 43 as laid down in Fabian,20 and not the petition for certiorari that the
petitioner filed. The Ombudsman argues further that since no petition for
review was filed within the prescribed period (as provided under Section 4,
Rule 43),21 the November 4, 2002 Decision and February 12, 2003 Order
had become final and executory. The Ombudsman maintained, too, that its
decision holding the petitioner administratively liable is supported by
substantial evidence; the petitioner’s denial of the verbal assault cannot
prevail over the submitted positive testimony. The Ombudsman also
asserted that the petitioner was not denied due process as she was given
the opportunity to be heard on the affidavits that were belatedly furnished her
when she was directed to "file any pleading as she may consider fit."
The private respondent shared the positions of the Ombudsman in her
Comment.22 Both the Office of the Solicitor General and the private
respondent also asserted the doctrine that factual findings of administrative
agencies should be given great respect when supported by substantial
evidence.
We initially denied the petition in our Resolution dated December 12, 2005
for the petitioner’s failure to comply with our Resolutions dated March 30,
2005 and April 25, 2005. However, we reconsidered the denial in a
subsequent Resolution (dated February 27, 2006)23 and reinstated the
petition on the petitioner’s motion for reconsideration after she complied with
our directives. We required the parties to submit their respective memoranda
where they reiterated the positions presented in their previous submissions.
THE COURT’S RULING
We deny the Petition.
While we find that the Court of Appeals erred in its ruling on the appropriate
mode of review the petitioner should take, we also find that the appellate
court effectively ruled on the due process issue raised – the failure to provide
the petitioner the affidavits of witnesses - although its ruling was not directly
expressed in due process terms. The CA’s finding that the petitioner failed to
exhaust administrative remedies (when she failed to act on the affidavits that
were belatedly furnished her) effectively embodied a ruling on the due
process issue at the same time that it determined the propriety of the petition
for certiorari that the CA assumed arguendo to be the correct remedy.
Under this situation, the error in the appellate court’s ruling relates to a
technical matter – the mode of review that the petitioner correctly took but
which the CA thought was erroneous. Despite this erroneous conclusion, the
CA nevertheless fully reviewed the petition and, assuming it arguendo to be
the correct mode of review, also ruled on its merits. Thus, while it erred on
the mode of review aspect, it correctly ruled on the exhaustion of
administrative remedy issue and on the due process issue that the
exhaustion issue implicitly carried. In these lights, the present petition
essentially has no merit so that its denial is in order.
The Mode of Review Issue
The case of Fabian v. Desierto 24 arose from the doubt created in the
application of Section 27 of R.A. No. 6770 (The Ombudsman’s Act) and
Section 7, Rule III of A.O. No. 7 (Rules of Procedure of the Office of the
Ombudsman) on the availability of appeal before the Supreme Court to
assail a decision or order of the Ombudsman in administrative cases. In
Fabian, we invalidated Section 27 of R.A. No. 6770 (and Section 7, Rule III
of A.O. No. 7 and the other rules implementing the Act) insofar as it provided
for appeal by certiorari under Rule 45 from the decisions or orders of the
Ombudsman in administrative cases. We held that Section 27 of R.A. No.
6770 had the effect, not only of increasing the appellate jurisdiction of this
Court without its advice and concurrence in violation of Section 30, Article VI
of the Constitution; it was also inconsistent with Section 1, Rule 45 of the
Rules of Court which provides that a petition for review on certiorari shall
apply only to a review of "judgments or final orders of the Court of Appeals,
the Sandiganbayan, the Court of Tax Appeals, the Regional Trial Court, or
other courts authorized by law."25 We pointedly said:
As a consequence of our ratiocination that Section 27 of Republic Act No.
6770 should be struck down as unconstitutional, and in line with the
regulatory philosophy adopted in appeals from quasi-judicial agencies in the
1997 Revised Rules of Civil Procedure, appeals from decisions of the Office
of the Ombudsman in administrative disciplinary cases should be taken to
the CA under the provisions of Rule 43.26
We restated this doctrine in several cases27 and further elaborated on the
recourses from Ombudsman actions in other cases we have decided since
then. In Lapid v. CA, we explained that an appeal under Rule 43 to the CA
only applies to administrative cases where the right to appeal is granted
under Section 27 of R.A. No. 6770. 28 In Lopez v. CA29 and Herrera v.
Bohol,30 we recognized that no appeal is allowed in administrative cases
where the penalty of public censure, reprimand, suspension of not more than
one month, or a fine equivalent to one month salary, is imposed. We pointed
out that decisions of administrative agencies that are declared by law to be
final and unappealable are still subject to judicial review if they fail the test of
arbitrariness or upon proof of gross abuse of discretion;31 the complainant’s
legal recourse is to file a petition for certiorari under Rule 65 of the Rules of
Court, applied as rules suppletory to the Rules of Procedure of the Office of
the Ombudsman.32 The use of this recourse should take into account the last
paragraph of Section 4, Rule 65 of the Rules of Court – i.e., the petition shall
be filed in and be cognizable only by the CA if it involves the acts or
omissions of a quasi-judicial agency, unless otherwise provided by law or by
the Rules.33
In the present case, the Ombudsman’s decision and order imposing the
penalty of reprimand on the petitioner are final and unappealable. Thus, the
petitioner availed of the correct remedy when she filed a petition for certiorari
before the CA to question the Ombudsman’s decision to reprimand her.
The Due Process Issue
The CA Decision dismissed the petition for certiorari on the ground that the
petitioner failed to exhaust all the administrative remedies available to her
before the Ombudsman. This ruling is legally correct as exhaustion of
administrative remedies is a requisite for the filing of a petition
for certiorari.34 Other than this legal significance, however, the ruling
necessarily carries the direct and immediate implication that the petitioner
has been granted the opportunity to be heard and has refused to avail of this
opportunity; hence, she cannot claim denial of due process. In the words of
the CA ruling itself: "Petitioner was given the opportunity by public
respondent to rebut the affidavits submitted by private respondent. . . and
had a speedy and adequate administrative remedy but she failed to avail
thereof for reasons only known to her."
For a fuller appreciation of our above conclusion, we clarify that although
they are separate and distinct concepts, exhaustion of administrative
remedies and due process embody linked and related principles. The
"exhaustion" principle applies when the ruling court or tribunal is not given
the opportunity to re-examine its findings and conclusions because of an
available opportunity that a party seeking recourse against the court or the
tribunal’s ruling omitted to take.35 Under the concept of "due process," on the
other hand, a violation occurs when a court or tribunal rules against a party
without giving him or her the opportunity to be heard.36 Thus, the exhaustion
principle is based on the perspective of the ruling court or tribunal, while due
process is considered from the point of view of the litigating party against
whom a ruling was made. The commonality they share is in the same
"opportunity" that underlies both. In the context of the present case, the
available opportunity to consider and appreciate the petitioner’s counter-
statement of facts was denied the Ombudsman; hence, the petitioner is
barred from seeking recourse at the CA because the ground she would
invoke was not considered at all at the Ombudsman level. At the same time,
the petitioner – who had the same opportunity to rebut the belatedly-
furnished affidavits of the private respondent’s witnesses – was not denied
and cannot now claim denial of due process because she did not take
advantage of the opportunity opened to her at the Ombudsman level.
The records show that the petitioner duly filed a motion for reconsideration
on due process grounds (i.e., for the private respondent’s failure to furnish
her copies of the affidavits of witnesses) and on questions relating to the
appreciation of the evidence on record.37 The Ombudsman acted on this
motion by issuing its Order of January 17, 2003 belatedly furnishing her with
copies of the private respondent’s witnesses, together with the "directive to
file, within ten (10) days from receipt of this Order, such pleading which she
may deem fit under the circumstances."38
present case is deemed final and unappealable pursuant to Section 27 of
Republic Act 6770, and Section 7, Rule III of Administrative Order No. 07.
Despite the clear provisions of the law and the rules, the respondent herein
was given the opportunity not normally accorded, to present her side, but
she opted not to do so which is evidently fatal to her cause." [emphasis
supplied].
Under these circumstances, we cannot help but recognize that the
petitioner’s cause is a lost one, not only for her failure to exhaust her
available administrative remedy, but also on due process grounds. The law
can no longer help one who had been given ample opportunity to be heard
but who did not take full advantage of the proffered chance.
WHEREFORE, premises considered, we hereby DENY the petition. This
denial has the effect of confirming the finality of the Decision of the
Ombudsman dated November 4, 2002 and of its Order dated February 12,
2003.
SO ORDERED.

Given this opportunity to act on the belatedly-furnished affidavits, the

petitioner simply chose to file a "Manifestation" where she took the position
that "The order of the Ombudsman dated 17 January 2003 supplying her
with the affidavits of the complainant does not cure the 04 November 2002
order," and on this basis prayed that the Ombudsman’s decision "be
reconsidered and the complaint dismissed for lack of merit."39

For her part, the private respondent filed a Comment/Opposition to Motion

for Reconsideration dated 27 January 2003 and prayed for the denial of the
petitioner’s motion.

In the February 12, 2003 Order, the Ombudsman denied the petitioner’s
motion for reconsideration after finding no basis to alter or modify its
ruling.40 Significantly, the Ombudsman fully discussed in this Order the due
process significance of the petitioner’s failure to adequately respond to the
belatedly-furnished affidavits. The Ombudsman said:

"Undoubtedly, the respondent herein has been furnished by this Office with
copies of the affidavits, which she claims she has not received. Furthermore,
the respondent has been given the opportunity to present her side relative
thereto, however, she chose not to submit countervailing evidence or
argument. The respondent, therefore (sic), cannot claim denial of due
process for purposes of assailing the Decision issued in the present case.
On this score, the Supreme Court held in the case of People v. Acot, 232
SCRA 406, that "a party cannot feign denial of due process where he had
the opportunity to present his side". This becomes all the more important
since, as correctly pointed out by the complainant, the decision issued in the
G.R. No. 202877, December 09, 2015
NARRA NICKEL MINING AND DEVELOPMENT CORPORATION, TESORO
MINING AND DEVELOPMENT, INC., AND MCARTHUR MINING,
INC., Petitioners, v. REDMONT CONSOLIDATED MINES
CORPORATION, Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated February 23,
2012 and the Resolution3 dated July 27, 2012 of the Court of Appeals (CA) in CA-
G.R. SP No. 120409, which affirmed the Decision4 dated April 6, 2011 and the
Resolution5 dated July 6, 2011 of the Office of the President (OP) in O.P. Case No.
10-E-229 and, among others, ordered the cancellation and/or revocation of the
Financial or Technical Assistance Agreement6 (FTAA) executed between the Republic
of the Philippines (Republic) and herein petitioners Narra Nickel Mining and
Development Corporation, Tesoro Mining and Development, Inc., and Me Arthur
Mining, Inc.
The Facts
On November 8, 2006, respondent Redmont Consolidated Mines Corporation
(Redmont) filed an Application for an Exploration Permit7 (EP) over mining areas
located in the Municipalities of Rizal, Bataraza, and Narra, Palawan. After an inquiry
with the Department of Environment and Natural Resources (DENR), Redmont
learned that said areas were already covered by existing Mineral Production Sharing
Agreements (MPSA) and an EP, which were initially applied for by petitioners'
respective predecessors-in-interest with the Mines and Geosciences Bureau (MGB),
Region IV-B, Office of the DENR.8
In particular, petitioner Narra Nickel Mining and Development Corporation (Narra
Nickel) acquired the application of MPSA-IV-I-12, covering an area of 3,277 hectares
(ha.) in Barangays Calategas and San Isidro, Narra, Palawan, from Alpha Resources
and Development Corporation and Patricia Louise Mining and Development
Corporation. On March 30, 2006, or prior to Redmont's EP application, Narra Nickel
had converted its MPSA into an FTAA application, denominated as AFTA-IVB-07. 9
For its part, petitioner Tesoro Mining and Development, Inc. (Tesoro) acquired the
application of MPSA-AMA-IVB-154 (formerly EPA-IVB-47), covering an area of 3,402
has. in Barangays Malinao and Princesa Urduja, Narra, Palawan, from Sara Marie
Mining, Inc. (SMMI). Similar to Narra Nickel, Tesoro sought the conversion of its
MPSA into an FTAA, but its application therefor, denominated as AFTA-IVB-08, was
filed subsequent to Redmont's EP application, or sometime in May 2007.10
In the same vein, petitioner McArthur Mining, Inc. (McArthur) acquired the application
of MPSA-AMA-IVB-153, as well as EPA-IVB-44, covering the areas of 1,782 has. and
3,720 has. in Barangays Sumbiling and Malatagao, Bataraza, Palawan, respectively,
from Madridejos Mining Corporation, an SMMI assignee. McArthur also filed an
application for FTAA conversion in May 2007, denominated as AFTA-IVB-09.11
Upon the recommendation of then DENR Secretary Jose L. Atienza, Jr., through a
memorandum12 dated November 9, 2009, petitioners' FTAA applications were all
approved on April 5, 2010. Consequently, on April 12, 2010, the Republic -
represented by then Executive Secretary Leandro R. Mendoza, acting by authority of
then President Gloria Macapagal-Arroyo - and petitioners executed an
FTAA13 covering the subject areas, denominated as FTAA No. 05-2010-IVB
(MIMAROPA).14
Prior to the grant of petitioners' applications for FTAA conversion, and the execution
of the above-stated FTAA, Redmont filed on January 2, 2007 three (3) separate
petitions15 for the denial of petitioners' respective MPSA and/or EP applications before
the Panel of Arbitrators (POA) of the DENR-MGB, docketed as DENR Case Nos.
2007-01,16 2007-02,17 and 2007-03.18 Redmont's primary argument was that
petitioners were all controlled by their common majority stockholder, MBMI
Resources, Inc. (MBMI) - a 100% Canadian-owned corporation19 - and, thus,
disqualified from being grantees of MPSAs and/or EPs. The matter essentially
concerning the propriety of denying petitioners' MPSAs and/or EPs in view of their
nationality had made it all the way to this Court, and was docketed as G.R. No.
195580.20 In the Court's April 21, 2014 Decision,21 petitioners were declared to be
foreign corporations under the application of the "Grandfather Rule." Petitioners
moved for the reconsideration of the said Decision, which was, however, denied in the
Court's Resolution dated January 28, 2015.
Meanwhile, Redmont separately sought the cancellation and/or revocation of the
executed FTAA through a Petition 22 dated May 7, 2010 (May 7, 2010 Petition) filed
before the Office of the President (OP), docketed as O.P. Case No. 10-E-229.
Redmont asserted, among others, that the FTAA was highly anomalous and irregular,
considering that petitioners and their mother company, MBMI, have a long history of
violating and circumventing the Constitution and other laws, due to their questionable
activities in the Philippines and abroad.23
Petitioners opposed Redmont's petition through a motion to dismiss, contending that:
(a) there is no rule or law which grants an appeal from a memorandum of a
department secretary; (b) the appeal was filed beyond the reglementary period; (c)
the appeal was not perfected because copies of the appeal were not properly served
on them; and (d) Redmont is not a real party-in-interest.24
The OP Ruling
In a Decision25 dated April 6, 2011, the OP granted Redmont's petition. It declared that
the OP has the authority to cancel the FTAA because the grant of exclusive power to
the President of the Philippines to enter into agreements, including FTAAs under
Republic Act No. (RA) 7942,26 or the "Philippine Mining Act of 1995," carries with it the
authority to cancel the same. 27 Thus, finding, inter alia, that petitioners
misrepresented that they were Filipino corporations qualified to engage in mining
activities,28 the OP cancelled and/or revoked the said FTAA, and, in turn, gave due
course to Redmont's EP application.29

Dissatisfied, petitioners appealed to the CA.30
The CA Ruling
In a Decision31 dated February 23, 2012, the CA affirmed the OP Ruling. It found no
procedural error in the OP's action on the FTAA, holding that it was done in
accordance with the President's power of control over the executive
departments.32 As to its merits, the CA ruled that the Republic, as represented by the
OP, had the right to cancel the FTAA, even without judicial permission, because
paragraph a (iii), Section 17.233 thereof provides that such agreement may be
cancelled by either party on the ground of "any intentional and materially false
statement or omission of facts by a [p]arty." 34 Accordingly, it sustained the OP's finding
that petitioners committed misrepresentations which warranted the cancellation
and/or revocation of the FTAA.35
Unperturbed, petitioners filed on March 14, 2012 a motion for reconsideration, 36 which
was denied in a Resolution37 dated July 27, 2012; hence, this petition.
The Issue Before the Court
The main issue for the Court's resolution is whether or not the CA correctly affirmed
on appeal the OP's cancellation and/or revocation of the FTAA.
The Court's Ruling
The petition is meritorious.
I. ON JURISDICTION.
It is a fundamental rule that the question of jurisdiction may be tackled motu
proprio on appeal even if none of the parties raised the same. 38 The reason for the
rule is that a court without jurisdiction cannot render a valid judgment.39
Cast against this light, the Court finds that the CA improperly took cognizance of the
case on appeal under Rule 43 of the Rules of Court for the reason that the OP's
cancellation and/or revocation of the FTAA was not one which could be classified as
an exercise of its quasi-judicial authority, thus negating the CA's jurisdiction over the
case. The jurisdictional parameter that the appeal be taken against a judgment,
final order, resolution or award of a "quasi-judicial agency in the exercise of its
quasi-judicial functions" is explicitly stated in Section 1 of the said Rule:
Rule 43
Appeals from the Court of Tax Appeals and Quasi-Judicial Agencies to the Court of
Appeals
Section 1. Scope. — This Rule shall apply to appeals from judgments or final orders
of the Court of Tax Appeals and from awards, judgments, final orders or resolutions of
or authorized by any quasi-judicial agency in the exercise of its quasi-judicial
functions. Among these agencies are the Civil Service Commission, Central Board of
Assessment Appeals, Securities and Exchange Commission, Office of the
President, Land Registration Authority, Social Security Commission, Civil Aeronautics
Board, Bureau of Patents, Trademarks and Technology Transfer, National
Electrification Administration, Energy Regulatory Board, National Telecommunications
Commission, Department of Agrarian Reform under Republic Act No. 6657,
Government Service Insurance System, Employees Compensation Commission,
Agricultural Inventions Board, Insurance Commission, Philippine Atomic Energy
Commission, Board of Investments, Construction Industry Arbitration Commission,
and voluntary arbitrators authorized by law. (Emphases and underscoring supplied)
Quasi-judicial or administrative adjudicatory power is the power of the
administrative agency to adjudicate the rights of persons before it. The
administrative body exercises its quasi-judicial power when it performs in a judicial
manner an act which is essentially executive or administrative in nature, where the
power to act in such manner is incidental to or reasonably necessary for the
performance of the executive or administrative duty entrusted to it.40
"'Adjudicate' as commonly or popularly understood, means to adjudge, arbitrate,
judge, decide, determine, resolve, rule on, or settle. The dictionary defines the term
as 'to settle finally (the rights and duties of parties to a court case) on the merits of
issues raised: x x x to pass judgment on: settle judicially: x x x act as judge.'" 41 "In the
legal sense, 'adjudicate' means: '[t]o settle in the exercise of judicial authority. To
determine finally. Synonymous with adjudge in its strictest sense;' and 'adjudge'
means: '[t]o pass on judicially, to decide, settle, or decree, or to sentence or condemn,
x x x. Implies a judicial determination of a fact, and the entry of a judgment.'"42
The OP's cancellation and/or revocation of the FTAA is obviously not an
"adjudication" in the sense above-described. It cannot be likened to the judicial
function of a court of justice, or even a quasi-judicial agency or office. The OP - at the
instance of Redmont at that - was exercising an administrative function pursuant to
the President's authority43 to invoke the Republic's right under paragraph a (iii),
Section 17.2 of the FTAA which reads:
17.2 Termination
a. Grounds. This Agreement may be terminated, after due process, for
any of the following causes:
xxxx
iii. any intentional and materially false statement or omission of facts by a Party;44
To contextualize the exercise, a brief discussion on the nature and legal parameters
of an FTAA is apropos.
The basis for the State, through the President, to enter into an FTAA with another
contracting party is found in the fourth paragraph of Section 2, Article XII of the 1987
Constitution:
Section 2. x x x.
xxxx
The President may enter into agreements with foreign-owned corporations involving
either technical or financial assistance for large-scale exploration, development,
and utilization of minerals, petroleum, and other mineral oils according to the
general terms and conditions provided by law, based on real contributions to the
economic growth and general welfare of the country. In such agreements, the State
shall promote the development and use of local scientific and technical resources.
(Emphases supplied)
An FTAA is explicitly characterized as a contract in Section 3 (r) of RA 7942:
Section 3. Definition of Terms. - As used in and for purposes of this Act, the following
terms, whether in singular or plural, shall mean: :chanRoblesvirtualLawlibrary
xxxx
(r) "Financial or technical assistance agreement" means a contract involving
financial or technical assistance for large-scale exploration, development, and
utilization of mineral resources. (Emphasis and underscoring supplied)
Since an FTAA is entered into by the President on the State's behalf, and it involves a
matter of public concern in that it covers the large-scale exploration, development,
and utilization of mineral resources, it is properly classified as a government or
public contract, which is, according to jurisprudence, "generally subject to the same
laws and regulations which govern the validity and sufficiency of contracts between
private individuals."45 In Sargasso Construction & Development Corporation v.
Philippine Ports Authority:46
A government or public contract has been defined as a contract entered into by state
officers acting on behalf of the state, and in which the entire people of the state are
directly interested. It relates wholly to matter of public concern, and affects private
rights only so far as the statute confers such rights when its provisions are carried out
by the officer to whom it is confided to perform.
A government contract is essentially similar to a private contract contemplated under
the Civil Code. The legal requisites of consent of the contracting parties, an object
certain which is the subject matter, and cause or consideration of the obligation must
likewise concur. Otherwise, there is no government contract to speak of.
xxxx
x x x. Contracts to which the government is a party are generally subject to the
same laws and regulations which govern the validity and sufficiency of
contracts between private individuals. A government contract, however, is
perfected only upon approval by a competent authority, where such approval is
required.47 (Emphasis and underscoring supplied)
Similar to private contracts, an FTAA involves terms, conditions, and warranties to be
followed by the contracting parties, which are expressly stated in Section 35 48 of RA
7942. Likewise, Section 36 of RA 7942 provides that an FTAA goes through
negotiation:
Section 36. Negotiations. - A financial or technical assistance agreement shall be
negotiated by the Department and executed and approved by the President. The
President shall notify Congress of all financial or technical assistance agreements
within thirty (30) days from execution and approval thereof.
In La Bugal-Oposa Tribal Association, Inc. v. Ramos49 (La Bugal-Oposa), the Court
differentiated an FTAA from a license. It pronounced that an FTAA involves contract
or property rights, which merit protection by the due process clause of the
Constitution; as such, it may not be revoked or cancelled in a blink of an eye, in
contrast, say for instance, to a timber license, else the contractor be unduly deprived
of its investments, which are ultimately intended to contribute to the general welfare of
the people:
3. Citing Oposa v. Factoran[,] Jr. [G.R. No. 101083, July 30, 1993, 224 SCRA 792],
Justice Morales claims that a service contract is not a contract or property right which
merits protection by the due process clause of the Constitution, but merely a license
or privilege which may be validly revoked, rescinded or withdrawn by executive action
whenever dictated by public interest or public welfare.
Oposa cites Tan v. Director of Forestry and Ysmael v. Deputy Executive
Secretary [210 Phil. 244 (1983)] as authority. The latter cases dealt specifically
with timber licenses only. Oposa allegedly reiterated that a license is merely a
permit or privilege to do what otherwise would be unlawful, and is not a contract
between the authority, federal, state or municipal, granting it and the person to whom
it is granted; neither is it property or a property right, nor does it create a vested right;
nor is it taxation. Thus this Court held that the granting of license does not create
irrevocable rights, neither is it property or property rights.
Should Oposa be deemed applicable to the case at bar, on the argument that natural
resources are also involved in this situation? We do not think so. A grantee of a timber
license, permit or license agreement gets to cut the timber already growing on the
surface; it need not dig up tons of earth to get at the logs. In a logging concession, the
investment of the licensee is not as substantial as the investment of a large-scale
mining contractor. If a timber license were revoked, the licensee packs up its gear and
moves to a new area applied for, and starts over; what it leaves behind are mainly the
trails leading to the logging site.
In contrast, the mining contractor will have sunk a great deal of money (tens of
millions of dollars) into the ground, so to speak, for exploration activities, for
development of the mine site and infrastructure, and for the actual excavation and
extraction of minerals, including the extensive tunneling work to reach the ore
body. The cancellation of the mining contract will utterly deprive the contractor
of its investments (i.e., prevent recovery of investments), most of which cannot
be pulled out.
To say that an FTAA is just like a mere timber license or permit and does not
involve contract or property rights which merit protection by the due process
clause of the Constitution, and may therefore be revoked or cancelled in the
blink of an eye, is to adopt a well-nigh confiscatory stance; at the very least, it
is downright dismissive of the property rights of businesspersons and
corporate entities that have investments in the mining industry-! whose
investments, operations and expenditures do contribute to the general welfare
of the people, the coffers of government, and the strength of the economy. Such
a pronouncement will surely discourage investments (local and foreign) which are
critically needed to fuel the engine of economic growth and move this country out of
the rut of poverty. In sum, Oposais not applicable.50 (Emphases and underscoring
supplied)
In La Bugal-B'laan, the financial interest of the contractor party to an FTAA was
recognized by the Court as follows; hence, the need for its fair protection:
[T]he foreign contractor is in the game precisely to make money. In order to come
anywhere near profitability, the contractor must first extract and sell the mineral ore. In
order to do that, it must also develop and construct the mining facilities, set up its
machineries and equipment and dig the tunnels to get to the deposit. The contractor
is thus compelled to expend funds in order to make profits. If it decides to cut back on
investments and expenditures, it will necessarily sacrifice the pace of development
and utilization; it will necessarily sacrifice the amount of profits it can make from the
mining operations. In fact, at certain less-than-optimal levels of operation, the stream
of revenues generated may not even be enough to cover variable expenses, let alone
overhead expenses; this is a dismal situation anyone would want to avoid. In order to
make money, one has to spend money. This truism applies to the mining industry as
well.51(Underscoring supplied)
Meanwhile, in Celestial Nickel Mining Exploration Corporation v. Macroasia
Corporation52 (Celestial), the Court answered the question on who between the DENR
Secretary, as one of the functionaries of the President under the Executive
Department, and the POA had the authority to cancel mineral agreements.
In Celestial, it was pronounced that the DENR Secretary, and not the POA, has the
jurisdiction to cancel existing mineral lease contracts or mineral agreements. "The
power of the DENR Secretary to cancel mineral agreements emanates from his
administrative authority, supervision, management, and control over mineral
resources under [Section 2,] Chapter I, Title XIV of Book IV of the Revised
Administrative Code of 1987[:]"53
Section 2. Mandate. - (1) The Department of Environment and Natural Resources
shall be primarily responsible for the implementation of the foregoing policy.
(2) It shall, subject to law and higher authority, be in charge of carrying out the
State's constitutional mandate to control and supervise the exploration,
development, utilization, and conservation of the country's natural
resources. (Emphasis supplied)
"[And] [d]erived from the broad and explicit powers of the DENR and its Secretary
under the Administrative Code of 1987 is the power to approve mineral agreements
and necessarily to cancel or cause to cancel said agreements."54
In fact, Sections 8 and 29 of RA 7942 confer to the DENR Secretary specific authority
over mineral agreements:
Section 8. Authority of the Department. - The Department shall be the primary
government agency responsible for the conservation, management, development,
and proper use of the State's mineral resources including those in reservations,
watershed areas, and lands of the public domain. The Secretary shall have the
authority to enter into mineral agreements on behalf of the Government upon
the recommendation of the Director, promulgate such rules and regulations as may
be necessary to implement the intent and provisions of this Act.
Section 29. Filing and approval of Mineral Agreements. - x x x.
The filing of a proposal for a mineral agreement shall give the proponent the prior
right to areas covered by the same. The proposed mineral agreement will be
approved by the Secretary and copies thereof shall be submitted to the President.
Thereafter, the President shall provide a list to Congress of every approved mineral
agreement within thirty (30) days from its approval by the Secretary. (Emphases
supplied)
In this relation, the Court, in Celestial, elaborated that a petition for the cancellation of
an existing mineral agreement covering an area applied for by an applicant based on
the alleged violation of any of the terms thereof, is not a 'dispute' involving a mineral
agreement under [Section] 77 (b) of RA 7942,55which lists down the cases which fall
within the jurisdiction of the POA:
Section. 77. Panel of Arbitrators. - x x x. Within thirty (30) working days, after the
submission of the case by the parties for decision, the panel shall have exclusive and
original jurisdiction to hear and decide on the following:
(a) Disputes involving rights to mining areas;
(b) Disputes involving mineral agreements or permits;
(c) Disputes involving surface owners, occupants and
claimholders/concessionaires; and
(d) Disputes pending before the Bureau and the Department at the date of the
effectivity of this Act.
This is because such matter "does not pertain to a violation by a party of the right of
another. The applicant [who seeks cancellation] is not a real party-in-interest as he
does not have a material or substantial interest in the mineral agreement but only a
prospective or expectant right or interest in the mining area. He has no legal right to
such mining claim and hence no dispute can arise between the applicant and the
parties to the mineral agreement."56 "[R]A 7942 x x x confers exclusive and primary
jurisdiction on the DENR Secretary to approve mineral agreements, which is purely
an administrative function within the scope of his powers and authority."57
With the legal treatment and parameters of an FTAA in mind, it becomes apparent
that the OP's cancellation and/or revocation of the FTAA is an exercise of a
contractual right that is purely administrative in nature, and thus, cannot be
treated as an adjudication, again, in the sense above-discussed. As one of the
contracting parties to the FTAA, the OP could not have adjudicated on the matter in
which it is an interested party, as in a court case where rights and duties of parties are
settled before an impartial tribunal. In a very loose sense, the OP's
cancellation/revocation may be taken as a "decision" but only to the extent of
considering it as its final administrative action internal to its channels. It is not one for
which we should employ the conventional import of the phrase "final and executory,"
as accorded to proper judicial/quasi-judicial decisions, and its concomitant effect of
barring further recourse of a party. To reiterate, being a government or public contract,
the FTAA is subject to fundamental contract principles, one of which is the principle of
mutuality of contracts which would definitely be violated if one were to accept the view
that the OP, a contracting party, can adjudicate on the contract's own validity. The
principle of mutuality of contracts is expressed in Article 1308 of the Civil Code, which
provides:
Article 1308. The contracts must bind both contracting parties; its validity or
compliance cannot be left to the will of one of them.
At this juncture, the Court finds it fitting to clarify that Redmont's participation in these
proceedings does not, by and of itself, make the OP's cancellation/revocation quasi-
judicial. Strangely enough, Redmont's May 7, 2010 Petition was, in fact, taken
cognizance by the OP albeit having been filed outside the existing state of procedure
on FTAA conversion and cancellation. A brief run-through of these procedures would
prove instructive.

A. Conversion
Under Section 45 of DENR Administrative Order No. 2010-21, otherwise known as
the "Revised Implementing Rules and Regulations of RA 7942, or the Philippine
Mining Act of 1995" (RIRR), mining contractor may opt to convert totally or partially
his existing mineral agreement, e.g., an MPSA to an FTAA, by filing a Letter of Intent
with the MGB, copy furnished the Regional Office where the area covered by said
mineral agreement is located. Within sixty (60) days from the filing of the Letter of
Intent, the contractor must comply with the requirements for the grant of an FTAA laid
down in Sections 49 to 69, Chapter VII of the RIRR, as well as pay the conversion
fee. The application for conversion shall be evaluated and eventually, approved upon
compliance. Note that the term of the FTAA arising from such conversion shall be
equivalent to the remaining period of its predecessor-mineral agreement.
Section 55 of the same DENR issuance requires a publication/posting/radio
announcement of an FTAA application. Any adverse claim, protest, or opposition to
the said FTAA should be filed directly to the Regional Office, Community Environment
and Natural Resources Office, or Provincial Environment and Natural Resources
Office concerned, within ten (10) days from the date of publication or from the last
date of posting/radio announcement. The said adverse claim, protest, or opposition
shall then be resolved by the POA of the DENR, whose ruling may then be appealed
to the proper tribunals.58 To this, it bears pointing out that Section 55 explicitly
exempts "previously published valid and existing mining claims or FTAA applications
originating from Exploration Permits that have undergone the [publication
requirement]" from the aforesaid publication requirement.
From the foregoing, it may be inferred that the only time that third parties, i.e., an
entity other than the contractor/applicant, may pose an objection to an FTAA
application is during the ten (10)-day window period given by Section 55 of the RIRR.
However, this window period is only available in instances of "fresh" FTAA
applications (meaning, that the same covers an area previously uncovered by any
existing mineral agreements and/or FTAAs). Differently, in instances of
conversion, i.e., of an existing MPSA to an FTAA, publication is not required as such
would have already been undertaken during the application of the original mineral
agreement, pursuant to the exemption expressly contained in Section 55 of the RIRR.
Absent any form of protest procedure at least under the prevailing rules, it appears
that the process merely involves the concerned executive agency directly
evaluating, i.e., screening and checking, whether the contractor had complied with the
pertinent requisites necessary for it to enter into a'valid FTAA with the Republic. If the
requisites have been met, the agency would then endorse the conversion application
to the topmost executive levels, i.e., the DENR Secretary, all culminating in the
President's, through his/her duly appointed agents/representatives, i.e., the Executive
Secretary, execution of the FTAA for and in behalf of the Republic, with the contractor
as counterparty. Following these premises, Redmont's opposition to petitioner's
application for FTAA conversion was actually made beyond the prescribed course of
procedure.
B. Cancellation.
Section 68 of the RIRR provides that the cancellation/revocation/termination of an
FTAA may only be done after due process. In relation, Section 77 of RA 7942, to
reiterate, provides that the POA has the exclusive and original jurisdiction to hear and
decide mining disputes:
Section. 77. Panel of Arbitrators. - x x x. Within thirty (30) working days, after the
submission of the case by the parties for decision, the panel shall have exclusive and
original jurisdiction to hear and decide on the following:
(a) Disputes involving rights to mining areas;
(b) Disputes involving mineral agreements or permits;
(c) Disputes involving surface owners, occupants and
claimholders/concessionaires; and
(d) Disputes pending before the Bureau and the Department at the date of the
effectivity of this Act.
In Gonzales v. Climax Mining Ltd. (Gonzales),59 it was clarified that "a mining dispute
is a dispute involving (a) rights to mining areas, (b) mineral agreements, FTAAs, or
permits, and (c) surface owners, occupants and
claimholders/concessionaires."60 Note that "the [POA's] jurisdiction is limited only to
those mining disputes which raise questions of fact or matters requiring the
application of technological knowledge and experience."61 Thus, the Court,
in Gonzales, ruled that the POA is bereft of any jurisdiction over a complaint for
declaration of nullity and/or termination of the subject contracts on the ground
of fraud, oppression and violation of the Constitution, viz.:
We now come to the meat of the case which revolves mainly around the question of
jurisdiction by the Panel of Arbitrators: Does the Panel of Arbitrators have jurisdiction
over the complaint for declaration of nullity and/or termination of the subject contracts
on the ground of fraud, oppression and violation of the Constitution? This issue may
be distilled into the more basic question of whether the Complaint raises a mining
dispute or a judicial question .
A judicial question is a question that is proper for determination by the courts, as
opposed to a moot question or one properly decided by the executive or legislative
branch. A judicial question is raised when the determination of the question involves
the exercise of a judicial function; that is, the question involves the determination of
what the law is and what the legal rights of the parties are with respect to the matter in
controversy.
xxxx
x x x. Whether the case involves void or voidable contracts is still a judicial question. It
may, in some instances, involve questions of fact especially with regard to the
determination of the circumstances of the execution of the contracts. But the
resolution of the validity or voidness of the contracts remains a legal or judicial
question as it requires the exercise of judicial function. It requires the ascertainment of
what laws are applicable to the dispute, the interpretation and application of those
laws, and the rendering of a judgment based thereon. Clearly, the dispute is not a
mining conflict. It is essentially judicial. The complaint was not merely for the
determination of rights under the mining contracts since the very validity of those
contracts is put in issue.62ChanRoblesVirtualawlibrary
The Court added that although mining rights may be raised as corollary issues, the
POA still has no jurisdiction to resolve cases which mainly involve a
determination of a contract's validity. Neither too would the mere involvement of
an FTAA turn a case into a mining dispute that would fall under the POA's jurisdiction:
The Complaint is not about a dispute involving rights to mining areas, nor is it a
dispute involving claimholders or concessionaires. The main question raised was the
validity of the Addendum Contract, the FTAA and the subsequent contracts. The
question as to the rights of petitioner or respondents to the mining area pursuant to
these contracts, as well as the question of whether or not petitioner had ceded his
mining claims in favor of respondents by way of execution of the questioned
contracts, is merely corollary to the main issue, and may not be resolved without first
determining the main issue.
case, and its Decision is, perforce, null and void. With this, it is unnecessary to delve
into the other ancillary issues raised in the course of these proceedings.
WHEREFORE, the petition is GRANTED. The Decision dated February 23, 2012 and
the Resolution dated July 27, 2012 of the Court of Appeals in CA-G.R. SP No. 120409
are hereby declared NULL and VOIDdue to lack of jurisdiction. This pronouncement
is without prejudice to any other appropriate remedy the parties may take against
each other.
SO ORDERED.

The Complaint is also not what is contemplated by [RA] 7942 when it says the dispute
should involve FTAAs. The Complaint is not exclusively within the jurisdiction of the
Panel of Arbitrators just because, or for as -long as, the dispute involves an FTAA.
The Complaintraised the issue of the constitutionality of the FTAA, which is definitely
a judicial question. The question of constitutionality is exclusively within the
jurisdiction of the courts to resolve as this would clearly involve the exercise of judicial
power. The Panel of Arbitrators does not have jurisdiction over such an issue since it
does not involve the application of technical knowledge and expertise relating to
mining. x x x.63ChanRoblesVirtualawlibrary
In this case, the OP cancelled/revoked the subject FTAA based on its finding that
petitioners misrepresented, inter alia, that they were Filipino corporations qualified to
engage in mining activities. Again, this is obviously an administrative exercise of a
contractual right under paragraph a (iii), Section 17.2 of the FTAA, which finds legal
basis in Section 99 of RA 7942 that states: "[a]ll statements made in the exploration
permit, mining agreement and financial or technical assistance shall be considered as
conditions and essential parts thereof x x x." A material misrepresentation, if so found
by ordinary courts of law as enunciated in Gonzales upon a case duly instituted
therefor, would then constitute a breach of a contractual condition that would entitle
the aggrieved party to cancel/revoke the agreement.64

The scenario at hand does not involve a complaint for cancellation/revocation

commenced before the ordinary courts of law. Hence, Redmont's recourse to the OP -
that, on the assumption that it even had the legal standing to oppose an already
executed FTAA which it was not a party to - was, by and of itself, done outside the
correct course procedure. Observe that RA 7942 and its RIRR do not state that the
OP has the power to take cognizance of a quasi-judicial proceeding involving a
petition for cancellation of an existing FTAA. In fact, there is even no mention of a
petition for cancellation or revocation to be taken by a third party before the OP. While
it may be said that the OP has administrative control or supervision over its
subordinate agencies, such as the POA,65 again the jurisdiction of that body pertains
only to mining disputes, and not .those which involve judicial questions cognizable by
the ordinary courts of law.

Thus, at least with respect to cases affecting an FTAA's validity, the Court holds that
the OP has no quasi-judicial power to adjudicate the propriety of its
cancellation/revocation. At the risk of belaboring the point, the FTAA is a contract to
which the OP itself represents a party, i.e., the Republic. It merely exercised a
contractual right by cancelling/revoking said agreement, a purely administrative action
which should not be considered quasi-judicial in nature. Thus, absent the OP's proper
exercise of a quasi-judicial function, the CA had no appellate jurisdiction over the