Remedial Law Review I Cases
Remedial Law Review I Cases
DELA PENA]
**
SECOND DIVISION
[G.R. No. 131282. January 4, 2002]
Meanwhile, RED Conflict Case No. 1029, an administrative case between petitioner and applicantcontestants Romeo, Artemio and Jury Laurente, remained pending with the Office of the Regional Director
of the Department of Environment and Natural Resources in Davao City. Eventually, it was forwarded to
the DENR Regional Office in Prosperidad, Agusan del Sur.
On July 24, 1996, private respondent filed before the RTC a Petition for Relief from Judgment,
reiterating the same allegation in his Motion for New Trial. He averred that unless there is a determination
on who owned the land, he could not be made to vacate the land. He also averred that the judgment of the
trial court was void inasmuch as the heirs of Artemio Laurente, Sr., who are indispensable parties, were not
impleaded.
On September 24, 1996, Josephine, Ana Soledad and Virginia, all surnamed Laurente, grandchildren
of Artemio who were claiming ownership of the land, filed a Motion for Intervention. The RTC denied the
motion.
On October 8, 1996, the trial court issued an order denying the Petition for Relief from Judgment. In
a Motion for Reconsideration of said order, private respondent alleged that the RTC had no jurisdiction
over the case, since the value of the land was only P5,240 and therefore it was under the jurisdiction of the
municipal trial court. On November 22, 1996, the RTC denied the motion for reconsideration.
On January 22, 1997, petitioner filed a Motion for Execution, which the RTC granted on January
28. On February 18, 1997, Entry of Judgment was made of record and a writ of execution was issued by the
RTC on February 27, 1997. On March 12, 1997, private respondent filed his petition for certiorari before
the Court of Appeals.
The Court of Appeals gave due course to the petition, maintaining that private respondent is not
estopped from assailing the jurisdiction of the RTC, Branch 27 in Tandag, Surigao del Sur, when private
respondent filed with said court his Motion for Reconsideration And/Or Annulment of Judgment. The Court
of Appeals decreed as follows:
IN THE LIGHT OF ALL THE FOREGOING, the Petition is GRANTED. All proceedings in Gabriel L.
Duero vs. Bernardo Eradel, et. al. Civil Case 1075 filed in the Court a quo, including its Decision, Annex
E of the petition, and its Orders and Writ of Execution and the turn over of the property to the Private
Respondent by the Sheriff of the Court a quo, are declared null and void and hereby SET ASIDE, No
pronouncement as to costs.
SO ORDERED.[6]
Petitioner now comes before this Court, alleging that the Court of Appeals acted with grave abuse of
discretion amounting to lack or in excess of jurisdiction when it held that:
I.
THE LOWER COURT HAS NO JURISDICTION OVER THE SUBJECT MATTER OF THE CASE.
II
other parties before the said court, [16] believing that the RTC had jurisdiction over his complaint. But by
then, Republic Act 7691[17] amending BP 129 had become effective, such that jurisdiction already belongs
not to the RTC but to the MTC pursuant to said amendment. Private respondent, an unschooled farmer, in
the mistaken belief that since he was merely a tenant of the late Artemio Laurente Sr., his landlord, gave the
summons to a Hipolito Laurente, one of the surviving heirs of Artemio Sr., who did not do anything about
the summons. For failure to answer the complaint, private respondent was declared in default. He then filed
a Motion for New Trial in the same court and explained that he defaulted because of his belief that the suit
ought to be answered by his landlord. In that motion he stated that he had by then the evidence to prove that
he had a better right than petitioner over the land because of his long, continuous and uninterrupted
possession as bona-fide tenant-lessee of the land.[18] But his motion was denied. He tried an alternative
recourse. He filed before the RTC a Motion for Relief from Judgment. Again, the same court denied his
motion, hence he moved for reconsideration of the denial. In his Motion for Reconsideration, he raised for
the first time the RTCs lack of jurisdiction. This motion was again denied. Note that private respondent
raised the issue of lack of jurisdiction, not when the case was already on appeal, but when the case was still
before the RTC that ruled him in default, denied his motion for new trial as well as for relief from
judgment, and denied likewise his two motions for reconsideration. After the RTC still refused to
reconsider the denial of private respondents motion for relief from judgment, it went on to issue the order
for entry of judgment and a writ of execution.
Under these circumstances, we could not fault the Court of Appeals in overruling the RTC and in
holding that private respondent was not estopped from questioning the jurisdiction of the regional trial
court. The fundamental rule is that, the lack of jurisdiction of the court over an action cannot be waived by
the parties, or even cured by their silence, acquiescence or even by their express consent. [19] Further, a party
may assail the jurisdiction of the court over the action at any stage of the proceedings and even on appeal.
[20]
The appellate court did not err in saying that the RTC should have declared itself barren of jurisdiction
over the action. Even if private respondent actively participated in the proceedings before said court, the
doctrine of estoppel cannot still be properly invoked against him because the question of lack of
jurisdiction may be raised at anytime and at any stage of the action. [21] Precedents tell us that as a general
rule, the jurisdiction of a court is not a question of acquiescence as a matter of fact, but an issue of
conferment as a matter of law.[22] Also, neither waiver nor estoppel shall apply to confer jurisdiction upon a
court, barring highly meritorious and exceptional circumstances. [23] The Court of Appeals found support for
its ruling in our decision in Javier vs. Court of Appeals, thus:
x x x The point simply is that when a party commits error in filing his suit or proceeding in a court that
lacks jurisdiction to take cognizance of the same, such act may not at once be deemed sufficient basis of
estoppel. It could have been the result of an honest mistake, or of divergent interpretations of doubtful legal
provisions. If any fault is to be imputed to a party taking such course of action, part of the blame
should be placed on the court which shall entertain the suit, thereby lulling the parties into believing
that they pursued their remedies in the correct forum. Under the rules, it is the duty of the court to
dismiss an action whenever it appears that the court has no jurisdiction over the subject matter. (Sec. 2,
Rule 9, Rules of Court) Should the Court render a judgment without jurisdiction, such judgment may be
impeached or annulled for lack of jurisdiction (Sec. 30, Rule 132, Ibid), within ten (10) years from the
finality of the same. [Emphasis ours.][24]
Indeed, the trial court was duty-bound to take judicial notice of the parameters of its jurisdiction and its
failure to do so, makes its decision a lawless thing.[25]
December 8, 2003
to petitioners counsel and thereafter initiated a petition for consignation of the rentals in Civil Case No.
144049 while they await the outcome of the negotiation to purchase.
Following trial under the Rule on Summary Procedure, the MeTC rendered judgment on September 19,
1994 against the 23 non-answering defendants, ordering them to vacate the premises occupied by each of
them, and to pay jointly and severally P10,000.00 per month from the date they last paid their rent until the
date they actually vacate, plus interest thereon at the legal rate allowed by law, as well as P10,000.00 as
attorneys fees and the costs of the suit. As to the 20 private respondents, the MeTC issued a separate
judgment6 on the same day sustaining their rights under the Land Reform Law, declaring petitioners cause
of action as not duly warranted by the facts and circumstances of the case and dismissing the case without
prejudice.
Not satisfied with the judgment dismissing the complaint as against the private respondents, petitioner
appealed to the Regional Trial Court (Branch 47) of Manila (RTC). 7 In a Decision8 dated July 5, 1996, the
RTC sustained the decision of the MeTC.
Undaunted, petitioner filed a petition for review with the Court of Appeals (CA for brevity), docketed as
CA-G.R. SP No. 41394. In a Resolution dated March 21, 1997, the CA dismissed the petition on two
grounds: (a) the certification of non-forum shopping was signed by petitioners counsel and not by
petitioner himself, in violation of Revised Circular No. 28-91; 9 and, (b) the only annex to the petition is a
certified copy of the questioned decision but copies of the pleadings and other material portions of the
record as would support the allegations of the petition are not annexed, contrary to Section 3, paragraph b,
Rule 6 of the Revised Internal Rules of the Court of Appeals (RIRCA). 10
On April 17, 1997, petitioner filed a Motion for Reconsideration, 11 attaching thereto a photocopy of the
certification of non-forum shopping duly signed by petitioner himself 12 and the relevant records of the
MeTC and the RTC.13Five days later, or on April 22, 1997, petitioner filed a Supplement 14 to his motion for
reconsideration submitting the duly authenticated original of the certification of non-forum shopping signed
by petitioner.15
In a Resolution16 dated June 23, 1997 the CA denied petitioners motion for reconsideration and its
supplement, ruling that "petitioners subsequent compliance did not cure the defect in the instant petition." 17
Hence, the present petition anchored on the following grounds:
Petitioner alleges that: private respondents had oral contracts of lease that expired at the end of each month
but were impliedly renewed under the same terms by mere acquiescence or tolerance; sometime in 1992,
they stopped paying rent; on April 7, 1994, petitioner sent them a written demand to vacate; the noncompliance with said demand letter constrained him to file the ejectment case against them. 4
Of the 43 named defendants, only 20 (private respondents, 5 for brevity) filed a consolidated Answer dated
June 29, 1994 wherein they denied non-payment of rentals. They contend that they cannot be evicted
because the Urban Land Reform Law guarantees security of tenure and priority right to purchase the
subject property; and that there was a negotiation for the purchase of the lots occupied by them but when
the negotiation reached a passive stage, they decided to continue payment of rentals and tendered payment
I.
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN DISMISSING THE PETITION BASED
ON HYPER-TECHNICAL GROUNDS BECAUSE:
A. PETITIONER HAS SUBSTANTIALLY COMPLIED WITH SUPREME COURT
CIRCULAR NO. 28-91. MORE, PETITIONER SUBSEQUENTLY SUBMITTED DURING
THE PENDENCY OF THE PROCEEDINGS A DULY AUTHENTICATED CERTIFICATE OF
II.
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT RULING THAT ALL THE
ELEMENTS OF UNLAWFUL DETAINER ARE PRESENT IN THE CASE AT BAR.
III.
RESPONDENT COURT OF APPEALS ERRED IN NOT RULING THAT THE RTC MANILA,
BRANCH 47, COMMITTED REVERSIBLE ERROR IN AFFIRMING THE FINDING OF MTC
MANILA, BRANCH 26, THAT PRIVATE RESPONDENTS CANNOT BE EJECTED FROM THE
SUBJECT PROPERTY WITHOUT VIOLATING THEIR SECURITY OF TENURE EVEN IF THE TERM
OF THE LEASE IS MONTH-TO-MONTH WHICH EXPIRES AT THE END OF EACH MONTH. IN
THIS REGARD,
A. RESPONDENT COURT OF APPEALS SHOULD HAVE RULED THAT THE RTC
MANILA COMMITTED REVERSIBLE ERROR IN NOT RULING THAT TENANTS
UNDER P.D. 1517 MAY BE EVICTED FOR NON-PAYMENT OF RENT, TERMINATION OF
LEASE OR OTHER GROUNDS FOR EJECTMENT.
B. RESPONDENT COURT OF APPEALS SHOULD HAVE RULED THAT THE RTC
MANILA COMMITTED REVERSIBLE ERROR IN NOT RULING THAT THE ALLEGED
"PRIORITY RIGHT TO BUY THE LOT THEY OCCUPY" DOES NOT APPLY WHERE THE
LANDOWNER DOES NOT INTEND TO SELL THE SUBJECT PROPERTY, AS IN THE
CASE AT BAR.
C. RESPONDENT COURT OF APPEALS SHOULD HAVE RULED THAT THE RTC
MANILA COMMITTED REVERSIBLE ERROR IN RULING THAT THE SUBJECT
PROPERTY IS LOCATED WITHIN A ZONAL IMPROVEMENT AREA OR APD.
D. RESPONDENT COURT OF APPEALS SHOULD HAVE RULED THAT THE RTC
MANILA COMMITTED REVERSIBLE ERROR IN NOT RULING THAT PRIVATE
We fully agree with petitioner that it was physically impossible for the petition to have been prepared and
sent to the petitioner in the United States, for him to travel from Virginia, U.S.A. to the nearest Philippine
Consulate in Washington, D.C., U.S.A., in order to sign the certification before the Philippine Consul, and
for him to send back the petition to the Philippines within the 15-day reglementary period. Thus, we find
that petitioner has adequately explained his failure to personally sign the certification which justifies
relaxation of the rule.
We have stressed that the rules on forum shopping, which were precisely designed to promote and facilitate
the orderly administration of justice, should not be interpreted with such absolute literalness as to subvert
its own ultimate and legitimate objective26 which is simply to prohibit and penalize the evils of forumshopping.27 The subsequent filing of the certification duly signed by the petitioner himself should thus be
deemed substantial compliance, pro hac vice.
In like manner, the failure of the petitioner to comply with Section 3, paragraph b, Rule 6 of the RIRCA,
that is, to append to his petition copies of the pleadings and other material portions of the records as would
support the petition, does not justify the outright dismissal of the petition. It must be emphasized that the
RIRCA gives the appellate court a certain leeway to require parties to submit additional documents as may
be necessary in the interest of substantial justice. Under Section 3, paragraph d of Rule 3 of the
RIRCA,28 the CA may require the parties to complete the annexes as the court deems necessary, and if the
petition is given due course, the CA may require the elevation of a complete record of the case as provided
for under Section 3(d)(5) of Rule 6 of the RIRCA.29 At any rate, petitioner attached copies of the pleadings
and other material portions of the records below with his motion for reconsideration. 30 In Jaro vs. Court of
Appeals,31 the Court reiterated the doctrine laid down inCusi-Hernandez vs. Diaz32 and Piglas-Kamao vs.
National Labor Relations Commission33 that subsequent submission of the missing documents with the
motion for reconsideration amounts to substantial compliance which calls for the relaxation of the rules of
procedure. We find no cogent reason to depart from this doctrine.
Truly, in dismissing the petition for review, the CA had committed grave abuse of discretion amounting to
lack of jurisdiction in putting a premium on technicalities at the expense of a just resolution of the case.
Needless to stress, "a litigation is not a game of technicalities." 34 When technicality deserts its function of
being an aid to justice, the Court is justified in exempting from its operations a particular case. 35 Technical
rules of procedure should be used to promote, not frustrate justice. While the swift unclogging of court
dockets is a laudable objective, granting substantial justice is an even more urgent ideal. 36
The Courts pronouncement in Republic vs. Court of Appeals37 is worth echoing: "cases should be
determined on the merits, after full opportunity to all parties for ventilation of their causes and defenses,
rather than on technicality or some procedural imperfections. In that way, the ends of justice would be
better served."38 Thus, what should guide judicial action is that a party litigant is given the fullest
opportunity to establish the merits of his action or defense rather than for him to lose life, honor or property
on mere technicalities.39 This guideline is especially true when the petitioner has satisfactorily explained the
lapse and fulfilled the requirements in his motion for reconsideration, 40 as in this case.
In addition, petitioner prays that we decide the present petition on the merits without need of remanding the
case to the CA. He insists that all the elements of unlawful detainer are present in the case. He further
auction. Thereafter TCT No. T-29950 was cancelled and in lieu thereof TCT No. T-86612 (Exh. 9) was
issued in favor of SSS. This being the situation obtaining, the reformation of instruments, even if allowed,
or the swapping of Lot 18 and Lot 19 as earlier proposed by the plaintiff, is no longer feasible considering
that plaintiff is no longer the owner of Lot 19, otherwise, defendant will be losing Lot 18 without any
substitute therefore (sic). Upon the other hand, plaintiff will be unjustly enriching himself having in its
favor both Lot 19 which was earlier mortgaged by him and subsequently foreclosed by SSS, as well as Lot
18 where his house is presently standing.
"The logic and common sense of the situation lean heavily in favor of the defendant. It is evident that what
plaintiff had bought from the defendant is Lot 19 covered by TCT No. 28254 which parcel of land has been
properly indicated in the instruments and not Lot 18 as claimed by the plaintiff. The contracts being clear
and unmistakable, they reflect the true intention of the parties, besides the plaintiff failed to assail the
contracts on mutual mistake, hence the same need no longer be reformed." 3
On June 22, 1998, a writ of execution was issued by the trial court. Thus, on September 17, 1998,
petitioners filed an urgent motion to recall writ of execution, alleging that the court a quo had no
jurisdiction to try the case as it was vested in the Housing and Land Use Regulatory Board (HLURB)
pursuant to PD 957 (The Subdivision and Condominium Buyers Protective Decree). Conformably,
petitioners filed a new complaint against private respondent with the HLURB. Likewise, on June 30, 1999,
petitioner-spouses filed before the Court of Appeals a petition for annulment of judgment, premised on the
ground that the trial court had no jurisdiction to try and decide Civil Case No. 17115.
In a decision rendered on December 29, 1999, the Court of Appeals denied the petition for annulment of
judgment, relying mainly on the jurisprudential doctrine of estoppel as laid down in the case of Tijam vs.
Sibonghanoy.4
Their subsequent motion for reconsideration having been denied, petitioners filed this instant petition,
contending that the Court of Appeals erred in dismissing the petition by applying the principle of estoppel,
even if the Regional Trial Court, Branch 36 of Iloilo City had no jurisdiction to decide Civil Case No.
17115.
At the outset, it should be stressed that petitioners are seeking from us the annulment of a trial court
judgment based on lack of jurisdiction. Because it is not an appeal, the correctness of the judgment is not in
issue here. Accordingly, there is no need to delve into the propriety of the decision rendered by the trial
court.
Petitioners claim that the recent decisions of this Court have already abandoned the doctrine laid down
in Tijam vs. Sibonghanoy.5 We do not agree. In countless decisions, this Court has consistently held that,
while an order or decision rendered without jurisdiction is a total nullity and may be assailed at any stage,
active participation in the proceedings in the court which rendered the order or decision will bar such party
from attacking its jurisdiction. As we held in the leading case of Tijam vs. Sibonghanoy:6
"A party may be estopped or barred from raising a question in different ways and for different reasons.
Thus we speak of estoppel in pais, or estoppel by deed or by record, and of estoppel by laches.
February 5, 2004
and moral and exemplary damages in the amount of ONE HUNDRED THIRTY-FIVE
THOUSAND (P135,000.00) PESOS, Philippine Currency.1
On March 19, 1991, the RTC issued an Order preventively suspending the petitioner from the service under
Presidential Decree No. 971, as amended by P.D. No. 1847. When apprised of the said order, the General
Headquarters of the PNP issued on October 6, 1992 Special Order No. 91, preventively suspending the
petitioner from the service until the case was terminated.2
The petitioner was arrested by virtue of a warrant issued by the RTC, while accused Bombita remained at
large. The petitioner posted bail and was granted temporary liberty.
When arraigned on April 9, 1991,3 the petitioner, assisted by counsel, pleaded not guilty to the offense
charged. Thereafter, on December 23, 1991, the petitioner filed a Motion to Quash 4 the Information
alleging that as mandated by Commonwealth Act No. 408,5 in relation to Section 1, Presidential Decree No.
1822 and Section 95 of R.A. No. 6975, the court martial, not the RTC, had jurisdiction over criminal cases
involving PNP members and officers.
Pending the resolution of the motion, the petitioner on June 25, 1993 requested the Chief of the PNP for his
reinstatement. He alleged that under R.A. No. 6975, his suspension should last for only 90 days, and,
having served the same, he should now be reinstated. On September 23, 1993, 6 the PNP Region V
Headquarters wrote Judge David C. Naval requesting information on whether he issued an order lifting the
petitioners suspension. The RTC did not reply. Thus, on February 22, 1994, the petitioner filed a motion in
the RTC for the lifting of the order of suspension. He alleged that he had served the 90-day preventive
suspension and pleaded for compassionate justice. The RTC denied the motion on March 9, 1994. 7 Trial
thereafter proceeded, and the prosecution rested its case. The petitioner commenced the presentation of his
evidence. On July 20, 1994, he filed a Motion to Dismiss8the case. Citing Republic of the Philippines v.
Asuncion, et al.,9 he argued that since he committed the crime in the performance of his duties, the
Sandiganbayan had exclusive jurisdiction over the case.
On October 28, 1994, the RTC issued an Order10 denying the motion to dismiss. It, however, ordered the
conduct of a preliminary hearing to determine whether or not the crime charged was committed by the
petitioner in relation to his office as a member of the PNP.
In the preliminary hearing, the prosecution manifested that it was no longer presenting any evidence in
connection with the petitioners motion. It reasoned that it had already rested its case, and that its evidence
showed that the petitioner did not commit the offense charged in connection with the performance of his
duties as a member of the Philippine Constabulary. According to the prosecution, they were able to show
the following facts: (a) the petitioner was not wearing his uniform during the incident; (b) the offense was
committed just after midnight; (c) the petitioner was drunk when the crime was committed; (d) the
petitioner was in the company of civilians; and, (e) the offense was committed in a beerhouse called "Sa
Harong Caf Bar and Restaurant."11
For his part, the petitioner testified that at about 10:00 p.m. on March 15, 1990, he was at the Sa Harong
Caf Bar and Restaurant at Barlin St., Naga City, to conduct surveillance on alleged drug trafficking,
pursuant to Mission Order No. 03-04 issued by Police Superintendent Rufo R. Pulido. The petitioner
10
duties/functions or in relation to his office, within fifteen (15) days from receipt
hereof;
On July 31, 1995, the trial court issued an Order declaring that the petitioner committed the crime charged
while not in the performance of his official function. The trial court added that upon the enactment of R.A.
No. 7975,13 the issue had become moot and academic. The amendatory law transferred the jurisdiction over
the offense charged from the Sandiganbayan to the RTC since the petitioner did not have a salary grade of
"27" as provided for in or by Section 4(a)(1), (3) thereof. The trial court nevertheless ordered the
prosecution to amend the Information pursuant to the ruling in Republic v. Asuncion 14 and R.A. No. 7975.
The amendment consisted in the inclusion therein of an allegation that the offense charged was not
committed by the petitioner in the performance of his duties/functions, nor in relation to his
office.lawphi1.nt
(2) After the filing of the Re-Amended Information, the complete records of this case,
together with the transcripts of the stenographic notes taken during the entire
proceedings herein, are hereby ordered transmitted immediately to the Honorable
Sandiganbayan, through its Clerk of Court, Manila, for appropriate proceedings. 17
The petitioner filed a motion for the reconsideration 15 of the said order, reiterating that based on his
testimony and those of Benjamin Cario and Roberto Fajardo, the offense charged was committed by him
in relation to his official functions. He asserted that the trial court failed to consider the exceptions to the
prohibition. He asserted that R.A. No. 7975, which was enacted on March 30, 1995, could not be applied
retroactively.16
The petitioner further alleged that Luz Nacario Nueca, the mother of the victim, through counsel,
categorically and unequivocably admitted in her complaint filed with the Peoples Law Enforcement Board
(PLEB) that he was on an official mission when the crime was committed.
On November 24, 1995, the RTC made a volte face and issued an Order reversing and setting aside its July
31, 1995 Order. It declared that based on the petitioners evidence, he was on official mission when the
shooting occurred. It concluded that the prosecution failed to adduce controverting evidence thereto. It
likewise considered Luz Nacario Nuecas admission in her complaint before the PLEB that the petitioner
was on official mission when the shooting happened.
The RTC ordered the public prosecutor to file a Re-Amended Information and to allege that the offense
charged was committed by the petitioner in the performance of his duties/functions or in relation to his
office; and, conformably to R.A. No. 7975, to thereafter transmit the same, as well as the complete records
with the stenographic notes, to the Sandiganbayan, to wit:
WHEREFORE, the Order dated July 31, 1995 is hereby SET ASIDE and RECONSIDERED,
and it is hereby declared that after preliminary hearing, this Court has found that the offense
charged in the Information herein was committed by the accused in his relation to his function
and duty as member of the then Philippine Constabulary.
Conformably with R.A. No. 7975 and the ruling of the Supreme Court in Republic v. Asuncion,
et al., G.R. No. 180208, March 11, 1994:
(1) The City Prosecutor is hereby ordered to file a Re-Amended Information alleging
that the offense charged was committed by the Accused in the performance of his
On January 8, 1996, the Presiding Justice of the Sandiganbayan ordered the Executive Clerk of Court IV,
Atty. Luisabel Alfonso-Cortez, to return the records of Criminal Case No. 90-3184 to the court of origin,
RTC of Naga City, Branch 21. It reasoned that under P.D. No. 1606, as amended by R.A. No. 7975, 18 the
RTC retained jurisdiction over the case, considering that the petitioner had a salary grade of "23."
Furthermore, the prosecution had already rested its case and the petitioner had commenced presenting his
evidence in the RTC; following the rule on continuity of jurisdiction, the latter court should continue with
the case and render judgment therein after trial.
Upon the remand of the records, the RTC set the case for trial on May 3, 1996, for the petitioner to continue
presenting his evidence. Instead of adducing his evidence, the petitioner filed a petition for certiorari,
assailing the Order of the Presiding Justice of the Sandiganbayan remanding the records of the case to the
RTC.
The threshold issue for resolution is whether or not the Presiding Justice of the Sandiganbayan committed a
grave abuse of his discretion amounting to excess or lack of jurisdiction in ordering the remand of the case
to the RTC.
The petitioner contends that when the amended information was filed with the RTC on February 6, 1991,
P.D. No. 1606 was still in effect. Under Section 4(a) of the decree, the Sandiganbayan had exclusive
jurisdiction over the case against him as he was charged with homicide with the imposable penalty of
reclusion temporal, and the crime was committed while in the performance of his duties. He further asserts
that although P.D. No. 1606, as amended by P.D. No. 1861 and by R.A. No. 7975 provides that crimes
committed by members and officers of the PNP with a salary grade below "27" committed in relation to
office are within the exclusive jurisdiction of the proper RTC, the amendment thus introduced by R.A. No.
7975 should not be applied retroactively. This is so, the petitioner asserts, because under Section 7 of R.A.
No. 7975, only those cases where trial has not begun in the Sandiganbayan upon the effectivity of the law
should be referred to the proper trial court.
The private complainant agrees with the contention of the petitioner. In contrast, the Office of the Special
Prosecutor contends that the Presiding Justice of the Sandiganbayan acted in accordance with law when he
ordered the remand of the case to the RTC. It asserts that R.A. No. 7975 should be applied retroactively.
Although the Sandiganbayan had jurisdiction over the crime committed by the petitioner when the
amended information was filed with the RTC, by the time it resolved petitioners motion to dismiss on July
31, 1995, R.A. No. 7975 had already taken effect. Thus, the law should be given retroactive effect.
The Ruling of the Court
11
temporal. Hence, the RTC had exclusive jurisdiction over the crime charged conformably to Sections 20
and 32 of Batas Pambansa Blg. 129, as amended by Section 2 of R.A. No. 7691.
The jurisdiction of the court over criminal cases is determined by the allegations in the Information or the
Complaint and the statute in effect at the time of the commencement of the action, unless such statute
provides for a retroactive application thereof. The jurisdictional requirements must be alleged in the
Information.19 Such jurisdiction of the court acquired at the inception of the case continues until the case is
terminated.20
The petitioners contention that R.A. No. 7975 should not be applied retroactively has no legal basis. It
bears stressing that R.A. No. 7975 is a substantive procedural law which may be applied retroactively.23
Under Section 4(a) of P.D. No. 1606 as amended by P.D. No. 1861, the Sandiganbayan had exclusive
jurisdiction in all cases involving the following:
(1) Violations of Republic Act No. 3019, as amended, otherwise known as the Anti-Graft and
Corrupt Practices Act, Republic Act No. 1379, and Chapter II, Section 2, Title VII of the Revised
Penal Code;
(2) Other offenses or felonies committed by public officers and employees in relation to their
office, including those employed in government-owned or controlled corporations, whether
simple or complexed with other crimes, where the penalty prescribed by law is higher than
prision correccional or imprisonment for six (6) years, or a fine of P6,000.00 .21
However, for the Sandiganbayan to have exclusive jurisdiction under the said law over crimes committed
by public officers in relation to their office, it is essential that the facts showing the intimate relation
between the office of the offender and the discharge of official duties must be alleged in the Information. It
is not enough to merely allege in the Information that the crime charged was committed by the offender in
relation to his office because that would be a conclusion of law.22 The amended Information filed with the
RTC against the petitioner does not contain any allegation showing the intimate relation between his office
and the discharge of his duties. Hence, the RTC had jurisdiction over the offense charged when on
November 24, 1995, it ordered the re-amendment of the Information to include therein an allegation that
the petitioner committed the crime in relation to office. The trial court erred when it ordered the elevation
of the records to the Sandiganbayan. It bears stressing that R.A. No. 7975 amending P.D. No. 1606 was
already in effect and under Section 2 of the law:
In cases where none of the principal accused are occupying positions corresponding to salary
grade "27" or higher, as prescribed in the said Republic Act No. 6758, or PNP officers occupying
the rank of superintendent or higher, or their equivalent, exclusive jurisdiction thereof shall be
vested in the proper Regional Trial Court, Metropolitan Trial Court, Municipal Trial Court, and
Municipal Circuit Trial Court, as the case may be, pursuant to their respective jurisdiction as
provided in Batas Pambansa Blg. 129.
Under the law, even if the offender committed the crime charged in relation to his office but occupies a
position corresponding to a salary grade below "27," the proper Regional Trial Court or Municipal Trial
Court, as the case may be, shall have exclusive jurisdiction over the case. In this case, the petitioner was a
Police Senior Inspector, with salary grade "23." He was charged with homicide punishable by reclusion
12
Prior to his arraignment, petitioner filed a Motion to Dismiss With Prayer to Defer the Issuance of Warrant
of Arrest7before respondent Sandiganbayan Second Division. As the OSP alleged, he admitted that he is a
Regional Director with Salary Grade 26. Citing Inding v. Sandiganbayan 8 and Serana v. Sandiganbayan, et
al.,9 he asserted that under Presidential Decree (P.D.) No. 1606, as amended by Section 4 (A) (1) of R.A No.
8249,10 the Sandiganbayan has no jurisdiction to try and hear the case because he is an official of the
executive branch occupying the position of a Regional Director but with a compensation that is classified
as below Salary Grade 27.
In its Opposition,11 the OSP argued that a reading of Section 4 (A) (1) (a) to (g) of the subject law would
clearly show that the qualification as to Salary Grade 27 and higher applies only to officials of the
executive branch other than the Regional Director and those specifically enumerated. This is so since the
term "Regional Director" and "higher" are separated by the conjunction "and," which signifies that these
two positions are different, apart and distinct, words but are conjoined together "relating one to the other" to
give effect to the purpose of the law. The fact that the position of Regional Director was specifically
mentioned without indication as to its salary grade signifies the lawmakers intention that officials
occupying such position, regardless of salary grade, fall within the original and exclusive jurisdiction of the
Sandiganbayan. This issue, it is claimed, was already resolved in Inding. Finally, the OSP contended that
the filing of the motion to dismiss is premature considering that the Sandiganbayan has yet to acquire
jurisdiction over the person of the accused.
Still not to be outdone, petitioner invoked the applicability of Cuyco v. Sandiganbayan 12 and Organo v.
Sandiganbayan13 in his rejoinder.
On August 18, 2009, the Sandiganbayan Second Division promulgated its Resolution, disposing:
WHEREFORE, in the light of the foregoing, the Court hereby DENIES the instant Motion to Dismiss for
being devoid of merit. Let a Warrant of Arrest be therefore issued against the accused.
SO ORDERED.14
The respondent court ruled that the position of Regional Director is one of those exceptions where the
Sandiganbayan has jurisdiction even if such position is not Salary Grade 27. It was opined that Section 4
(A) (1) of R.A No. 8249 unequivocally provides that respondent court has jurisdiction over officials of the
executive branch of the government occupying the position of regional director and higher, otherwise
classified as Salary Grade 27 and higher, of R.A. No. 6758, including those officials who are expressly
enumerated in subparagraphs (a) to (g). In support of the ruling, this Courts pronouncements in Indingand
Binay v. Sandiganbayan15 were cited.
Petitioner filed a Motion for Reconsideration, but it was denied; 16 Hence, this petition.
Instead of issuing a temporary restraining order or writ of preliminary injunction, the Court required
respondents to file a comment on the petition without necessarily giving due course thereto. 17 Upon
compliance of the OSP, a Rejoinder (supposedly a Reply) was filed by petitioner.
CONTRARY TO LAW.6
13
"(d) Philippine army and air force colonels, naval captains, and all officers of higher rank;
The creation of the Sandiganbayan was mandated by Section 5, Article XIII of the 1973 Constitution. 18 By
virtue of the powers vested in him by the Constitution and pursuant to Proclamation No. 1081, dated
September 21, 1972, former President Ferdinand E. Marcos issued P.D. No. 1486. 19 The decree was later
amended by P.D. No. 1606,20Section 20 of Batas Pambansa Blg. 129,21 P.D. No. 1860,22 and P.D. No.
1861.23
With the advent of the 1987 Constitution, the special court was retained as provided for in Section 4,
Article XI thereof.24 Aside from Executive Order Nos. 1425 and 14-a,26 and R.A. 7080,27 which expanded
the jurisdiction of the Sandiganbayan, P.D. No. 1606 was further modified by R.A. No. 7975, 28 R.A. No.
8249,29 and just this year, R.A. No. 10660.30
"(3) Members of the judiciary without prejudice to the provisions of the Constitution;
For the purpose of this case, the relevant provision is Section 4 of R.A. No. 8249, which states: SEC. 4.
Section 4 of the same decree is hereby further amended to read as follows:
"SEC. 4. Jurisdiction. The Sandiganbayan shall exercise exclusive original jurisdiction in all cases
involving:
"A. Violations of Republic Act No. 3019, as amended, otherwise known as the Anti-Graft and Corrupt
Practices Act, Republic Act No. 1379, and Chapter II, Section 2, Title VII, Book II of the Revised Penal
Code, where one or more of the accused are officials occupying the following positions in the government,
whether in a permanent, acting or interim capacity, at the time of the commission of the offense:
"(e) Officers of the Philippine National Police while occupying the position of provincial director
and those holding the rank of senior superintendent or higher;
"(f) City and provincial prosecutors and their assistants, and officials and prosecutors in the
Office of the Ombudsman and special prosecutor;
"(2) Members of Congress and officials thereof classified as Grade 27 and up under the
Compensation and Position Classification Act of 1989;
"(4) Chairmen and members of Constitutional Commission, without prejudice to the provisions
of the Constitution; and
"(5) All other national and local officials classified as Grade 27 and higher under the
Compensation and Position Classification Act of 1989.
"B. Other offenses or felonies whether simple or complexed with other crimes committed by the public
officials and employees mentioned in subsection a of this section in relation to their office.
"C. Civil and criminal cases filed pursuant to and in connection with Executive Order Nos. 1, 2, 14 and 14A, issued in 1986.
x x x"
"(1) Officials of the executive branch occupying the positions of regional director and higher, otherwise
classified as Grade 27 and higher, of the Compensation and Position Classification Act of 1989 (Republic
Act No. 6758), specifically including:
"(a) Provincial governors, vice-governors, members of the sangguniang panlalawigan, and
provincial treasurers, assessors, engineers, and other provincial department heads;
"(b) City mayor, vice-mayors, members of the sangguniang panlungsod, city treasurers,
assessors, engineers, and other city department heads;
"(c) Officials of the diplomatic service occupying the position of consul and higher;
Based on the afore-quoted, those that fall within the original jurisdiction of the Sandiganbayan are: (1)
officials of the executive branch with Salary Grade 27 or higher, and (2) officials specifically enumerated in
Section 4 (A) (1) (a) to (g), regardless of their salary grades. 31 While the first part of Section 4 (A) covers
only officials of the executive branch with Salary Grade 27 and higher, its second part specifically includes
other executive officials whose positions may not be of Salary Grade 27 and higher but who are by express
provision of law placed under the jurisdiction of the Sandiganbayan. 32
That the phrase "otherwise classified as Grade 27 and higher" qualifies "regional director and higher" is
apparent from the Sponsorship Speech of Senator Raul S. Roco on Senate Bill Nos. 1353and 844, which
eventually became R.A. Nos. 7975 and 8249, respectively:
14
Philippines,42 and a Head of the Legal Department and Chief of the Documentation with corresponding
ranks of Vice-Presidents and Assistant Vice-President of the Armed Forces of the Philippines Retirement
and Separation Benefits System (AFP-RSBS)43 fall within the jurisdiction of the Sandiganbayan.
Petitioner is not an executive official with Salary Grade 27 or higher. Neither does he hold any position
particularly enumerated in Section 4 (A) (1) (a) to (g). As he correctly argues, his case is, in fact, on all
fours with Cuyco.1avvphi1Therein, the accused was the Regional Director of the Land Transportation
Office, Region IX, Zamboanga City, but at the time of the commission of the crime in 1992, his position
was classified as Director II with Salary Grade 26.44It was opined: Petitioner contends that at the time of the
commission of the offense in 1992, he was occupying the position of Director II, Salary Grade 26, hence,
jurisdiction over the cases falls with the Regional Trial Court.
We sustain petitioner's contention.
The Sandiganbayan has no jurisdiction over violations of Section 3(a) and (e), Republic Act No. 3019, as
amended, unless committed by public officials and employees occupying positions of regional director and
higher with Salary Grade "27" or higher, under the Compensation and Position Classification Act of 1989
(Republic Act No. 6758) in relation to their office.
In ruling in favor of its jurisdiction, even though petitioner admittedly occupied the position of Director II
with Salary Grade "26" under the Compensation and Position Classification Act of 1989 (Republic Act No.
6758), the Sandiganbayan incurred in serious error of jurisdiction, and acted with grave abuse of discretion
amounting to lack of jurisdiction in suspending petitioner from office, entitling petitioner to the reliefs
prayed for.45
In the same way, a certification issued by the OIC Assistant Chief, Personnel Division of the BIR shows
that, although petitioner is a Regional Director of the BIR, his position is classified as Director II with
Salary Grade 26.46
There is no merit in the OSPs allegation that the petition was prematurely filed on the ground that
respondent court has not yet acquired jurisdiction over the person of petitioner. Records disclose that when
a warrant of arrest was issued by respondent court, petitioner voluntarily surrendered and posted a cash
bond on September 17, 2009.Also, he was arraigned on April 14, 2010,prior to the filing of the petition on
April 30, 2010.
WHEREFORE, the foregoing considered, the instant petition for certiorari is GRANTED. The August 18,
2009 Resolution and February 8, 2010 Order of the Sandiganbayan Second Division, which denied
petitioner's Motion to Dismiss on the ground of lack of jurisdiction, are REVERSED AND SET ASIDE.
SO ORDERED.
Thus, to cite a few, We have held that a member of the Sangguniang Panlungsod, 40 a department manager
of the Philippine Health Insurance Corporation (Philhealth), 41 a student regent of the University of the
15
May 5, 2003
x---------------------------------------------------------x
G.R. No. 155547 May 5, 2003
SALACNIB F. BATERINA, CLAVEL A. MARTINEZ and CONSTANTINO G.
JARAULA, petitioners,
vs.
PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., MANILA INTERNATIONAL
AIRPORT AUTHORITY, DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS,
DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, SECRETARY LEANDRO M.
MENDOZA, in his capacity as Head of the Department of Transportation and Communications, and
SECRETARY SIMEON A. DATUMANONG, in his capacity as Head of the Department of Public
Works and Highways, respondents,
JACINTO V. PARAS, RAFAEL P. NANTES, EDUARDO C. ZIALCITA, WILLY BUYSON
VILLARAMA, PROSPERO C. NOGRALES, PROSPERO A. PICHAY, JR., HARLIN CAST
ABAYON, and BENASING O. MACARANBON,respondents-intervenors,
x---------------------------------------------------------x
G.R. No. 155661 May 5, 2003
In August 1989, the DOTC engaged the services of Aeroport de Paris (ADP) to conduct a
comprehensive study of the Ninoy Aquino International Airport (NAIA) and determine whether
the present airport can cope with the traffic development up to the year 2010. The study
consisted of two parts: first, traffic forecasts, capacity of existing facilities, NAIA future
requirements, proposed master plans and development plans; and second, presentation of the
preliminary design of the passenger terminal building. The ADP submitted a Draft Final Report
to the DOTC in December 1989.
Some time in 1993, six business leaders consisting of John Gokongwei, Andrew Gotianun,
Henry Sy, Sr., Lucio Tan, George Ty and Alfonso Yuchengco met with then President Fidel V.
Ramos to explore the possibility of investing in the construction and operation of a new
international airport terminal. To signify their commitment to pursue the project, they formed the
Asia's Emerging Dragon Corp. (AEDC) which was registered with the Securities and Exchange
Commission (SEC) on September 15, 1993.
On October 5, 1994, AEDC submitted an unsolicited proposal to the Government through the
DOTC/MIAA for the development of NAIA International Passenger Terminal III (NAIA IPT III)
under a build-operate-and-transfer arrangement pursuant to RA 6957 as amended by RA 7718
(BOT Law).1
16
10.0%
b. The amount of the fixed Annual Guaranteed Payment shall be subject of the price challenge.
Proponent may offer an Annual Guaranteed Payment which need not be of equal amount, but
payment of which shall start upon site possession.
c. The project proponent must have adequate capability to sustain the financing requirement for
the detailed engineering, design, construction, and/or operation and maintenance phases of the
project as the case may be. For purposes of pre-qualification, this capability shall be measured in
terms of:
i. Proof of the availability of the project proponent and/or the consortium to provide
the minimum amount of equity for the project; and
ii. a letter testimonial from reputable banks attesting that the project proponent and/or
the members of the consortium are banking with them, that the project proponent
and/or the members are of good financial standing, and have adequate resources.
The Bid Documents issued by the PBAC provided among others that the proponent must have adequate
capability to sustain the financing requirement for the detailed engineering, design, construction, operation,
and maintenance phases of the project. The proponent would be evaluated based on its ability to provide a
minimum amount of equity to the project, and its capacity to secure external financing for the project.
d. The basis for the prequalification shall be the proponent's compliance with the minimum
technical and financial requirements provided in the Bid Documents and the IRR of the BOT
Law. The minimum amount of equity shall be 30% of the Project Cost.
On July 23, 1996, the PBAC issued PBAC Bulletin No. 2 inviting all bidders to a pre-bid conference on
July 29, 1996.
e. Amendments to the draft Concession Agreement shall be issued from time to time. Said
amendments shall only cover items that would not materially affect the preparation of the
proponent's proposal.
On August 16, 1996, the PBAC issued PBAC Bulletin No. 3 amending the Bid Documents. The following
amendments were made on the Bid Documents:
a. Aside from the fixed Annual Guaranteed Payment, the proponent shall include in its financial
proposal an additional percentage of gross revenue share of the Government, as follows:
i. First 5 years
5.0%
7.5%
On August 29, 1996, the Second Pre-Bid Conference was held where certain clarifications were made.
Upon the request of prospective bidder People's Air Cargo & Warehousing Co., Inc (Paircargo), the PBAC
warranted that based on Sec. 11.6, Rule 11 of the Implementing Rules and Regulations of the BOT Law,
only the proposed Annual Guaranteed Payment submitted by the challengers would be revealed to AEDC,
and that the challengers' technical and financial proposals would remain confidential. The PBAC also
clarified that the list of revenue sources contained in Annex 4.2a of the Bid Documents was merely
indicative and that other revenue sources may be included by the proponent, subject to approval by
DOTC/MIAA. Furthermore, the PBAC clarified that only those fees and charges denominated as Public
Utility Fees would be subject to regulation, and those charges which would be actually deemed Public
Utility Fees could still be revised, depending on the outcome of PBAC's query on the matter with the
Department of Justice.
In September 1996, the PBAC issued Bid Bulletin No. 5, entitled "Answers to the Queries of PAIRCARGO
as Per Letter Dated September 3 and 10, 1996." Paircargo's queries and the PBAC's responses were as
follows:
17
c. The prohibition imposed by RA 337, as amended (the General Banking Act) on the amount
that Security Bank could legally invest in the project;
d. The inclusion of Siemens as a contractor of the PAIRCARGO Joint Venture, for
prequalification purposes; and
e. The appointment of Lufthansa as the facility operator, in view of the Philippine requirement in
the operation of a public utility.
The PBAC gave its reply on October 2, 1996, informing AEDC that it had considered the issues raised by
the latter, and that based on the documents submitted by Paircargo and the established prequalification
criteria, the PBAC had found that the challenger, Paircargo, had prequalified to undertake the project. The
Secretary of the DOTC approved the finding of the PBAC.
The PBAC then proceeded with the opening of the second envelope of the Paircargo Consortium which
contained its Technical Proposal.
On October 3, 1996, AEDC reiterated its objections, particularly with respect to Paircargo's financial
capability, in view of the restrictions imposed by Section 21-B of the General Banking Act and Sections
1380 and 1381 of the Manual Regulations for Banks and Other Financial Intermediaries. On October 7,
1996, AEDC again manifested its objections and requested that it be furnished with excerpts of the PBAC
meeting and the accompanying technical evaluation report where each of the issues they raised were
addressed.
On October 16, 1996, the PBAC opened the third envelope submitted by AEDC and the Paircargo
Consortium containing their respective financial proposals. Both proponents offered to build the NAIA
Passenger Terminal III for at least $350 million at no cost to the government and to pay the government:
5% share in gross revenues for the first five years of operation, 7.5% share in gross revenues for the next
ten years of operation, and 10% share in gross revenues for the last ten years of operation, in accordance
with the Bid Documents. However, in addition to the foregoing, AEDC offered to pay the government a
total of P135 million as guaranteed payment for 27 years while Paircargo Consortium offered to pay the
government a total of P17.75 billion for the same period.
On September 20, 1996, the consortium composed of People's Air Cargo and Warehousing Co., Inc.
(Paircargo), Phil. Air and Grounds Services, Inc. (PAGS) and Security Bank Corp. (Security Bank)
(collectively, Paircargo Consortium) submitted their competitive proposal to the PBAC. On September 23,
1996, the PBAC opened the first envelope containing the prequalification documents of the Paircargo
Consortium. On the following day, September 24, 1996, the PBAC prequalified the Paircargo Consortium.
Thus, the PBAC formally informed AEDC that it had accepted the price proposal submitted by the
Paircargo Consortium, and gave AEDC 30 working days or until November 28, 1996 within which to
match the said bid, otherwise, the project would be awarded to Paircargo.
On September 26, 1996, AEDC informed the PBAC in writing of its reservations as regards the Paircargo
Consortium, which include:
As AEDC failed to match the proposal within the 30-day period, then DOTC Secretary Amado Lagdameo,
on December 11, 1996, issued a notice to Paircargo Consortium regarding AEDC's failure to match the
proposal.
On February 27, 1997, Paircargo Consortium incorporated into Philippine International Airport Terminals
Co., Inc. (PIATCO).
18
The First Supplement to the ARCA amended Sec. 1.36 of the ARCA defining "Revenues" or "Gross
Revenues"; Sec. 2.05 (d) of the ARCA referring to the obligation of MIAA to provide sufficient funds for
the upkeep, maintenance, repair and/or replacement of all airport facilities and equipment which are owned
or operated by MIAA; and further providing additional special obligations on the part of GRP aside from
those already enumerated in Sec. 2.05 of the ARCA. The First Supplement also provided a stipulation as
regards the construction of a surface road to connect NAIA Terminal II and Terminal III in lieu of the
proposed access tunnel crossing Runway 13/31; the swapping of obligations between GRP and PIATCO
regarding the improvement of Sales Road; and the changes in the timetable. It also amended Sec. 6.01 (c)
of the ARCA pertaining to the Disposition of Terminal Fees; Sec. 6.02 of the ARCA by inserting an
introductory paragraph; and Sec. 6.02 (a) (iii) of the ARCA referring to the Payments of Percentage Share
in Gross Revenues.
The Second Supplement to the ARCA contained provisions concerning the clearing, removal, demolition or
disposal of subterranean structures uncovered or discovered at the site of the construction of the terminal by
the Concessionaire. It defined the scope of works; it provided for the procedure for the demolition of the
said structures and the consideration for the same which the GRP shall pay PIATCO; it provided for time
extensions, incremental and consequential costs and losses consequent to the existence of such structures;
and it provided for some additional obligations on the part of PIATCO as regards the said structures.
Finally, the Third Supplement provided for the obligations of the Concessionaire as regards the
construction of the surface road connecting Terminals II and III.
Meanwhile, the MIAA which is charged with the maintenance and operation of the NAIA Terminals I and
II, had existing concession contracts with various service providers to offer international airline airport
services, such as in-flight catering, passenger handling, ramp and ground support, aircraft maintenance and
provisions, cargo handling and warehousing, and other services, to several international airlines at the
NAIA. Some of these service providers are the Miascor Group, DNATA-Wings Aviation Systems Corp.,
and the MacroAsia Group. Miascor, DNATA and MacroAsia, together with Philippine Airlines (PAL), are
the dominant players in the industry with an aggregate market share of 70%.
On September 17, 2002, the workers of the international airline service providers, claiming that they stand
to lose their employment upon the implementation of the questioned agreements, filed before this Court a
petition for prohibition to enjoin the enforcement of said agreements. 2
On October 15, 2002, the service providers, joining the cause of the petitioning workers, filed a motion for
intervention and a petition-in-intervention.
On October 24, 2002, Congressmen Salacnib Baterina, Clavel Martinez and Constantino Jaraula filed a
similar petition with this Court.3
On November 6, 2002, several employees of the MIAA likewise filed a petition assailing the legality of the
various agreements.4
19
20
Standing is a peculiar concept in constitutional law because in some cases, suits are not brought by parties
who have been personally injured by the operation of a law or any other government act but by concerned
citizens, taxpayers or voters who actually sue in the public interest. Although we are not unmindful of the
cases of Imus Electric Co. v. Municipality of Imus13 and Gonzales v. Raquiza14 wherein this Court held
that appropriation must be made only on amounts immediately demandable, public interest demands that
we take a more liberal view in determining whether the petitioners suing as legislators, taxpayers and
citizens have locus standi to file the instant petition. In Kilosbayan, Inc. v. Guingona,15 this Court held
"[i]n line with the liberal policy of this Court onlocus standi, ordinary taxpayers, members of Congress, and
even association of planters, and non-profit civic organizations were allowed to initiate and prosecute
actions before this Court to question the constitutionality or validity of laws, acts, decisions, rulings, or
orders of various government agencies or instrumentalities." 16 Further, "insofar as taxpayers' suits are
concerned . . . (this Court) is not devoid of discretion as to whether or not it should be entertained."17 As
such ". . . even if, strictly speaking, they [the petitioners] are not covered by the definition, it is still within
the wide discretion of the Court to waive the requirement and so remove the impediment to its addressing
and resolving the serious constitutional questions raised." 18 In view of the serious legal questions involved
and their impact on public interest, we resolve to grant standing to the petitioners.
Other Procedural Matters
Respondent PIATCO further alleges that this Court is without jurisdiction to review the instant cases as
factual issues are involved which this Court is ill-equipped to resolve. Moreover, PIATCO alleges that
submission of this controversy to this Court at the first instance is a violation of the rule on hierarchy of
courts. They contend that trial courts have concurrent jurisdiction with this Court with respect to a special
civil action for prohibition and hence, following the rule on hierarchy of courts, resort must first be had
before the trial courts.
After a thorough study and careful evaluation of the issues involved, this Court is of the view that the crux
of the instant controversy involves significant legal questions. The facts necessary to resolve these legal
questions are well established and, hence, need not be determined by a trial court.
The rule on hierarchy of courts will not also prevent this Court from assuming jurisdiction over the cases at
bar. The said rule may be relaxed when the redress desired cannot be obtained in the appropriate courts or
where exceptional and compelling circumstances justify availment of a remedy within and calling for the
exercise of this Court's primary jurisdiction.19
It is easy to discern that exceptional circumstances exist in the cases at bar that call for the relaxation of
the rule. Both petitioners and respondents agree that these cases are of transcendental importance as they
involve the construction and operation of the country's premier international airport. Moreover, the crucial
issues submitted for resolution are of first impression and they entail the proper legal interpretation of key
provisions of the Constitution, the BOT Law and its Implementing Rules and Regulations. Thus,
considering the nature of the controversy before the Court, procedural bars may be lowered to give way for
the speedy disposition of the instant cases.
Legal Effect of the Commencement
21
PIATCO relies, on the other hand, on the strength of the Memorandum dated October 14, 1996 issued by
the DOTC Undersecretary Primitivo C. Cal stating that the Paircargo Consortium is found to have a
combined net worth of P3,900,000,000.00, sufficient to meet the equity requirements of the project. The
said Memorandum was in response to a letter from Mr. Antonio Henson of AEDC to President Fidel V.
Ramos questioning the financial capability of the Paircargo Consortium on the ground that it does not have
the financial resources to put up the required minimum equity of P2,700,000,000.00. This contention is
based on the restriction under R.A. No. 337, as amended or the General Banking Act that a commercial
bank cannot invest in any single enterprise in an amount more than 15% of its net worth. In the said
Memorandum, Undersecretary Cal opined:
The Bid Documents, as clarified through Bid Bulletin Nos. 3 and 5, require that financial
capability will be evaluated based on total financial capability of all the member companies of
the [Paircargo] Consortium. In this connection, the Challenger was found to have a combined net
worth of P3,926,421,242.00 that could support a project costing approximately P13 Billion.
It is not a requirement that the net worth must be "unrestricted." To impose that as a requirement
now will be nothing less than unfair.
The financial statement or the net worth is not the sole basis in establishing financial capability.
As stated in Bid Bulletin No. 3, financial capability may also be established by testimonial letters
issued by reputable banks. The Challenger has complied with this requirement.
To recap, net worth reflected in the Financial Statement should not be taken as the amount of the
money to be used to answer the required thirty percent (30%) equity of the challenger but rather
to be used in establishing if there is enough basis to believe that the challenger can comply with
the required 30% equity. In fact, proof of sufficient equity is required as one of the conditions for
award of contract (Section 12.1 IRR of the BOT Law) but not for pre-qualification (Section 5.4
of the same document).23
Under the BOT Law, in case of a build-operate-and-transfer arrangement, the contract shall be
awarded to the bidder "who, having satisfied the minimum financial, technical, organizational
and legal standards" required by the law, has submitted the lowest bid and most favorable terms
of the project.24 Further, the 1994 Implementing Rules and Regulations of the BOT Law provide:
Section 5.4 Pre-qualification Requirements.
xxx
xxx
xxx
c. Financial Capability: The project proponent must have adequate capability to sustain the
financing requirements for the detailed engineering design, construction and/or operation and
maintenance phases of the project, as the case may be. For purposes of pre-qualification, this
capability shall be measured in terms of (i) proof of the ability of the project proponent
and/or the consortium to provide a minimum amount of equity to the project, and (ii) a
letter testimonial from reputable banks attesting that the project proponent and/or
22
bank, a bank authorized to provide commercial banking services, as well as a governmentowned and controlled bank, to operate under an expanded commercial banking authority
and by virtue thereof exercise, in addition to powers authorized for commercial banks, the
powers of an Investment House as provided in Presidential Decree No. 129, invest in the
equity of a non-allied undertaking, or own a majority or all of the equity in a financial
intermediary other than a commercial bank or a bank authorized to provide commercial banking
services:Provided, That (a) the total investment in equities shall not exceed fifty percent (50%)
of the net worth of the bank; (b) the equity investment in any one enterprise whether allied
or non-allied shall not exceed fifteen percent (15%) of the net worth of the bank; (c) the
equity investment of the bank, or of its wholly or majority-owned subsidiary, in a single nonallied undertaking shall not exceed thirty-five percent (35%) of the total equity in the enterprise
nor shall it exceed thirty-five percent (35%) of the voting stock in that enterprise; and (d) the
equity investment in other banks shall be deducted from the investing bank's net worth for
purposes of computing the prescribed ratio of net worth to risk assets.
xxx
xxx
xxx
23
PIATCO maintains, however, that the Concession Agreement attached to the Bid Documents is intended to
be adraft, i.e., subject to change, alteration or modification, and that this intention was clear to all
participants, including AEDC, and DOTC/MIAA. It argued further that said intention is expressed in Part C
(6) of Bid Bulletin No. 3 issued by the PBAC which states:
6. Amendments to the Draft Concessions Agreement
Further, the determination of whether or not a bidder is pre-qualified to undertake the project requires an
evaluation of the financial capacity of the said bidder at the time the bid is submitted based on the
required documents presented by the bidder. The PBAC should not be allowed to speculate on the future
financial ability of the bidder to undertake the project on the basis of documents submitted. This would
open doors to abuse and defeat the very purpose of a public bidding. This is especially true in the case at
bar which involves the investment of billions of pesos by the project proponent. The relevant government
authority is duty-bound to ensure that the awardee of the contract possesses the minimum required financial
capability to complete the project. To allow the PBAC to estimate the bidder's future financial capability
would not secure the viability and integrity of the project. A restrictive and conservative application of the
rules and procedures of public bidding is necessary not only to protect the impartiality and regularity of the
proceedings but also to ensure the financial and technical reliability of the project. It has been held that:
The basic rule in public bidding is that bids should be evaluated based on the required documents
submitted before and not after the opening of bids. Otherwise, the foundation of a fair and
competitive public bidding would be defeated. Strict observance of the rules, regulations, and
guidelines of the bidding process is the only safeguard to a fair, honest and competitive
public bidding.30
Thus, if the maximum amount of equity that a bidder may invest in the project at the time the bids are
submittedfalls short of the minimum amounts required to be put up by the bidder, said bidder should be
properly disqualified. Considering that at the pre-qualification stage, the maximum amounts which the
Paircargo Consortium may invest in the project fell short of the minimum amounts prescribed by the
PBAC, we hold that Paircargo Consortium was not a qualified bidder. Thus the award of the contract by the
PBAC to the Paircargo Consortium, a disqualified bidder, is null and void.
While it would be proper at this juncture to end the resolution of the instant controversy, as the legal effects
of the disqualification of respondent PIATCO's predecessor would come into play and necessarily result in
the nullity of all the subsequent contracts entered by it in pursuance of the project, the Court feels that it is
necessary to discuss in full the pressing issues of the present controversy for a complete resolution thereof.
II
Is the 1997 Concession Agreement valid?
Petitioners and public respondents contend that the 1997 Concession Agreement is invalid as it contains
provisions that substantially depart from the draft Concession Agreement included in the Bid Documents.
They maintain that a substantial departure from the draft Concession Agreement is a violation of public
policy and renders the 1997 Concession Agreement null and void.
Amendments to the Draft Concessions Agreement shall be issued from time to time. Said
amendments shall only cover items that would not materially affect the preparation of the
proponent's proposal.
By its very nature, public bidding aims to protect the public interest by giving the public the best possible
advantages through open competition. Thus:
Competition must be legitimate, fair and honest. In the field of government contract law,
competition requires, not only `bidding upon a common standard, a common basis, upon the
same thing, the same subject matter, the same undertaking,' but also that it be legitimate, fair
and honest; and not designed to injure or defraud the government.31
An essential element of a publicly bidded contract is that all bidders must be on equal footing. Not simply
in terms of application of the procedural rules and regulations imposed by the relevant government agency,
but more importantly, on the contract bidded upon. Each bidder must be able to bid on the same thing. The
rationale is obvious. If the winning bidder is allowed to later include or modify certain provisions in the
contract awarded such that the contract is altered in any material respect, then the essence of fair
competition in the public bidding is destroyed. A public bidding would indeed be a farce if after the
contract is awarded, the winning bidder may modify the contract and include provisions which are
favorable to it that were not previously made available to the other bidders. Thus:
It is inherent in public biddings that there shall be a fair competition among the bidders. The
specifications in such biddings provide the common ground or basis for the bidders. The
specifications should, accordingly, operate equally or indiscriminately upon all bidders. 32
The same rule was restated by Chief Justice Stuart of the Supreme Court of Minnesota:
The law is well settled that where, as in this case, municipal authorities can only let a contract for
public work to the lowest responsible bidder, the proposals and specifications therefore must be
so framed as to permit free and full competition. Nor can they enter into a contract with the
best bidder containing substantial provisions beneficial to him, not included or
contemplated in the terms and specifications upon which the bids were invited. 33
In fact, in the PBAC Bid Bulletin No. 3 cited by PIATCO to support its argument that the draft concession
agreement is subject to amendment, the pertinent portion of which was quoted above, the PBAC also
clarified that "[s]aid amendments shall only cover items that would not materially affect the
preparation of the proponent's proposal."
24
of DOTC/MIAA; and (3) new fees and charges that may be imposed by PIATCO which have not been
previously imposed or collected at the Ninoy Aquino International Airport Passenger Terminal I, pursuant
to Administrative Order No. 1, Series of 1993, as amended. The glaring distinctions between the draft
Concession Agreement and the 1997 Concession Agreement lie in the types of fees included in each
category and the extent of the supervision and regulation which MIAA is allowed to exercise in relation
thereto.
For fees under the first category, i.e., those which are subject to periodic adjustment in accordance with a
prescribed parametric formula and effective only upon written approval by MIAA, the draft Concession
Agreementincludes the following:36
(1) aircraft parking fees;
(2) aircraft tacking fees;
(3) groundhandling fees;
(4) rentals and airline offices;
(5) check-in counter rentals; and
(6) porterage fees.
Under the 1997 Concession Agreement, fees which are subject to adjustment and effective upon MIAA
approval are classified as "Public Utility Revenues" and include: 37
(1) aircraft parking fees;
collected by PIATCO
The fees that may be imposed and collected by PIATCO under the draft Concession Agreement and the
1997 Concession Agreement may be classified into three distinct categories: (1) fees which are subject to
periodic adjustment of once every two years in accordance with a prescribed parametric formula and
adjustments are made effective only upon written approval by MIAA; (2) fees other than those included in
the first category which maybe adjusted by PIATCO whenever it deems necessary without need for consent
The implication of the reduced number of fees that are subject to MIAA approval is best appreciated in
relation to fees included in the second category identified above. Under the 1997 Concession
Agreement, fees which PIATCO may adjust whenever it deems necessary without need for consent of
DOTC/MIAA are "Non-Public Utility Revenues" and is defined as "all other income not classified as
Public Utility Revenues derived from operations of the Terminal and the Terminal Complex." 38 Thus, under
the 1997 Concession Agreement, ground handling fees, rentals from airline offices and porterage fees are
no longer subject to MIAA regulation.
25
MIAA may regulate fees under the first category, i.e., periodic adjustment of once every two years in
accordance with a prescribed parametric formula and effective only upon written approval by MIAA.
However, under the 1997 Concession Agreement, adjustment of fees under the third category is not
subject to MIAA regulation.
With respect to terminal fees that may be charged by PIATCO,41 as shown earlier, this was included within
the category of "Public Utility Revenues" under the 1997 Concession Agreement. This classification is
significant because under the 1997 Concession Agreement, "Public Utility Revenues" are subject to an
"Interim Adjustment" of fees upon the occurrence of certain extraordinary events specified in the
agreement.42 However, under the draft Concession Agreement, terminal fees are not included in the types
of fees that may be subject to "Interim Adjustment." 43
Finally, under the 1997 Concession Agreement, "Public Utility Revenues," except terminal fees, are
denominated in US Dollars44 while payments to the Government are in Philippine Pesos. In the draft
Concession Agreement,no such stipulation was included. By stipulating that "Public Utility Revenues"
will be paid to PIATCO in US Dollars while payments by PIATCO to the Government are in Philippine
currency under the 1997 Concession Agreement, PIATCO is able to enjoy the benefits of depreciations of
the Philippine Peso, while being effectively insulated from the detrimental effects of exchange rate
fluctuations.
On the other hand, the equivalent provision under the 1997 Concession Agreement reads:
Section 6.03 Periodic Adjustment in Fees and Charges.
xxx
xxx
xxx
(c) Concessionaire shall at all times be judicious in fixing fees and charges constituting NonPublic Utility Revenues in order to ensure that End Users are not unreasonably deprived of
services. While the vehicular parking fee, porterage fee and greeter/well wisher fee
constitute Non-Public Utility Revenues of Concessionaire, GRP may intervene and require
Concessionaire to explain and justify the fee it may set from time to time, if in the reasonable
opinion of GRP the said fees have become exorbitant resulting in the unreasonable deprivation of
End Users of such services.40
Thus, under the 1997 Concession Agreement, with respect to (1) vehicular parking fee, (2) porterage fee
and (3) greeter/well wisher fee, all that MIAA can do is to require PIATCO to explain and justify the fees
set by PIATCO. In the draft Concession Agreement, vehicular parking fee is subject to MIAA regulation
and approval under the second paragraph of Section 6.03 thereof while porterage fee is covered by the first
paragraph of the same provision. There is an obvious relaxation of the extent of control and regulation by
MIAA with respect to the particular fees that may be charged by PIATCO.
Moreover, with respect to the third category of fees that may be imposed and collected by PIATCO, i.e.,
new fees and charges that may be imposed by PIATCO which have not been previously imposed or
collected at the Ninoy Aquino International Airport Passenger Terminal I, under Section 6.03 of the draft
Concession Agreement MIAA has reserved the right to regulate the same under the same conditions that
When taken as a whole, the changes under the 1997 Concession Agreement with respect to reduction in the
types of fees that are subject to MIAA regulation and the relaxation of such regulation with respect to other
fees are significant amendments that substantially distinguish the draft Concession Agreement from the
1997 Concession Agreement. The 1997 Concession Agreement, in this respect, clearly gives PIATCO
more favorable terms than what was available to other bidders at the time the contract was bidded
out. It is not very difficult to see that the changes in the 1997 Concession Agreement translate to direct and
concrete financial advantages for PIATCO which were not available at the time the contract was offered
for bidding. It cannot be denied that under the 1997 Concession Agreement only "Public Utility Revenues"
are subject to MIAA regulation. Adjustments of all other fees imposed and collected by PIATCO are
entirely within its control. Moreover, with respect to terminal fees, under the 1997 Concession Agreement,
the same is further subject to "Interim Adjustments" not previously stipulated in the draft Concession
Agreement. Finally, the change in the currency stipulated for "Public Utility Revenues" under the 1997
Concession Agreement, except terminal fees, gives PIATCO an added benefit which was not available at
the time of bidding.
b. Assumption by the
Government of the liabilities of
PIATCO in the event of the latter's
default thereof
26
xxx
xxx
(b) In the event Concessionaire should default in the payment of an Attendant Liability, and the
default has resulted in the acceleration of the payment due date of the Attendant Liability prior to
its stated date of maturity, the Unpaid Creditors and Concessionaire shall immediately inform
GRP in writing of such default. GRP shall, within one hundred eighty (180) Days from receipt of
the joint written notice of the Unpaid Creditors and Concessionaire, either (i) take over the
Development Facility and assume the Attendant Liabilities, or (ii) allow the Unpaid Creditors, if
qualified, to be substituted as concessionaire and operator of the Development Facility in
accordance with the terms and conditions hereof, or designate a qualified operator acceptable to
GRP to operate the Development Facility, likewise under the terms and conditions of this
Agreement; Provided that if at the end of the 180-day period GRP shall not have served the
Unpaid Creditors and Concessionaire written notice of its choice, GRP shall be deemed to have
elected to take over the Development Facility with the concomitant assumption of Attendant
Liabilities.
(c) If GRP should, by written notice, allow the Unpaid Creditors to be substituted as
concessionaire, the latter shall form and organize a concession company qualified to take over
the operation of the Development Facility. If the concession company should elect to designate
an operator for the Development Facility, the concession company shall in good faith identify
and designate a qualified operator acceptable to GRP within one hundred eighty (180) days from
receipt of GRP's written notice. If the concession company, acting in good faith and with due
diligence, is unable to designate a qualified operator within the aforesaid period, then GRP shall
at the end of the 180-day period take over the Development Facility and assume Attendant
Liabilities.
The term "Attendant Liabilities" under the 1997 Concession Agreement is defined as:
Attendant Liabilities refer to all amounts recorded and from time to time outstanding in the
books of the Concessionaire as owing to Unpaid Creditors who have provided, loaned or
advanced funds actually used for the Project, including all interests, penalties, associated fees,
charges, surcharges, indemnities, reimbursements and other related expenses, and further
including amounts owed by Concessionaire to its suppliers, contractors and sub-contractors.
Under the above quoted portions of Section 4.04 in relation to the definition of "Attendant
Liabilities," default by PIATCO of its loans used to finance the NAIA IPT III project triggers the
occurrence of certain events that leads to the assumption by the Government of the liability for the
loans. Only in one instance may the Government escape the assumption of PIATCO's liabilities, i.e., when
the Government so elects and allows a qualified operator to take over as Concessionaire. However, this
circumstance is dependent on the existence and availability of a qualified operator who is willing to
take over the rights and obligations of PIATCO under the contract, a circumstance that is not
entirely within the control of the Government.
Without going into the validity of this provision at this juncture, suffice it to state that Section 4.04 of the
1997 Concession Agreement may be considered a form of security for the loans PIATCO has obtained to
finance the project, an option that was not made available in the draft Concession Agreement. Section 4.04
is an important amendment to the 1997 Concession Agreement because it grants PIATCO a financial
advantage or benefit which was not previously made available during the bidding process. This
financial advantage is a significant modification that translates to better terms and conditions for PIATCO.
PIATCO, however, argues that the parties to the bidding procedure acknowledge that the draft Concession
Agreement is subject to amendment because the Bid Documents permit financing or borrowing. They claim
that it was the lenders who proposed the amendments to the draft Concession Agreement which resulted in
the 1997 Concession Agreement.
We agree that it is not inconsistent with the rationale and purpose of the BOT Law to allow the project
proponent or the winning bidder to obtain financing for the project, especially in this case which involves
the construction, operation and maintenance of the NAIA IPT III. Expectedly, compliance by the project
proponent of its undertakings therein would involve a substantial amount of investment. It is therefore
inevitable for the awardee of the contract to seek alternate sources of funds to support the project. Be that
as it may, this Court maintains that amendments to the contract bidded upon should always conform to the
general policy on public bidding if such procedure is to be faithful to its real nature and purpose. By its
very nature and characteristic, competitive public bidding aims to protect the public interest by giving the
public the best possible advantages through open competition. 45 It has been held that the three principles in
public bidding are (1) the offer to the public; (2) opportunity for competition; and (3) a basis for the exact
comparison of bids. A regulation of the matter which excludes any of these factors destroys the distinctive
character of the system and thwarts the purpose of its adoption. 46 These are the basic parameters which
every awardee of a contract bidded out must conform to, requirements of financing and borrowing
notwithstanding. Thus, upon a concrete showing that, as in this case, the contract signed by the government
and the contract-awardee is an entirely different contract from the contract bidded, courts should not
hesitate to strike down said contract in its entirety for violation of public policy on public bidding. A strict
adherence on the principles, rules and regulations on public bidding must be sustained if only to preserve
the integrity and the faith of the general public on the procedure.
Public bidding is a standard practice for procuring government contracts for public service and for
furnishing supplies and other materials. It aims to secure for the government the lowest possible price under
the most favorable terms and conditions, to curtail favoritism in the award of government contracts and
avoid suspicion of anomalies and it places all bidders in equal footing. 47 Any government action which
permits any substantial variance between the conditions under which the bids are invited and the
27
xxx
xxx
(b) In the event Concessionaire should default in the payment of an Attendant Liability, and
the default resulted in the acceleration of the payment due date of the Attendant Liability prior to
its stated date of maturity, the Unpaid Creditors and Concessionaire shall immediately inform
GRP in writing of such default. GRP shall within one hundred eighty (180) days from receipt of
the joint written notice of the Unpaid Creditors and Concessionaire, either (i) take over the
Development Facility and assume the Attendant Liabilities, or (ii) allow the Unpaid Creditors,
if qualified to be substituted as concessionaire and operator of the Development facility in
accordance with the terms and conditions hereof, or designate a qualified operator acceptable to
GRP to operate the Development Facility, likewise under the terms and conditions of this
Agreement; Provided, that if at the end of the 180-day period GRP shall not have served the
Unpaid Creditors and Concessionaire written notice of its choice, GRP shall be deemed to have
elected to take over the Development Facility with the concomitant assumption of
Attendant Liabilities.
(c) If GRP, by written notice, allow the Unpaid Creditors to be substituted as concessionaire, the
latter shall form and organize a concession company qualified to takeover the operation of the
Development Facility. If the concession company should elect to designate an operator for the
Development Facility, the concession company shall in good faith identify and designate a
qualified operator acceptable to GRP within one hundred eighty (180) days from receipt of
GRP's written notice. If the concession company, acting in good faith and with due diligence, is
unable to designate a qualified operator within the aforesaid period, then GRP shall at the end of
the 180-day period take over the Development Facility and assume Attendant Liabilities.
.
Section 1.06. Attendant Liabilities
Attendant Liabilities refer to all amounts recorded and from time to time outstanding in the
books of the Concessionaire as owing to Unpaid Creditors who have provided, loaned or
advanced funds actually used for the Project, including all interests, penalties, associated fees,
charges, surcharges, indemnities, reimbursements and other related expenses, and further
including amounts owed by Concessionaire to its suppliers, contractors and sub-contractors. 48
It is clear from the above-quoted provisions that Government, in the event that PIATCO defaults in its
loan obligations, is obligated to pay "all amounts recorded and from time to time outstanding from the
books" of PIATCO which the latter owes to its creditors.49 These amounts include "all interests, penalties,
associated fees, charges, surcharges, indemnities, reimbursements and other related expenses." 50 This
obligation of the Government to pay PIATCO's creditors upon PIATCO's default would arise if the
Government opts to take over NAIA IPT III. It should be noted, however, that even if the Government
chooses the second option, which is to allow PIATCO's unpaid creditors operate NAIA IPT III, the
Government is still at a risk of being liable to PIATCO's creditors should the latter be unable to designate a
qualified operator within the prescribed period.51 In effect,whatever option the Government chooses to
take in the event of PIATCO's failure to fulfill its loan obligations, the Government is still at a risk of
assuming PIATCO's outstanding loans. This is due to the fact that the Government would only be free
from assuming PIATCO's debts if the unpaid creditors would be able to designate a qualified operator
within the period provided for in the contract. Thus, the Government's assumption of liability is
virtually out of its control. The Government under the circumstances provided for in the 1997 Concession
Agreement is at the mercy of the existence, availability and willingness of a qualified operator. The above
contractual provisions constitute a direct government guarantee which is prohibited by law.
One of the main impetus for the enactment of the BOT Law is the lack of government funds to construct
the infrastructure and development projects necessary for economic growth and development. This is why
private sector resources are being tapped in order to finance these projects. The BOT law allows the private
sector to participate, and is in fact encouraged to do so by way of incentives, such as minimizing the
unstable flow of returns,52 provided that the government would not have to unnecessarily expend scarcely
available funds for the project itself. As such, direct guarantee, subsidy and equity by the government in
these projects are strictly prohibited.53 This is but logical for if the government would in the end still be
at a risk of paying the debts incurred by the private entity in the BOT projects, then the purpose of
the law is subverted.
Section 2(n) of the BOT Law defines direct guarantee as follows:
28
Facility [NAIA Terminal 3] to GRP) within the following one hundred eighty (180)
days. If no agreement relating to the Development Facility [NAIA Terminal 3] is
arrived at by GRP and the Senior Lenders within the said 180-day period, then at the
end thereof the Development Facility [NAIA Terminal 3] shall be transferred by
the Concessionaire [PIATCO] to GRP or its designee and GRP shall make a
termination payment to Concessionaire [PIATCO] equal to the Appraised Value
(as hereinafter defined) of the Development Facility [NAIA Terminal 3] or the
sum of the Attendant Liabilities, if greater. Notwithstanding Section 8.01(c) hereof,
this Agreement shall be deemed terminated upon the transfer of the Development
Facility [NAIA Terminal 3] to GRP pursuant hereto;
The fact that the ARCA superseded the 1997 Concession Agreement did not cure this fatal defect. Article
IV, Section 4.04(c), in relation to Article I, Section 1.06, of the ARCA provides:
xxx
xxx
xxx
xxx
xxx
(c) GRP agrees with Concessionaire (PIATCO) that it shall negotiate in good faith and enter
into direct agreement with the Senior Lenders, or with an agent of such Senior Lenders
(which agreement shall be subject to the approval of the Bangko Sentral ng Pilipinas), in such
form as may be reasonably acceptable to both GRP and Senior Lenders, with regard, inter alia, to
the following parameters:
xxx
xxx
xxx
xxx
Attendant Liabilities refer to all amounts in each case supported by verifiable evidence from
time to timeowed or which may become owing by Concessionaire [PIATCO] to Senior
Lenders or any other persons or entities who have provided, loaned, or advanced funds
or provided financial facilities to Concessionaire [PIATCO] for the Project [NAIA Terminal
3], including, without limitation, all principal, interest, associated fees, charges,
reimbursements, and other related expenses (including the fees, charges and expenses of any
agents or trustees of such persons or entities), whether payable at maturity, by acceleration or
otherwise, and further including amounts owed by Concessionaire [PIATCO] to its professional
consultants and advisers, suppliers, contractors and sub-contractors. 54
xxx
(vi) if the Senior Lenders, acting in good faith and using reasonable efforts, are unable
to designate a nominee or effect a transfer in terms and conditions satisfactory to the
Senior Lenders within one hundred eighty (180) days after giving GRP notice as
referred to respectively in (iv) or (v) above, then GRP and the Senior Lenders shall
endeavor in good faith to enter into any other arrangement relating to the
Development Facility [NAIA Terminal 3] (other than a turnover of the Development
It is clear from the foregoing contractual provisions that in the event that PIATCO fails to fulfill its loan
obligations to its Senior Lenders, the Government is obligated to directly negotiate and enter into an
agreement relating to NAIA IPT III with the Senior Lenders, should the latter fail to appoint a qualified
nominee or transferee who will take the place of PIATCO. If the Senior Lenders and the Government are
unable to enter into an agreement after the prescribed period, the Government must then pay PIATCO,
upon transfer of NAIA IPT III to the Government, termination payment equal to the appraised value of the
project or the value of the attendant liabilities whichever is greater. Attendant liabilities as defined in
the ARCA includes all amounts owed or thereafter may be owed by PIATCO not only to the Senior Lenders
with whom PIATCO has defaulted in its loan obligations but to all other persons who may have loaned,
advanced funds or provided any other type of financial facilities to PIATCO for NAIA IPT III. The amount
of PIATCO's debt that the Government would have to pay as a result of PIATCO's default in its loan
obligations -- in case no qualified nominee or transferee is appointed by the Senior Lenders and no other
agreement relating to NAIA IPT III has been reached between the Government and the Senior Lenders -includes, but is not limited to, "all principal, interest, associated fees, charges, reimbursements, and other
related expenses . . . whether payable at maturity, by acceleration or otherwise." 55
It is clear from the foregoing that the ARCA provides for a direct guarantee by the government to
pay PIATCO's loans not only to its Senior Lenders but all other entities who provided PIATCO funds
or services upon PIATCO's default in its loan obligation with its Senior Lenders. The fact that the
Government's obligation to pay PIATCO's lenders for the latter's obligation would only arise after the
Senior Lenders fail to appoint a qualified nominee or transferee does not detract from the fact that, should
29
prohibition against a direct government guarantee would not only make a mockery of what the BOT
Law seeks to prevent -- which is to expose the government to the risk of incurring a monetary
obligation resulting from a contract of loan between the project proponent and its lenders and to
which the Government is not a party to -- but would also render the BOT Law useless for what it
seeks to achieve - to make use of the resources of the private sector in the "financing, operation and
maintenance of infrastructure and development projects" 59which are necessary for national growth
and development but which the government, unfortunately, could ill-afford to finance at this point in
time.
IV
Temporary takeover of business affected with public interest
Article XII, Section 17 of the 1987 Constitution provides:
Section 17. In times of national emergency, when the public interest so requires, the State may,
during the emergency and under reasonable terms prescribed by it, temporarily take over or
direct the operation of any privately owned public utility or business affected with public
interest.
The above provision pertains to the right of the State in times of national emergency, and in the exercise of
its police power, to temporarily take over the operation of any business affected with public interest. In the
1986 Constitutional Commission, the term "national emergency" was defined to include threat from
external aggression, calamities or national disasters, but not strikes "unless it is of such proportion that
would paralyze government service."60 The duration of the emergency itself is the determining factor as to
how long the temporary takeover by the government would last.61 The temporary takeover by the
government extends only to the operation of the business and not to the ownership thereof. As such
the government is not required to compensate the private entity-owner of the said business as there is
no transfer of ownership, whether permanent or temporary. The private entity-owner affected by the
temporary takeover cannot, likewise, claim just compensation for the use of the said business and its
properties as the temporary takeover by the government is in exercise of its police power and not of its
power of eminent domain.
Article V, Section 5.10 (c) of the 1997 Concession Agreement provides:
Section 5.10 Temporary Take-over of operations by GRP.
.
(c) In the event the development Facility or any part thereof and/or the operations of
Concessionaire or any part thereof, become the subject matter of or be included in any notice,
notification, or declaration concerning or relating to acquisition, seizure or appropriation by GRP
in times of war or national emergency, GRP shall, by written notice to Concessionaire,
immediately take over the operations of the Terminal and/or the Terminal Complex. During such
30
In the cases at bar, PIATCO, under the 1997 Concession Agreement and the ARCA, is granted the
"exclusive rightto operate a commercial international passenger terminal within the Island of Luzon" at the
NAIA IPT III.68 This is with the exception of already existing international airports in Luzon such as those
located in the Subic Bay Freeport Special Economic Zone ("SBFSEZ"), Clark Special Economic Zone
("CSEZ") and in Laoag City.69 As such, upon commencement of PIATCO's operation of NAIA IPT III,
Terminals 1 and 2 of NAIA would cease to function as international passenger terminals. This, however,
does not prevent MIAA to use Terminals 1 and 2 as domestic passenger terminals or in any other manner as
it may deem appropriate except those activities that would compete with NAIA IPT III in the latter's
operation as an international passenger terminal.70 The right granted to PIATCO toexclusively operate
NAIA IPT III would be for a period of twenty-five (25) years from the In-Service Date 71 and renewable for
another twenty-five (25) years at the option of the government. 72 Both the 1997 Concession Agreement
and the ARCA further provide that, in view of the exclusive right granted to PIATCO, the concession
contracts of the service providers currently servicing Terminals 1 and 2 would no longer be renewed
and those concession contracts whose expiration are subsequent to the In-Service Date would cease to
be effective on the said date.73
The operation of an international passenger airport terminal is no doubt an undertaking imbued with public
interest. In entering into a BuildOperate-and-Transfer contract for the construction, operation and
maintenance of NAIA IPT III, the government has determined that public interest would be served better if
private sector resources were used in its construction and an exclusive right to operate be granted to the
private entity undertaking the said project, in this case PIATCO. Nonetheless, the privilege given to
PIATCO is subject to reasonable regulation and supervision by the Government through the MIAA, which
is the government agency authorized to operate the NAIA complex, as well as DOTC, the department to
which MIAA is attached.74
This is in accord with the Constitutional mandate that a monopoly which is not prohibited must be
regulated.75 While it is the declared policy of the BOT Law to encourage private sector participation by
"providing a climate of minimum government regulations," 76 the same does not mean that Government
must completely surrender its sovereign power to protect public interest in the operation of a public utility
as a monopoly. The operation of said public utility can not be done in an arbitrary manner to the detriment
of the public which it seeks to serve. The right granted to the public utility may be exclusive but the
exercise of the right cannot run riot. Thus, while PIATCO may be authorized to exclusively operate NAIA
IPT III as an international passenger terminal, the Government, through the MIAA, has the right and the
duty to ensure that it is done in accord with public interest. PIATCO's right to operate NAIA IPT III cannot
also violate the rights of third parties.
Section 3.01(e) of the 1997 Concession Agreement and the ARCA provide:
3.01 Concession Period
xxx
xxx
xxx
(e) GRP confirms that certain concession agreements relative to certain services and
operations currently being undertaken at the Ninoy Aquino International Airport passenger
Terminal I have a validity period extending beyond the In-Service Date. GRP through
31
government guarantee expressly prohibited by, among others, the BOT Law and its Implementing Rules
and Regulations are also null and void. The Supplements, being accessory contracts to the ARCA, are
likewise null and void.
WHEREFORE, the 1997 Concession Agreement, the Amended and Restated Concession Agreement and
the Supplements thereto are set aside for being null and void.
SO ORDERED.
During the oral arguments on December 10, 2002, the counsel for the petitioners-in-intervention
for G.R. No. 155001 stated that there are two service providers whose contracts are still existing
and whose validity extends beyond the In-Service Date. One contract remains valid until 2008
and the other until 2010.77
We hold that while the service providers presently operating at NAIA Terminal 1 do not have an absolute
right for the renewal or the extension of their respective contracts, those contracts whose duration extends
beyond NAIA IPT III's In-Service-Date should not be unduly prejudiced. These contracts must be respected
not just by the parties thereto but also by third parties. PIATCO cannot, by law and certainly not by
contract, render a valid and binding contract nugatory. PIATCO, by the mere expedient of claiming an
exclusive right to operate, cannot require the Government to break its contractual obligations to the service
providers. In contrast to the arrastre and stevedoring service providers in the case of Anglo-Fil Trading
Corporation v. Lazaro78 whose contracts consist of temporary hold-over permits, the affected service
providers in the cases at bar, have a valid and binding contract with the Government, through MIAA,
whose period of effectivity, as well as the other terms and conditions thereof, cannot be violated.
In fine, the efficient functioning of NAIA IPT III is imbued with public interest. The provisions of the 1997
Concession Agreement and the ARCA did not strip government, thru the MIAA, of its right to supervise the
operation of the whole NAIA complex, including NAIA IPT III. As the primary government agency tasked
with the job,79 it is MIAA's responsibility to ensure that whoever by contract is given the right to operate
NAIA IPT III will do so within the bounds of the law and with due regard to the rights of third parties and
above all, the interest of the public.
VI
CONCLUSION
In sum, this Court rules that in view of the absence of the requisite financial capacity of the Paircargo
Consortium, predecessor of respondent PIATCO, the award by the PBAC of the contract for the
construction, operation and maintenance of the NAIA IPT III is null and void. Further, considering that the
1997 Concession Agreement contains material and substantial amendments, which amendments had the
effect of converting the 1997 Concession Agreement into an entirely different agreement from the contract
bidded upon, the 1997 Concession Agreement is similarly null and void for being contrary to public policy.
The provisions under Sections 4.04(b) and (c) in relation to Section 1.06 of the 1997 Concession
Agreement and Section 4.04(c) in relation to Section 1.06 of the ARCA, which constitute a direct
32
1.2 Liga ng mga Barangay Provincial, Metropolitan, HUC/ICC Chapters. There shall be
nationwide synchronized elections for the provincial, metropolitan, and HUC/ICC chapters to be
held on the third Monday of the month immediately after the month when the synchronized
elections in paragraph 1.1 above was held. The incumbent Liga chapter president concerned duly
assisted by the proper government agency, office or department, e.g.
Provincial/City/NCR/Regional Director, shall convene all the duly elected Component
City/Municipal Chapter Presidents and all the current elected Punong Barangays (for HUC/ICC)
of the respective chapters in any public place within its area of jurisdiction for the purpose of
reorganizing and electing the officers and directors of the provincial, metropolitan or HUC/ICC
Liga chapters. Said president duly assisted by the government officer aforementioned, shall
notify, in writing, all the above concerned at least fifteen (15) days before the scheduled election
meeting on the exact date, time, place and requirements of the said meeting.
The Liga thereafter came out with its Calendar of Activities and Guidelines in the Implementation of the
Liga Election Code of 2002,6 setting on 21 October 2002 the synchronized elections for highly urbanized
city chapters, such as the Liga Chapter of Manila, together with independent component city, provincial,
and metropolitan chapters.lawphi1.net
On 28 June 2002, respondent City Council of Manila enacted Ordinance No. 8039, Series of 2002,
providing, among other things, for the election of representatives of the District Chapters in the City
Chapter of Manila and setting the elections for both chapters thirty days after the barangay elections.
Section 3 (A) and (B) of the assailed ordinance read:
SEC. 3. Representation Chapters. Every Barangay shall be represented in the said Liga
Chapters by the Punong Barangayor, in his absence or incapacity, by the kagawad duly
elected for the purpose among its members.
A. District Chapter
All elected Barangay Chairman in each District shall elect from among themselves the President,
Vice-President and five (5) members of the Board.
B. City Chapter
On 16 March 2000, the Liga adopted and ratified its own Constitution and By-laws to govern its internal
organization.4 Section 1, third paragraph, Article XI of said Constitution and By-Laws states:
All other election matters not covered in this Article shall be governed by the "Liga Election
Code" or such other rules as may be promulgated by the National Liga Executive Board in
conformity with the provisions of existing laws.
By virtue of the above-cited provision, the Liga adopted and ratified its own Election Code. 5 Section 1.2,
Article I of the Liga Election Code states:
The District Chapter representatives shall automatically become members of the Board and they
shall elect from among themselves a President, Vice-President, Secretary, Treasurer, Auditor and
create other positions as it may deem necessary for the management of the chapter.
The assailed ordinance was later transmitted to respondent City Mayor Jose L. Atienza, Jr., for
his signature and approval.
On 16 July 2002, upon being informed that the ordinance had been forwarded to the Office of
the City Mayor, still unnumbered and yet to be officially released, the Liga sent respondent
Mayor of Manila a letter requesting him that said ordinance be vetoed considering that it
33
of the Liga ng mga Barangay pursuant thereto, to be null and void. The assailed ordinance prescribing for
an "indirect manner of election" amended, in effect, the provisions of the Local Government Code of 1991,
which provides for the election of the Liga officers at large. It also violated and curtailed the rights of the
petitioner and intervenor, as well as the other 896 Barangay Chairmen in the City of Manila, to vote and be
voted upon in a direct election.
On 25 October 2002, the Office of the Solicitor General (OSG) filed a Manifestation in lieu of
Comment.9 It supports the petition of the Liga, arguing that the assailed city ordinance and executive order
are clearly inconsistent with the express public policy enunciated in R.A. No. 7160. Local political
subdivisions are able to legislate only by virtue of a valid delegation of legislative power from the national
legislature. They are mere agents vested with what is called the power of subordinate legislation. Thus, the
enactments in question, which are local in origin, cannot prevail against the decree, which has the force and
effect of law.
On the issue of non-observance by the petitioners of the hierarchy-of-courts rule, the OSG posits that
technical rules of procedure should be relaxed in the instant petition. While Batas Pambansa Blg. 129, as
amended, grants original jurisdiction over cases of this nature to the Regional Trial Court (RTC), the
exigency of the present petition, however, calls for the relaxation of this rule. Section 496 (should be
Section 491) of the Local Government Code of 1991 primarily intended that the Liga ng mga
Barangay determine the representation of the Liga in the sanggunians for the immediate ventilation,
articulation, and crystallization of issues affecting barangay government administration. Thus, the
immediate resolution of this petition is a must.
On the other hand, the respondents defend the validity of the assailed ordinance and executive order and
pray for the dismissal of the present petition on the following grounds: (1) certiorari under Rule 65 of the
Rules of Court is unavailing; (2) the petition should not be entertained by this Court in view of the
pendency before the Regional Trial Court of Manila of two actions or petitions questioning the subject
ordinance and executive order; (3) the petitioner is guilty of forum shopping; and (4) the act sought to be
enjoined is fait accompli.
The respondents maintain that certiorari is an extraordinary remedy available to one aggrieved by the
decision of a tribunal, officer, or board exercising judicial or quasi-judicial functions. The City Council and
City Mayor of Manila are not the "board" and "officer" contemplated in Rule 65 of the Rules of Court
because both do not exercise judicial functions. The enactment of the subject ordinance and issuance of the
questioned executive order are legislative and executive functions, respectively, and thus, do not fall within
the ambit of "judicial functions." They are both within the prerogatives, powers, and authority of the City
Council and City Mayor of Manila, respectively. Furthermore, the petition failed to show with certainty that
the respondents acted without or in excess of jurisdiction or with grave abuse of discretion.
The respondents also asseverate that the petitioner cannot claim that it has no other recourse in addressing
its grievance other than this petition for certiorari. As a matter of fact, there are two cases pending before
Branches 33 and 51 of the RTC of Manila (one is for mandamus; the other, for declaratory relief) and three
in the Court of Appeals (one is for prohibition; the two other cases, for quo warranto), which are all akin to
the present petition in the sense that the relief being sought therein is the declaration of the invalidity of the
subject ordinance. Clearly, the petitioner may ask the RTC or the Court of Appeals the relief being prayed
34
hearings, and draw conclusions from them as a basis for their official action and to exercise discretion of a
judicial nature."12
Besides, according to the respondents, the petitioner has transgressed the proscription against forumshopping in filing the instant suit. Although the parties in the other pending cases and in this petition are
different individuals or entities, they represent the same interest.
Before a tribunal, board, or officer may exercise judicial or quasi-judicial acts, it is necessary that there be a
law that gives rise to some specific rights of persons or property under which adverse claims to such rights
are made, and the controversy ensuing therefrom is brought before a tribunal, board, or officer clothed with
power and authority to determine the law and adjudicate the respective rights of the contending parties. 13
With regard to petitioner's prayer for temporary restraining order and/ or preliminary injunction in its
petition, the respondents maintain that the same had become moot and academic in view of the elections of
officers of the City Liga ng mga Barangay on 15 September 2002 and their subsequent assumption to their
respective offices.10 Since the acts to be enjoined are now fait accompli, this petition for certiorari with an
application for provisional remedies must necessarily fail. Thus, where the records show that during the
pendency of the case certain events or circumstances had taken place that render the case moot and
academic, the petition for certiorari must be dismissed.
After due deliberation on the pleadings filed, we resolve to dismiss this petition for certiorari.
First, the respondents neither acted in any judicial or quasi-judicial capacity nor arrogated unto themselves
any judicial or quasi-judicial prerogatives. A petition for certiorari under Rule 65 of the 1997 Rules of Civil
Procedure is a special civil action that may be invoked only against a tribunal, board, or officer exercising
judicial or quasi-judicial functions.
Section 1, Rule 65 of the 1997 Rules of Civil Procedure provides:
SECTION 1. Petition for certiorari. When any tribunal, board or officer exercising judicial or
quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave
abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, or any
plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby
may file a verified petition in the proper court, alleging the facts with certainty and praying that
judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer,
and granting such incidental reliefs as law and justice may require.
Elsewise stated, for a writ of certiorari to issue, the following requisites must concur: (1) it must
be directed against a tribunal, board, or officer exercising judicial or quasi-judicial functions; (2)
the tribunal, board, or officer must have acted without or in excess of jurisdiction or with grave
abuse of discretion amounting lack or excess of jurisdiction; and (3) there is no appeal or any
plain, speedy, and adequate remedy in the ordinary course of law.
A respondent is said to be exercising judicial function where he has the power to determine what
the law is and what the legal rights of the parties are, and then undertakes to determine these
questions and adjudicate upon the rights of the parties.11
The respondents do not fall within the ambit of tribunal, board, or officer exercising judicial or quasijudicial functions. As correctly pointed out by the respondents, the enactment by the City Council of
Manila of the assailed ordinance and the issuance by respondent Mayor of the questioned executive order
were done in the exercise of legislative and executive functions, respectively, and not of judicial or quasijudicial functions. On this score alone, certiorari will not lie.
Second, although the instant petition is styled as a petition for certiorari, in essence, it seeks the declaration
by this Court of the unconstitutionality or illegality of the questioned ordinance and executive order. It,
thus, partakes of the nature of a petition for declaratory relief over which this Court has only appellate, not
original, jurisdiction.14 Section 5, Article VIII of the Constitution provides:
Sec. 5. The Supreme Court shall have the following powers:
(1) Exercise original jurisdiction over cases affecting ambassadors, other public
ministers and consuls, and over petitions for certiorari, prohibition, mandamus, quo
warranto, and habeas corpus.
(2) Review, revise, reverse, modify, or affirm on appeal or certiorari as the law or the
Rules of Court may provide, final judgments and orders of lower courts in:
(a) All cases in which the constitutionality or validity of any treaty,
international or executive agreement, law, presidential decree,
proclamation, order, instruction, ordinance, or regulation is in question.
(Italics supplied).
As such, this petition must necessary fail, as this Court does not have original jurisdiction over a
petition for declaratory relief even if only questions of law are involved. 15
Third, even granting arguendo that the present petition is ripe for the extraordinary writ of certiorari, there
is here a clear disregard of the hierarchy of courts. No special and important reason or exceptional and
compelling circumstance has been adduced by the petitioner or the intervenor why direct recourse to this
Court should be allowed.
Quasi-judicial function, on the other hand, is "a term which applies to the actions, discretion, etc., of public
administrative officers or bodies required to investigate facts or ascertain the existence of facts, hold
35
In the instant petition, and as admitted by the respondents, the parties in this case and in the alleged other
pending cases are different individuals or entities; thus, forum-shopping cannot be said to exist. Moreover,
even assuming that those five petitions are indeed pending before the RTC of Manila and the Court of
Appeals, we can only guess the causes of action and issues raised before those courts, considering that the
respondents failed to furnish this Court with copies of the said petitions.
WHEREFORE, the petition is DISMISSED.
SO ORDERED.
As we have said in Santiago v. Vasquez,17 the propensity of litigants and lawyers to disregard the hierarchy
of courts in our judicial system by seeking relief directly from this Court must be put to a halt for two
reasons: (1) it would be an imposition upon the precious time of this Court; and (2) it would cause an
inevitable and resultant delay, intended or otherwise, in the adjudication of cases, which in some instances
had to be remanded or referred to the lower court as the proper forum under the rules of procedure, or as
better equipped to resolve the issues because this Court is not a trier of facts.
Thus, we shall reaffirm the judicial policy that this Court will not entertain direct resort to it unless the
redress desired cannot be obtained in the appropriate courts, and exceptional and compelling circumstances
justify the availment of the extraordinary remedy of writ of certiorari, calling for the exercise of its primary
jurisdiction.18
Petitioners reliance on Pimentel v. Aguirre19 is misplaced because the non-observance of the hierarchy-ofcourts rule was not an issue therein. Besides, what was sought to be nullified in the petition for certiorari
and prohibition therein was an act of the President of the Philippines, which would have greatly affected all
local government units. We reiterated therein that when an act of the legislative department is seriously
alleged to have infringed the Constitution, settling the controversy becomes the duty of this Court. The
same is true when what is seriously alleged to be unconstitutional is an act of the President, who in our
constitutional scheme is coequal with Congress.
We hesitate to rule that the petitioner and the intervenor are guilty of forum-shopping. Forum-shopping
exists where the elements of litis pendentia are present or when a final judgment in one case will amount
to res judicata in the other. For litis pendentia to exist, the following requisites must be present: (1) identity
of parties, or at least such parties as are representing the same interests in both actions; (2) identity of rights
asserted and reliefs prayed for, the reliefs being founded on the same facts; and (3) identity with respect to
the two preceding particulars in the two cases, such that any judgment that may be rendered in the pending
case, regardless of which party is successful, would amount to res judicata in the other case.20
36
Once more, petitioner issued another notice to move-in addressed to its building administrator advising the
latter that respondent is scheduled to move in on August 22, 1990.
On October 5, 1990, respondent returned to the Philippines only to find that his condominium unit was still
unlivable. Exasperated, he was constrained to send petitioner a letter dated November 21, 1990 demanding
payment for the damages he sustained. But petitioner ignored such demand, prompting respondent to file
with the Regional Trial Court, Branch 150, Makati City, a complaint against the former for specific
performance and damages, docketed as Civil Case No. 90-3440.
Meanwhile, during the pendency of the case, respondent finally accepted the condominium unit and
on April 12, 1991, occupied the same. Thus, respondents cause of action has been limited to his claim for
damages.
On December 18, 1992, the trial court rendered a Decision 3 finding the petitioner liable for payment of
damages due to the delay in the performance of its obligation to the respondent. The dispositive portion
reads:
"WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendant, ordering Manila
Bankers Life Insurance Corporation to pay plaintiff Eddy Ng Kok Wei the following:
1. One percent (1%) of the total amount plaintiff paid defendant;
2. P100,000.00 as moral damages;
3. P50,000.00 as exemplary damages;
Consequently, petitioner, through its President, Mr. Antonio G. Puyat, executed a Contract to Sell in favor
of the respondent. The contract expressly states that the subject condominium unit "shall substantially be
completed and delivered" to the respondent "within fifteen (15) months" from February 8, 1989 or on May
8, 1990, and that "(S)hould there be no substantial completion and fail(ure) to deliver the unit on the date
specified, a penalty of 1% of the total amount paid (by respondent) shall be charged against (petitioner)".
Considering that the stipulated 15-month period was at hand, respondent returned to the Philippines
sometime in April, 1990.
In a letter dated April 5, 1990, petitioner, through its Senior Assistant Vice-President, Mr. Mario G. Zavalla,
informed respondent of the substantial completion of his condominium unit, however, due to various
uncontrollable forces (such as coup d etat attempts, typhoon and steel and cement shortage), the final
turnover is reset to May 31, 1990.1wphi1
Meanwhile, on July 5, 1990, upon receipt of petitioners notice of delivery dated May 31, 1990, respondent
again flew back to Manila. He found the unit still uninhabitable for lack of water and electric facilities.
37
38
The Provincial Prosecutor opposed Judge Hurtados motion, arguing that the case against Judge Hurtado is
not within the scope of Circular No. 3-89 since it is not an IBP-initiated case. Moreover, the offense
charged was committed in 1993 when Judge Hurtado was still a clerk of court and ex-officio notary public.
CARPIO, J.:
On 20 October 1998, Judge Sardido issued an Order, the pertinent portions of which read:
The Case
This is an administrative case against respondent Judge Agustin T. Sardido ("Judge Sardido") formerly
presiding judge of the Municipal Trial Court of Koronadal, South Cotabato, for gross ignorance of the law.
Judge Sardido issued an Order dated 20 October 1998 excluding Judge Braulio Hurtado, Jr. ("Judge
Hurtado") of the Regional Trial Court of Kabacan, North Cotabato as one of the accused in an Amended
Information.1 Judge Sardido ruled that Supreme Court Circular No. 3-89 requires that Judge Hurtado be
dropped from the Amended Information and his case be forwarded to the Court.
The Facts
Private complainant Teresita Aguirre Magbanua accused Oscar Pagunsan and Danilo Ong of the crime of
"Falsification by Private Individual and Use of Falsified Document." 2 The Amended Information included
Judge Hurtado. The case, docketed as Criminal Case No. 14071, was raffled to Judge Sardido, then
presiding judge of the Municipal Trial Court of Koronadal, South Cotabato ("MTC-Koronadal").
In a Deed of Absolute Sale dated 8 August 1993, private complainant Magbanua and six other vendors
allegedly sold two parcels of land, covered by TCT Nos. 47873 and 33633 and located at the commercial
district of Koronadal, to Davao Realty Development Corporation, represented by accused Ong, with coaccused Pagunsan, as broker. Judge Hurtado, who at that time was the Clerk of Court of RTC-Koronadal
and ex-officio notary public, notarized the Deed of Absolute Sale.
However, private complainant Magbanua denies signing the Deed of Absolute Sale dated 8 August 1993
which states that the consideration for the sale was only P600,000.00. Private complainant asserts that what
she and the other vendors signed was a Deed of Absolute Sale dated 6 August 1996 for a consideration
of P16,000,000.00. Under the terms of the sale, the vendee agreed to pay for the capital gains tax. The
consideration in the 8 August 1993 Deed of Absolute Sale was apparently undervalued. Subsequently, the
Bureau of Internal Revenue assessed the vendors a deficiency capital gains tax of P1,023,375.00.
Judge Hurtado filed a motion praying that the criminal complaint against him be forwarded to the Supreme
Court. Judge Hurtado claimed that Circular No. 3-89 dated 6 February 1989 requires "all cases involving
justices and judges of the lower courts, whether or not such complaints deal with acts apparently unrelated
to the discharge of their official functions, such as acts of immorality, estafa, crimes against persons and
property, etc." to be forwarded to the Supreme Court. Judge Hurtado asserted that since the case against
him is one involving a judge of a lower court, the same should be forwarded to the Supreme Court pursuant
to Circular No. 3-89.
The issue to be resolved in the instant case is, whether the case of Judge Hurtado, who is charged
for acts committed prior to his appointment as an RTC Judge, falls within the purview of the
afore-said Circular No. 3-89.
It is the humble submission of the Court that the case of Judge Hurtado, an RTC Judge of the
Regional Trial Court of Kabacan, North Cotabato, falls within the meaning and intent of the said
circular.
For reasons being, firstly, the said circular provides that all cases involving justices and judges of
lower courts shall be forwarded to the Supreme Court for appropriate action, whether or not such
complaints deal with acts apparently unrelated to the discharge of their official functions, and
regardless of the nature of the crime, without any qualification whether the crime was committed
before or during his tenure of office. Under the law on Legal Hermeneutics, if the law does not
qualify we must not qualify. Secondly, it would sound, to the mind of the Court, awkward for a
first level court to be trying an incumbent judge of a second level court.
For reasons afore-stated, this Court can not and shall not try this case as against Judge Hurtado,
unless the Honorable Supreme Court would order otherwise.
Wherefore, the foregoing premises duly considered, the name of Judge Braulio L. Hurtado, Jr. is
ordered excluded from the amended information and the case against him is ordered forwarded
to the Honorable Supreme Court, pursuant to the afore-said Circular No. 3-89 of the Supreme
Court, dated February 9, 1989.
Accordingly, Maxima S. Borja ("Borja"), Stenographer I and Acting Clerk of Court II of the MTCKoronadal, South Cotabato, wrote a letter dated 21 July 1999 forwarding the criminal case against Judge
Hurtado to the Court Administrator for appropriate action.
Then Court Administrator Alfredo L. Benipayo issued a Memorandum dated 25 October 2000 pointing out
that Circular No. 3-89 refers only to administrative complaints filed with the IBP against justices and
judges of lower courts. The Circular does not apply to criminal cases filed before trial courts against such
justices and judges.
Thus, in the Resolution of 6 December 2000, the Court directed that the letter of Acting Clerk of Court
Borja be returned to the MTC-Koronadal together with the records of the criminal case. The Court directed
Judge Sardido to explain in writing why he should not be held liable for gross ignorance of the law for
excluding Judge Hurtado from the Amended Information and for transmitting the records of Judge
Hurtados case to the Court.
39
whether or not such complaints deal with acts apparently unrelated to the discharge of their
official functions, such as acts of immorality, estafa, crimes against persons and property, etc. x x
x. (Emphasis supplied)
Circular No. 3-89 clarified the second paragraph, Section 1 of Rule 139-B of the Rules of Court which
states that:
The IBP Board of Governors may, motu proprio or upon referral by the Supreme Court or by a
Chapter Board of Officers, or at the instance of any person, initiate and prosecute proper charges
against erring attorneys including those in the government service. (Emphasis supplied).
As clarified, the phrase "attorneys x x x in the government service" in Section 1 of Rule 139-B does not
include justices of appellate courts and judges of lower courts who are not subject to the disciplining
authority of the IBP. All administrative cases against justices of appellate courts and judges of lower courts
fall exclusively within the jurisdiction of the Supreme Court.
However, Rule 139-B refers to Disbarment and Discipline of Attorneys which is administrative and not
criminal in nature. The cases referred to in Circular No. 3-89 are administrative cases for disbarment,
suspension or discipline of attorneys, including justices of appellate courts and judges of the lower courts.
The Court has vested the IBP with the power to initiate and prosecute administrative cases against erring
lawyers.8 However, under Circular No. 3-89, the Court has directed the IBP to refer to the Supreme Court
for appropriate action all administrative cases filed with IBP against justices of appellate courts and judges
of the lower courts. As mandated by the Constitution, the Court exercises the exclusive power to discipline
administratively justices of appellate courts and judges of lower courts.
Circular No. 3-89 does not refer to criminal cases against erring justices of appellate courts or judges of
lower courts. Trial courts retain jurisdiction over the criminal aspect of offenses committed by justices of
appellate courts9and judges of lower courts. This is clear from the Circular directing the IBP, and not the
trial courts, to refer all administrative cases filed against justices of appellate courts and judges of lower
courts to the Supreme Court. The case filed against Judge Hurtado is not an administrative case filed with
the IBP. It is a criminal case filed with the trial court under its jurisdiction as prescribed by law.
The acts or omissions of a judge may well constitute at the same time both a criminal act and an
administrative offense. Whether the criminal case against Judge Hurtado relates to an act committed before
or after he became a judge is of no moment. Neither is it material that an MTC judge will be trying an RTC
judge in the criminal case. A criminal case against an attorney or judge is distinct and separate from an
administrative case against him. The dismissal of the criminal case does not warrant the dismissal of an
administrative case arising from the same set of facts. The quantum of evidence that is required in the latter
is only preponderance of evidence, and not proof beyond reasonable doubt which is required in criminal
cases.10 As held in Gatchalian Promotions Talents Pool, Inc. v. Naldoza:11
Administrative cases against lawyers belong to a class of their own. They are distinct from and
they may proceed independently of civil and criminal cases.
40
would be dealt with more severely. InAlmeron v. Judge Sardido,16 the Court imposed on Judge Sardido a
stiffer fine of P10,000.00 for gross ignorance of the law. He was again sternly warned that the commission
of the same or similar act in the future would be dealt with more severely including, if warranted, his
dismissal from the service.
In a more recent administrative case, Torcende v. Judge Sardido,17 the Court found Judge Sardido again
guilty of gross ignorance of the law and of gross misconduct. This time the Court dismissed Judge Sardido
from the service with forfeiture of his retirement benefits, except accrued leave credits. The dismissal was
with prejudice to reemployment in any branch of the government or any of its agencies or instrumentalities,
including government-owned and controlled corporations.
The records of the OCA further disclose that Judge Sardido has other similar administrative
complaints18 still pending against him. Such an unflattering service record erodes the peoples faith and
confidence in the judiciary. It is the duty of every member of the bench to avoid any impression of
impropriety to protect the image and integrity of the judiciary.19 The Court may still impose a fine on Judge
Sardido in the instant case despite his dismissal from the service.
WHEREFORE, respondent Judge Agustin T. Sardido is FINED Ten Thousand Pesos (P10,000.00) for gross
ignorance of the law. The fine may be deducted from his accrued leave credits.
SO ORDERED.
A judge is called upon to exhibit more than just a cursory acquaintance with statutes and procedural rules.
He must be conversant with basic legal principles and well-settled doctrines. He should strive for
excellence and seek the truth with passion.12 Judge Sardido failed in this regard. He erred in excluding
Judge Hurtado as one of the accused in the Amended Information and in forwarding the criminal case
against Judge Hurtado to the Court.
One last point. This administrative case against Judge Sardido started before the amendment 13 of Rule 140
classifying gross ignorance of the law a serious offense punishable by a fine of more than P20,000.00 but
not exceeding P40,000.00. The amendment cannot apply retroactively to Judge Sardidos case. However,
the fine ofP5,000.00 recommended by the OCA is too light a penalty considering that this is not the first
offense of Judge Sardido.
In RE: Hold Departure Order Issued by Judge Agustin T. Sardido,14 the Court reprimanded Judge Sardido
for issuing a hold-departure order contrary to Circular No. 39-97. In Cabilao v. Judge Sardido,15 the Court
fined Judge Sardido P5,000.00 for gross ignorance of the law, grave abuse of discretion and gross
misconduct. The Court gave a stern warning to Judge Sardido that a commission of the same or similar act
September 7, 2004
41
approximately 18 hectares. Said property is within Timberland Block of LC Project No. 10-C of
Aborlan, Palawan, per BF Map LC No. 1582.
"Thereafter, the Bureau of Forestry District Office, Puerto Princesa, Palawan, ordered the
inspection, investigation and survey of the land subject of the petitioners request for eventual
conversion or re-classification from forest to agricultural land, and thereafter for George Katon
to apply for a homestead patent.
PANGANIBAN, J.:
Where prescription, lack of jurisdiction or failure to state a cause of action clearly appear from the
complaint filed with the trial court, the action may be dismissed motu proprio by the Court of Appeals,
even if the case has been elevated for review on different grounds. Verily, the dismissal of such cases
appropriately ends useless litigations.
The Case
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, assailing the December 8, 2000
Decision2and the November 20, 2001 Resolution3 of the Court of Appeals in CA-GR SP No. 57496. The
assailed Decision disposed as follows:
"Assuming that petitioner is correct in saying that he has the exclusive right in applying for the
patent over the land in question, it appears that his action is already barred by laches because he
slept on his alleged right for almost 23 years from the time the original certificate of title has
been issued to respondent Manuel Palanca, Jr., or after 35 years from the time the land was
certified as agricultural land. In addition, the proper party in the annulment of patents or titles
acquired through fraud is the State; thus, the petitioners action is deemed misplaced as he really
does not have any right to assert or protect. What he had during the time he requested for the reclassification of the land was the privilege of applying for the patent over the same upon the
lands conversion from forest to agricultural.
"WHEREFORE, the petition is hereby DISMISSED. No pronouncement as to cost." 4
The assailed Resolution, on the other hand, denied the Motion for Reconsideration filed by petitioner. It
affirmed the RTCs dismissal of his Complaint in Civil Case No. 3231, not on the grounds relied upon by
the trial court, but because of prescription and lack of jurisdiction.
The Antecedent Facts
The CA narrates the antecedent facts as follows:
"On August 2, 1963, herein [P]etitioner [George Katon] filed a request with the District Office of
the Bureau of Forestry in Puerto Princesa, Palawan, for the re-classification of a piece of real
property known as Sombrero Island, located in Tagpait, Aborlan, Palawan, which consists of
"Gabriel Mandocdoc (now retired Land Classification Investigator) undertook the investigation,
inspection and survey of the area in the presence of the petitioner, his brother Rodolfo Katon
(deceased) and his cousin, [R]espondent Manuel Palanca, Jr. During said survey, there were no
actual occupants on the island but there were some coconut trees claimed to have been planted
by petitioner and [R]espondent Manuel Palanca, Jr. (alleged overseer of petitioner) who went to
the island from time to time to undertake development work, like planting of additional coconut
trees.
"The application for conversion of the whole Sombrero Island was favorably endorsed by the
Forestry District Office of Puerto Princesa to its main office in Manila for appropriate action.
The names of Felicisimo Corpuz, Clemente Magdayao and Jesus Gapilango and Juan Fresnillo
were included in the endorsement as co-applicants of the petitioner.
"In a letter dated September 23, 1965, then Asst. Director of Forestry R.J.L. Utleg informed the
Director of Lands, Manila, that since the subject land was no longer needed for forest purposes,
the same is therefore certified and released as agricultural land for disposition under the Public
Land Act.
"Petitioner contends that the whole area known as Sombrero Island had been classified from
forest land to agricultural land and certified available for disposition upon his request and at his
instance. However, Mr. Lucio Valera, then [l]and investigator of the District Land Office, Puerto
Princesa, Palawan, favorably endorsed the request of [R]espondents Manuel Palanca Jr. and
Lorenzo Agustin, for authority to survey on November 15, 1965. On November 22, a second
endorsement was issued by Palawan District Officer Diomedes De Guzman with specific
instruction to survey vacant portions of Sombrero Island for the respondents consisting of five
(5) hectares each. On December 10, 1965, Survey Authority No. R III-342-65 was issued
authorizing Deputy Public Land Surveyor Eduardo Salvador to survey ten (10) hectares of
Sombrero Island for the respondents. On December 23, 1990, [R]espondent Lorenzo Agustin
filed a homestead patent application for a portion of the subject island consisting of an area of
4.3 hectares.
"Records show that on November 8, 1996, [R]espondent Juan Fresnillo filed a homestead patent
application for a portion of the island comprising 8.5 hectares. Records also reveal that
[R]espondent Jesus Gapilango filed a homestead application on June 8, 1972. Respondent
Manuel Palanca, Jr. was issued Homestead Patent No. 145927 and OCT No. G-7089 on March 3,
19775 with an area of 6.84 hectares of Sombrero Island.
42
Instead of limiting itself to the allegation of grave abuse of discretion, the CA ruled on the merits. It held
that while petitioner had caused the reclassification of Sombrero Island from forest to agricultural land, he
never applied for a homestead patent under the Public Land Act. Hence, he never acquired title to that land.
The CA added that the annulment and cancellation of a homestead patent and the reversion of the property
to the State were matters between the latter and the homestead grantee. Unless and until the government
takes steps to annul the grant, the homesteaders right thereto stands.
Finally, granting arguendo that petitioner had the exclusive right to apply for a patent to the land in
question, he was already barred by laches for having slept on his right for almost 23 years from the time
Respondent Palancas title had been issued.
"According to Mandocdoc, the island was uninhabited but the respondents insist that they
already had their respective occupancy and improvements on the island. Palanca denies that he is
a mere overseer of the petitioner because he said he was acting for himself in developing his own
area and not as anybodys caretaker.
In the Assailed Resolution, the CA acknowledged that it had erred when it ruled on the merits of the case. It
agreed with petitioner that the trial court had acted without jurisdiction in perfunctorily dismissing his
September 10, 1999 Motion for Reconsideration, on the erroneous ground that it was a third and prohibited
motion when it was actually only his first motion.
"Respondents aver that they are all bona fide and lawful possessors of their respective portions
and have declared said portions for taxation purposes and that they have been faithfully paying
taxes thereon for twenty years.
Nonetheless, the Complaint was dismissed motu proprio by the challenged Resolution of the CA Special
Division of five members with two justices dissenting pursuant to its "residual prerogative" under
Section 1 of Rule 9 of the Rules of Court.
"Respondents contend that the petitioner has no legal capacity to sue insofar as the island is
concerned because an action for reconveyance can only be brought by the owner and not a mere
homestead applicant and that petitioner is guilty of estoppel by laches for his failure to assert his
right over the land for an unreasonable and unexplained period of time.
From the allegations of the Complaint, the appellate court opined that petitioner clearly had no standing to
seek reconveyance of the disputed land, because he neither held title to it nor even applied for a homestead
patent. It reiterated that only the State could sue for cancellation of the title issued upon a homestead patent,
and for reversion of the land to the public domain.
"In the instant case, petitioner seeks to nullify the homestead patents and original certificates of
title issued in favor of the respondents covering certain portions of the Sombrero Island as well
as the reconveyance of the whole island in his favor. The petitioner claims that he has the
exclusive right to file an application for homestead patent over the whole island since it was he
who requested for its conversion from forest land to agricultural land." 6
Respondents filed their Answer with Special and/or Affirmative Defenses and Counterclaim in due time.
On June 30, 1999, they also filed a Motion to Dismiss on the ground of the alleged defiance by petitioner of
the trial courts Order to amend his Complaint so he could thus effect a substitution by the legal heirs of the
deceased, Respondent Gapilango. The Motion to Dismiss was granted by the RTC in its Order dated July
29, 1999.
Petitioners Motion for Reconsideration of the July 29, 1999 Order was denied by the trial court in its
Resolution dated December 17, 1999, for being a third and prohibited motion. In his Petition for Certiorari
before the CA, petitioner charged the trial court with grave abuse of discretion on the ground that the
denied Motion was his first and only Motion for Reconsideration of the aforesaid Order.
Finally, it ruled that prescription had already barred the action for reconveyance. First, petitioners action
was brought 24 years after the issuance of Palancas homestead patent. Under the Public Land Act, such
action should have been taken within ten years from the issuance of the homestead certificate of title.
Second, it appears from the submission (Annex "F" of the Complaint) of petitioner himself that
Respondents Fresnillo and Palanca had been occupying six hectares of the island since 1965, or 33 years
before he took legal steps to assert his right to the property. His action was filed beyond the 30-year
prescriptive period under Articles 1141 and 1137 of the Civil Code.
Hence, this Petition.7
Issues
In his Memorandum, petitioner raises the following issues:
"1. Is the Court of Appeals correct in resolving the Petition for Certiorari based on an issue not
raised (the merits of the case) in the Petition?
43
Under Section 1 of Rule 9 of the Rules of Court, defenses and objections not pleaded either in a motion to
dismiss or in the answer are deemed waived, except when (1) lack of jurisdiction over the subject matter,
(2) litis pendentia, (3) res judicata and (4) prescription are evident from the pleadings or the evidence on
record. In the four excepted instances, the court shall motu proprio dismiss the claim or action. In Gumabon
v. Larin11 we explained thus:
"x x x [T]he motu proprio dismissal of a case was traditionally limited to instances when the
court clearly had no jurisdiction over the subject matter and when the plaintiff did not appear
during trial, failed to prosecute his action for an unreasonable length of time or neglected to
comply with the rules or with any order of the court. Outside of these instances, any motu
proprio dismissal would amount to a violation of the right of the plaintiff to be heard. Except for
qualifying and expanding Section 2, Rule 9, and Section 3, Rule 17, of the Revised Rules of
Court, the amendatory 1997 Rules of Civil Procedure brought about no radical change. Under
the new rules, a court may motu proprio dismiss a claim when it appears from the pleadings or
evidence on record that it has no jurisdiction over the subject matter; when there is another cause
of action pending between the same parties for the same cause, or where the action is barred by a
prior judgment or by statute of limitations. x x x." 12 (Italics supplied)
On the other hand, "residual jurisdiction" is embodied in Section 9 of Rule 41 of the Rules of Court, as
follows:
"SEC. 9. Perfection of appeal; effect thereof. A partys appeal by notice of appeal is deemed
perfected as to him upon the filing of the notice of appeal in due time.
"A partys appeal by record on appeal is deemed perfected as to him with respect to the subject
matter thereof upon the approval of the record on appeal filed in due time.
"In appeals by notice of appeal, the court loses jurisdiction over the case upon the perfection of
the appeals filed in due time and the expiration of the time to appeal of the other parties.
"In appeals by record on appeal, the court loses jurisdiction only over the subject matter thereof
upon the approval of the records on appeal filed in due time and the expiration of the time to
appeal of the other parties.
"In either case, prior to the transmittal of the original record or the record on appeal, the court
may issue orders for the protection and preservation of the rights of the parties which do not
involve any matter litigated by the appeal, approve compromises, permit appeals of indigent
litigants, order execution pending appeal in accordance with Section 2 of Rule 39, and allow
withdrawal of the appeal." (Italics supplied)
The "residual jurisdiction" of trial courts is available at a stage in which the court is normally deemed to
have lost jurisdiction over the case or the subject matter involved in the appeal. This stage is reached upon
the perfection of the appeals by the parties or upon the approval of the records on appeal, but prior to the
transmittal of the original records or the records on appeal. 13 In either instance, the trial court still retains its
44
xxx
xxx
2.3. In stating in his application for homestead patent that he was applying for the
VACANT PORTION of Sombrero Island where there was none, the same constituted
another clear case of fraud and misrepresentation;
"3. That the issuance of Homestead Patent No. 145927 and OCT No. G-7089 in the name of
[Respondent] Manuel Palanca Jr. and the filing of Homestead Patent Applications in the names
of [respondents], Lorenzo Agustin, Jesus Gapilango and Juan Fresnillo[,] having been done
fraudulently and in bad faith, are ipso facto null and void and of no effect whatsoever." 19
xxx
xxx
"x x x. By a wrongful act or a willful omission and intending the effects with natural necessity
arise knowing from such act or omission, [Respondent Palanca] on account of his blood relation,
first degree cousins, trust, interdependence and intimacy is guilty of intrinsic fraud [sic]. x x x." 20
Thereupon, petitioner prayed, among others, for a judgment (1) nullifying the homestead patent
applications of Respondents Agustin, Fresnillo and Gapilango as well as Homestead Patent No. 145927 and
OCT No. G-7089 in the name of Respondent Palanca; and (2) ordering the director of the Land
Management Bureau to reconvey the Sombrero Island to petitioner.21
The question is, did the Complaint sufficiently allege an action for declaration of nullity of the free patent
and certificate of title or, alternatively, for reconveyance? Or did it plead merely for reversion?
The Complaint did not sufficiently make a case for any of such actions, over which the trial court could
have exercised jurisdiction.
In an action for nullification of title or declaration of its nullity, the complaint must contain the following
allegations: 1) that the contested land was privately owned by the plaintiff prior to the issuance of the
assailed certificate of title to the defendant; and 2) that the defendant perpetuated a fraud or committed a
mistake in obtaining a document of title over the parcel of land claimed by the plaintiff. 22 In these cases, the
nullity arises not from fraud or deceit, but from the fact that the director of the Land Management Bureau
had no jurisdiction to bestow title; hence, the issued patent or certificate of title was void ab initio. 23
In an alternative action for reconveyance, the certificate of title is also respected as incontrovertible, but the
transfer of the property or title thereto is sought to be nullified on the ground that it was wrongfully or
erroneously registered in the defendants name.24 As with an annulment of title, a complaint must allege
two facts that, if admitted, would entitle the plaintiff to recover title to the disputed land: (1) that the
plaintiff was the owner of the land, and (2) that the defendant illegally dispossessed the plaintiff of the
property.25 Therefore, the defendant who acquired the property through mistake or fraud is bound to hold
and reconvey to the plaintiff the property or the title thereto. 26
In the present case, nowhere in the Complaint did petitioner allege that he had previously held title to the
land in question. On the contrary, he acknowledged that the disputed island was public land, 27 that it had
never been privately titled in his name, and that he had not applied for a homestead under the provisions of
the Public Land Act.28 This Court has held that a complaint by a private party who alleges that a homestead
patent was obtained by fraudulent means, and who consequently prays for its annulment, does not state a
cause of action; hence, such complaint must be dismissed. 29
Neither can petitioners case be one for reversion. Section 101 of the Public Land Act categorically declares
that only the solicitor general or the officer in his stead may institute such an action. 30 A private person may
not bring an action for reversion or any other action that would have the effect of canceling a free patent
and its derivative title, with the result that the land thereby covered would again form part of the public
domain.31
xxx
45
Clearly then, the CA did not err in dismissing the present case. After all, if and when they are able to do so,
courts must endeavor to settle entire controversies before them to prevent future litigations. 46
Consequently, the dismissal of the Complaint is proper not only because of lack of jurisdiction, but also
because of the utter absence of a cause of action, 35 a defense raised by respondents in their
Answer.36 Section 2 of Rule 3 of the Rules of Court37 ordains that every action must be prosecuted or
defended in the name of the real party in interest, who stands to be benefited or injured by the judgment in
the suit. Indeed, one who has no right or interest to protect has no cause of action by which to invoke, as a
party-plaintiff, the jurisdiction of the court.38
SO ORDERED.
WHEREFORE, the Petition is hereby DENIED, and the assailed Resolution AFFIRMED. The dismissal
of the Complaint in Civil Case No. 3231 is SUSTAINED on the grounds of lack of jurisdiction, failure to
state a cause of action and prescription. Costs against petitioner.
Finally, assuming that petitioner is the proper party to bring the action for annulment of title or its
reconveyance, the case should still be dismissed for being time-barred. 39 It is not disputed that a homestead
patent and an Original Certificate of Title was issued to Palanca on February 21, 1977, 40 while the
Complaint was filed only on October 6, 1998. Clearly, the suit was brought way past ten years from the
date of the issuance of the Certificate, the prescriptive period for reconveyance of fraudulently registered
real property.41
It must likewise be stressed that Palancas title -- which attained the status of indefeasibility one year from
the issuance of the patent and the Certificate of Title in February 1977 -- is no longer open to review on the
ground of actual fraud. Ybanez v. Intermediate Appellate Court 42 ruled that a certificate of title, issued
under an administrative proceeding pursuant to a homestead patent, is as indefeasible as one issued under a
judicial registration proceeding one year from its issuance; provided, however, that the land covered by it is
disposable public land, as in this case.
In Aldovino v. Alunan,43 the Court has held that when the plaintiffs own complaint shows clearly that the
action has prescribed, such action may be dismissed even if the defense of prescription has not been
invoked by the defendant. In Gicano v. Gegato, 44 we also explained thus:
"x x x [T]rial courts have authority and discretion to dismiss an action on the ground of
prescription when the parties' pleadings or other facts on record show it to be indeed time-barred;
(Francisco v. Robles, Feb. 15, 1954; Sison v. McQuaid, 50 O.G. 97; Bambao v. Lednicky, Jan.
28, 1961; Cordova v. Cordova, Jan. 14, 1958; Convets, Inc. v. NDC, Feb. 28, 1958; 32 SCRA
529; Sinaon v. Sorongan, 136 SCRA 408); and it may do so on the basis of a motion to dismiss
(Sec. 1,f, Rule 16, Rules of Court), or an answer which sets up such ground as an affirmative
defense (Sec. 5, Rule 16), or even if the ground is alleged after judgment on the merits, as in a
motion for reconsideration (Ferrer v. Ericta, 84 SCRA 705); or even if the defense has not been
asserted at all, as where no statement thereof is found in the pleadings (Garcia v. Mathis, 100
SCRA 250; PNB v. Pacific Commission House, 27 SCRA 766; Chua Lamco v. Dioso, et al., 97
Phil. 821); or where a defendant has been declared in default (PNB v. Perez, 16 SCRA 270).
What is essential only, to repeat, is that the facts demonstrating the lapse of the prescriptive
period be otherwise sufficiently and satisfactorily apparent on the record; either in the averments
of the plaintiff's complaint, or otherwise established by the evidence." 45 (Italics supplied)
46
d. Is the Honorable Court of Appeals justified in convicting the petitioner for homicide through
reckless imprudence (the legally correct designation is "reckless imprudence resulting to
homicide") with violation of the Land Transportation and Traffic Code when the prosecution did
not prove this during the trial and, more importantly, the information filed against the petitioner
does not contain an allegation to that effect?
NACHURA, J.:
When is a litigant estopped by laches from assailing the jurisdiction of a tribunal? This is the paramount
issue raised in this petition for review of the February 28, 2001 Decision 2 of the Court of Appeals (CA) in
CA-G.R. CR No. 22697.
e. Does the uncontroverted testimony of the defense witness Leonardo Hernal that the victim
unexpectedly crossed the road resulting in him getting hit by the bus driven by the petitioner not
enough evidence to acquit him of the crime charged? 9
Applied uniformly is the familiar rule that the jurisdiction of the court to hear and decide a case is conferred
by the law in force at the time of the institution of the action, unless such statute provides for a retroactive
application thereof.10 In this case, at the time the criminal information for reckless imprudence resulting in
homicide with violation of the Automobile Law (now Land Transportation and Traffic Code) was filed,
Section 32(2) of Batas Pambansa (B.P.) Blg. 12911 had already been amended by Republic Act No.
7691.12 The said provision thus reads:
The appellate court, however, in the challenged decision, considered the petitioner to have actively
participated in the trial and to have belatedly attacked the jurisdiction of the RTC; thus, he was already
estopped by laches from asserting the trial courts lack of jurisdiction. Finding no other ground to reverse
the trial courts decision, the CA affirmed the petitioners conviction but modified the penalty imposed and
the damages awarded.8
Sec. 32. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial
Courts in Criminal Cases.Except in cases falling within the exclusive original jurisdiction of Regional
Trial Courts and the Sandiganbayan, the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal
Circuit Trial Courts shall exercise:
Dissatisfied, the petitioner filed the instant petition for review on certiorari raising the following issues for
our resolution:
a. Does the fact that the petitioner failed to raise the issue of jurisdiction during the trial of this
case, which was initiated and filed by the public prosecutor before the wrong court, constitute
laches in relation to the doctrine laid down in Tijam v. Sibonghanoy, notwithstanding the fact
that said issue was immediately raised in petitioners appeal to the Honorable Court of Appeals?
Conversely, does the active participation of the petitioner in the trial of his case, which is
initiated and filed not by him but by the public prosecutor, amount to estoppel?
b. Does the admission of the petitioner that it is difficult to immediately stop a bus while it is
running at 40 kilometers per hour for the purpose of avoiding a person who unexpectedly crossed
the road, constitute enough incriminating evidence to warrant his conviction for the crime
charged?
c. Is the Honorable Court of Appeals justified in considering the place of accident as falling
within Item 4 of Section 35 (b) of the Land Transportation and Traffic Code, and subsequently
ruling that the speed limit thereto is only 20 kilometers per hour, when no evidence whatsoever
to that effect was ever presented by the prosecution during the trial of this case?
xxxx
(2) Exclusive original jurisdiction over all offenses punishable with imprisonment not exceeding six (6)
years irrespective of the amount of fine, and regardless of other imposable accessory or other penalties,
including the civil liability arising from such offenses or predicated thereon, irrespective of kind, nature,
value or amount thereof: Provided, however, That in offenses involving damage to property through
criminal negligence, they shall have exclusive original jurisdiction thereof.
As the imposable penalty for the crime charged herein is prision correccional in its medium and maximum
periods or imprisonment for 2 years, 4 months and 1 day to 6 years, 13 jurisdiction to hear and try the same
is conferred on the Municipal Trial Courts (MTCs). Clearly, therefore, the RTC of Bulacan does not have
jurisdiction over Criminal Case No. 2235-M-94.
While both the appellate court and the Solicitor General acknowledge this fact, they nevertheless are of the
position that the principle of estoppel by laches has already precluded the petitioner from questioning the
jurisdiction of the RTCthe trial went on for 4 years with the petitioner actively participating therein and
without him ever raising the jurisdictional infirmity. The petitioner, for his part, counters that the lack of
jurisdiction of a court over the subject matter may be raised at any time even for the first time on appeal. As
undue delay is further absent herein, the principle of laches will not be applicable.
To settle once and for all this problem of jurisdiction vis--vis estoppel by laches, which continuously
confounds the bench and the bar, we shall analyze the various Court decisions on the matter.
47
was never impugned until the adverse decision of this Court was handed down. The conduct of counsel
leads us to believe that they must have always been of the belief that notwithstanding said enactment of
Republic Act 2613 this Court has jurisdiction of the case, such conduct being born out of a conviction that
the actual real value of the properties in question actually exceeds the jurisdictional amount of this Court
(over P200,000). Our minute resolution in G.R. No. L-10096, Hyson Tan, et al. vs. Filipinas Compaa de
Seguros, et al., of March 23, 1956, a parallel case, is applicable to the conduct of plaintiff-appellee in this
case, thus:
x x x that an appellant who files his brief and submits his case to the Court of Appeals for decision, without
questioning the latters jurisdiction until decision is rendered therein, should be considered as having
voluntarily waived so much of his claim as would exceed the jurisdiction of said Appellate Court; for the
reason that a contrary rule would encourage the undesirable practice of appellants submitting their cases for
decision to the Court of Appeals in expectation of favorable judgment, but with intent of attacking its
jurisdiction should the decision be unfavorable: x x x20
Then came our ruling in Tijam v. Sibonghanoy21 that a party may be barred by laches from invoking lack of
jurisdiction at a late hour for the purpose of annulling everything done in the case with the active
participation of said party invoking the plea. We expounded, thus:
A party may be estopped or barred from raising a question in different ways and for different reasons. Thus,
we speak of estoppel in pais, of estoppel by deed or by record, and of estoppel by laches.
Laches, in a general sense, is failure or neglect, for an unreasonable and unexplained length of time, to do
that which, by exercising due diligence, could or should have been done earlier; it is negligence or omission
to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either
has abandoned it or declined to assert it.
The doctrine of laches or of "stale demands" is based upon grounds of public policy which requires, for the
peace of society, the discouragement of stale claims and, unlike the statute of limitations, is not a mere
question of time but is principally a question of the inequity or unfairness of permitting a right or claim to
be enforced or asserted.
It has been held that a party cannot invoke the jurisdiction of a court to secure affirmative relief against his
opponent and, after obtaining or failing to obtain such relief, repudiate or question that same jurisdiction
(Dean vs. Dean, 136 Or. 694, 86 A.L.R. 79). In the case just cited, by way of explaining the rule, it was
further said that the question whether the court had jurisdiction either of the subject matter of the action or
of the parties was not important in such cases because the party is barred from such conduct not because the
judgment or order of the court is valid and conclusive as an adjudication, but for the reason that such a
practice cannot be toleratedobviously for reasons of public policy.
Furthermore, it has also been held that after voluntarily submitting a cause and encountering an adverse
decision on the merits, it is too late for the loser to question the jurisdiction or power of the court (Pease vs.
Rathbun-Jones etc., 243 U.S. 273, 61 L. Ed. 715, 37 S.Ct. 283; St. Louis etc. vs. McBride, 141 U.S. 127, 35
L. Ed. 659). And in Littleton vs. Burgess, 16 Wyo. 58, the Court said that it is not right for a party who has
48
could or should have been done earlier; it is negligence or omission to assert a right within a reasonable
time, warranting a presumption that the party entitled to assert has abandoned it or declined to assert it. 24
Upon this same principle is what We said in the three cases mentioned in the resolution of the Court of
Appeals of May 20, 1963 (supra)to the effect that we frown upon the "undesirable practice" of a party
submitting his case for decision and then accepting the judgment, only if favorable, and attacking it for lack
of jurisdiction, when adverseas well as in Pindagan etc. vs. Dans et al., G.R. L-14591, September 26,
1962; Montelibano et al. vs. Bacolod-Murcia Milling Co., Inc., G.R. L-15092; Young Men Labor Union
etc. vs. The Court of Industrial Relations et al., G.R. L-20307, Feb. 26, 1965, and Mejia vs. Lucas, 100
Phil. p. 277.
In Calimlim, despite the fact that the one who benefited from the plea of lack of jurisdiction was the one
who invoked the courts jurisdiction, and who later obtained an adverse judgment therein, we refused to
apply the ruling in Sibonghanoy. The Court accorded supremacy to the time-honored principle that the
issue of jurisdiction is not lost by waiver or by estoppel.
The facts of this case show that from the time the Surety became a quasi-party on July 31, 1948, it could
have raised the question of the lack of jurisdiction of the Court of First Instance of Cebu to take cognizance
of the present action by reason of the sum of money involved which, according to the law then in force,
was within the original exclusive jurisdiction of inferior courts. It failed to do so. Instead, at several stages
of the proceedings in the court a quo, as well as in the Court of Appeals, it invoked the jurisdiction of said
courts to obtain affirmative relief and submitted its case for a final adjudication on the merits. It was only
after an adverse decision was rendered by the Court of Appeals that it finally woke up to raise the question
of jurisdiction. Were we to sanction such conduct on its part, We would in effect be declaring as useless all
the proceedings had in the present case since it was commenced on July 19, 1948 and compel the judgment
creditors to go up their Calvary once more. The inequity and unfairness of this is not only patent but
revolting.22
For quite a time since we made this pronouncement in Sibonghanoy, courts and tribunals, in resolving
issues that involve the belated invocation of lack of jurisdiction, have applied the principle of estoppel by
laches. Thus, in Calimlim v. Ramirez,23 we pointed out that Sibonghanoy was developing into a general rule
rather than the exception:
A rule that had been settled by unquestioned acceptance and upheld in decisions so numerous to cite is that
the jurisdiction of a court over the subject-matter of the action is a matter of law and may not be conferred
by consent or agreement of the parties. The lack of jurisdiction of a court may be raised at any stage of the
proceedings, even on appeal. This doctrine has been qualified by recent pronouncements which stemmed
principally from the ruling in the cited case of Sibonghanoy. It is to be regretted, however, that the holding
in said case had been applied to situations which were obviously not contemplated therein. The exceptional
circumstance involved in Sibonghanoy which justified the departure from the accepted concept of nonwaivability of objection to jurisdiction has been ignored and, instead a blanket doctrine had been repeatedly
upheld that rendered the supposed ruling in Sibonghanoy not as the exception, but rather the general rule,
virtually overthrowing altogether the time-honored principle that the issue of jurisdiction is not lost by
waiver or by estoppel.
In Sibonghanoy, the defense of lack of jurisdiction of the court that rendered the questioned ruling was held
to be barred by estoppel by laches. It was ruled that the lack of jurisdiction having been raised for the first
time in a motion to dismiss filed almost fifteen (15) years after the questioned ruling had been rendered,
such a plea may no longer be raised for being barred by laches. As defined in said case, laches is "failure or
neglect, for an unreasonable and unexplained length of time, to do that which, by exercising due diligence,
Yet, in subsequent cases decided after Calimlim, which by sheer volume are too plentiful to mention, the
Sibonghanoy doctrine, as foretold in Calimlim, became the rule rather than the exception. As such, in
Soliven v. Fastforms Philippines, Inc.,25 the Court ruled:
While it is true that jurisdiction may be raised at any time, "this rule presupposes that estoppel has not
supervened." In the instant case, respondent actively participated in all stages of the proceedings before the
trial court and invoked its authority by asking for an affirmative relief. Clearly, respondent is estopped from
challenging the trial courts jurisdiction, especially when an adverse judgment has been rendered. In
PNOC Shipping and Transport Corporation vs. Court of Appeals, we held:
Moreover, we note that petitioner did not question at all the jurisdiction of the lower court x x x in its
answers to both the amended complaint and the second amended complaint. It did so only in its motion for
reconsideration of the decision of the lower court after it had received an adverse decision. As this Court
held in Pantranco North Express, Inc. vs. Court of Appeals (G.R. No. 105180, July 5, 1993, 224 SCRA 477,
491), participation in all stages of the case before the trial court, that included invoking its authority in
asking for affirmative relief, effectively barred petitioner by estoppel from challenging the courts
jurisdiction. Notably, from the time it filed its answer to the second amended complaint on April 16, 1985,
petitioner did not question the lower courts jurisdiction. It was only on December 29, 1989 when it filed its
motion for reconsideration of the lower courts decision that petitioner raised the question of the lower
courts lack of jurisdiction. Petitioner thus foreclosed its right to raise the issue of jurisdiction by its own
inaction. (italics ours)
Similarly, in the subsequent case of Sta. Lucia Realty and Development, Inc. vs. Cabrigas, we ruled:
In the case at bar, it was found by the trial court in its 30 September 1996 decision in LCR Case No. Q60161(93) that private respondents (who filed the petition for reconstitution of titles) failed to comply with
both sections 12 and 13 of RA 26 and therefore, it had no jurisdiction over the subject matter of the case.
However, private respondents never questioned the trial courts jurisdiction over its petition for
reconstitution throughout the duration of LCR Case No. Q-60161(93). On the contrary, private respondents
actively participated in the reconstitution proceedings by filing pleadings and presenting its evidence. They
invoked the trial courts jurisdiction in order to obtain affirmative relief the reconstitution of their titles.
Private respondents have thus foreclosed their right to raise the issue of jurisdiction by their own actions.
The Court has constantly upheld the doctrine that while jurisdiction may be assailed at any stage, a
litigants participation in all stages of the case before the trial court, including the invocation of its authority
in asking for affirmative relief, bars such party from challenging the courts jurisdiction (PNOC Shipping
and Transport Corporation vs. Court of Appeals, 297 SCRA 402 [1998]). A party cannot invoke the
49
circumstance involved in Sibonghanoy which justified the departure from the accepted concept of nonwaivability of objection to jurisdiction has been ignored and, instead a blanket doctrine had been repeatedly
upheld that rendered the supposed ruling in Sibonghanoy not as the exception, but rather the general rule,
virtually overthrowing altogether the time-honored principle that the issue of jurisdiction is not lost by
waiver or by estoppel.
Indeed, the general rule remains: a courts lack of jurisdiction may be raised at any stage of the
proceedings, even on appeal. The reason is that jurisdiction is conferred by law, and lack of it affects the
very authority of the court to take cognizance of and to render judgment on the action. Moreover,
jurisdiction is determined by the averments of the complaint, not by the defenses contained in the answer. 30
Also, in Mangaliag v. Catubig-Pastoral,31 even if the pleader of lack of jurisdiction actively took part in the
trial proceedings by presenting a witness to seek exoneration, the Court, reiterating the doctrine in
Calimlim, said:
Private respondent argues that the defense of lack of jurisdiction may be waived by estoppel through active
participation in the trial. Such, however, is not the general rule but an exception, best characterized by the
peculiar circumstances in Tijam vs. Sibonghanoy. In Sibonghanoy, the party invoking lack of jurisdiction
did so only after fifteen years and at a stage when the proceedings had already been elevated to the
CA. Sibonghanoy is an exceptional case because of the presence of laches, which was defined therein as
failure or neglect for an unreasonable and unexplained length of time to do that which, by exercising due
diligence, could or should have been done earlier; it is the negligence or omission to assert a right within a
reasonable time, warranting a presumption that the party entitled to assert has abandoned it or declined to
assert it.32
And in the more recent Regalado v. Go,33 the Court again emphasized that laches should be clearly present
for the Sibonghanoy doctrine to be applicable, thus:
Laches is defined as the "failure or neglect for an unreasonable and unexplained length of time, to do that
which, by exercising due diligence, could or should have been done earlier, it is negligence or omission to
assert a right within a reasonable length of time, warranting a presumption that the party entitled to assert it
either has abandoned it or declined to assert it."
The ruling in People v. Regalario that was based on the landmark doctrine enunciated in Tijam v.
Sibonghanoy on the matter of jurisdiction by estoppel is the exception rather than the rule. Estoppel by
laches may be invoked to bar the issue of lack of jurisdiction only in cases in which the factual milieu is
analogous to that in the cited case. In such controversies, laches should have been clearly present; that is,
lack of jurisdiction must have been raised so belatedly as to warrant the presumption that the party entitled
to assert it had abandoned or declined to assert it.
In Sibonghanoy, the defense of lack of jurisdiction was raised for the first time in a motion to dismiss filed
by the Surety almost 15 years after the questioned ruling had been rendered. At several stages of the
proceedings, in the court a quo as well as in the Court of Appeals, the Surety invoked the jurisdiction of the
said courts to obtain affirmative relief and submitted its case for final adjudication on the merits. It was
50
entitled to any or all such reliefs. Jurisdiction over the nature and subject matter of an action is conferred by
the Constitution and the law, and not by the consent or waiver of the parties where the court otherwise
would have no jurisdiction over the nature or subject matter of the action. Nor can it be acquired through,
or waived by, any act or omission of the parties. Moreover, estoppel does not apply to confer jurisdiction to
a tribunal that has none over the cause of action. x x x
Indeed, the jurisdiction of the court or tribunal is not affected by the defenses or theories set up by the
defendant or respondent in his answer or motion to dismiss. Jurisdiction should be determined by
considering not only the status or the relationship of the parties but also the nature of the issues or questions
that is the subject of the controversy. x x x x The proceedings before a court or tribunal without jurisdiction,
including its decision, are null and void, hence, susceptible to direct and collateral attacks. 43
With the above considerations, we find it unnecessary to resolve the other issues raised in the petition.
WHEREFORE, premises considered, the petition for review on certiorari is GRANTED. Criminal Case
No. 2235-M-94 is hereby DISMISSED without prejudice.
SO ORDERED.
Applying the said doctrine to the instant case, the petitioner is in no way estopped by laches in assailing the
jurisdiction of the RTC, considering that he raised the lack thereof in his appeal before the appellate court.
At that time, no considerable period had yet elapsed for laches to attach. True, delay alone, though
unreasonable, will not sustain the defense of "estoppel by laches" unless it further appears that the party,
knowing his rights, has not sought to enforce them until the condition of the party pleading laches has in
good faith become so changed that he cannot be restored to his former state, if the rights be then enforced,
due to loss of evidence, change of title, intervention of equities, and other causes. 36 In applying the
principle of estoppel by laches in the exceptional case of Sibonghanoy, the Court therein considered the
patent and revolting inequity and unfairness of having the judgment creditors go up their Calvary once
more after more or less 15 years.37 The same, however, does not obtain in the instant case.
We note at this point that estoppel, being in the nature of a forfeiture, is not favored by law. It is to be
applied rarelyonly from necessity, and only in extraordinary circumstances. The doctrine must be applied
with great care and the equity must be strong in its favor.38 When misapplied, the doctrine of estoppel may
be a most effective weapon for the accomplishment of injustice. 39 Moreover, a judgment rendered without
jurisdiction over the subject matter is void.40 Hence, the Revised Rules of Court provides for remedies in
attacking judgments rendered by courts or tribunals that have no jurisdiction over the concerned cases. No
laches will even attach when the judgment is null and void for want of jurisdiction. 41 As we have stated in
Heirs of Julian Dela Cruz and Leonora Talaro v. Heirs of Alberto Cruz, 42
It is axiomatic that the jurisdiction of a tribunal, including a quasi-judicial officer or government agency,
over the nature and subject matter of a petition or complaint is determined by the material allegations
therein and the character of the relief prayed for, irrespective of whether the petitioner or complainant is
51
That on October, 24, 2000, or sometime prior or subsequent thereto, in Quezon City, Metro
Manila, Philippines, and within the jurisdiction of this Honorable Court, above-named accused,
HANNAH EUNICE D. SERANA, a high-ranking public officer, being then the Student Regent
of the University of the Philippines, Diliman, Quezon City, while in the performance of her
official functions, committing the offense in relation to her office and taking advantage of her
position, with intent to gain, conspiring with her brother, JADE IAN D. SERANA, a private
individual, did then and there wilfully, unlawfully and feloniously defraud the government by
falsely and fraudulently representing to former President Joseph Ejercito Estrada that the
renovation of the Vinzons Hall of the University of the Philippines will be renovated and
renamed as "President Joseph Ejercito Estrada Student Hall," and for which purpose accused
HANNAH EUNICE D. SERANA requested the amount of FIFTEEN MILLION PESOS
(P15,000,000.00), Philippine Currency, from the Office of the President, and the latter relying
and believing on said false pretenses and misrepresentation gave and delivered to said accused
Land Bank Check No. 91353 dated October 24, 2000 in the amount of FIFTEEN MILLION
PESOS (P15,000,000.00), which check was subsequently encashed by accused Jade Ian D.
Serana on October 25, 2000 and misappropriated for their personal use and benefit, and despite
repeated demands made upon the accused for them to return aforesaid amount, the said accused
failed and refused to do so to the damage and prejudice of the government in the aforesaid
amount.
CONTRARY TO LAW. (Underscoring supplied)
Petitioner moved to quash the information. She claimed that the Sandiganbayan does not have any
jurisdiction over the offense charged or over her person, in her capacity as UP student regent.
Petitioner claimed that Republic Act (R.A.) No. 3019, as amended by R.A. No. 8249, enumerates the
crimes or offenses over which the Sandiganbayan has jurisdiction. 8 It has no jurisdiction over the crime
of estafa.9 It only has jurisdiction over crimes covered by Title VII, Chapter II, Section 2 (Crimes
Committed by Public Officers), Book II of the Revised Penal Code (RPC). Estafa falling under Title X,
Chapter VI (Crimes Against Property), Book II of the RPC is not within the Sandiganbayans jurisdiction.
She also argued that it was President Estrada, not the government, that was duped. Even assuming that she
received the P15,000,000.00, that amount came from Estrada, not from the coffers of the government. 10
Petitioner likewise posited that the Sandiganbayan had no jurisdiction over her person. As a student regent,
she was not a public officer since she merely represented her peers, in contrast to the other regents who
held their positions in an ex officio capacity. She addsed that she was a simple student and did not receive
any salary as a student regent.
She further contended that she had no power or authority to receive monies or funds. Such power was
vested with the Board of Regents (BOR) as a whole. Since it was not alleged in the information that it was
among her functions or duties to receive funds, or that the crime was committed in connection with her
official functions, the same is beyond the jurisdiction of the Sandiganbayan citing the case of Soller v.
Sandiganbayan.11
52
(A) x x x
(1) Officials of the executive branch occupying the positions of regional director and higher,
otherwise classified as Grade "27" and higher, of the Compensation and Position Classification
Act of 1989 (Republic Act No. 6758), specifically including:
xxxx
On November 19, 2003, petitioner filed a motion for reconsideration. 17 The motion was denied with finality
in a Resolution dated February 4, 2004.18
Issue
53
In De Jesus v. Garcia (19 SCRA 554), upon the denial of a motion to dismiss based on lack of
jurisdiction over the subject matter, this Court granted the petition for certiorari and prohibition
against the City Court of Manila and directed the respondent court to dismiss the case.
In Lopez v. City Judge (18 SCRA 616), upon the denial of a motion to quash based on lack of
jurisdiction over the offense, this Court granted the petition for prohibition and enjoined the
respondent court from further proceeding in the case.
In Enriquez v. Macadaeg (84 Phil. 674), upon the denial of a motion to dismiss based on
improper venue, this Court granted the petition for prohibition and enjoined the respondent judge
from taking cognizance of the case except to dismiss the same.
In Manalo v. Mariano (69 SCRA 80), upon the denial of a motion to dismiss based on bar by
prior judgment, this Court granted the petition for certiorari and directed the respondent judge to
dismiss the case.
In Yuviengco v. Dacuycuy (105 SCRA 668), upon the denial of a motion to dismiss based on the
Statute of Frauds, this Court granted the petition for certiorari and dismissed the amended
complaint.
In Tacas v. Cariaso (72 SCRA 527), this Court granted the petition for certiorari after the motion
to quash based on double jeopardy was denied by respondent judge and ordered him to desist
from further action in the criminal case except to dismiss the same.
In People v. Ramos (83 SCRA 11), the order denying the motion to quash based on prescription
was set aside on certiorari and the criminal case was dismissed by this Court. 24
We do not find the Sandiganbayan to have committed a grave abuse of discretion.
The jurisdiction of the Sandiganbayan is
set by P.D. No. 1606, as amended, not by
R.A. No. 3019, as amended.
We first address petitioners contention that the jurisdiction of the Sandiganbayan is determined by Section
4 of R.A. No. 3019 (The Anti-Graft and Corrupt Practices Act, as amended). We note that petitioner refers
to Section 4 of the said law yet quotes Section 4 of P.D. No. 1606, as amended, in her motion to quash
before the Sandiganbayan.25She repeats the reference in the instant petition for certiorari26 and in her
memorandum of authorities.27
We cannot bring ourselves to write this off as a mere clerical or typographical error. It bears stressing that
petitioner repeated this claim twice despite corrections made by the Sandiganbayan. 28
54
" (f) City and provincial prosecutors and their assistants, and officials and prosecutors in the
Office of the Ombudsman and special prosecutor;
" (g) Presidents, directors or trustees, or managers of government-owned or controlled
corporations, state universities or educational institutions or foundations.
" (2) Members of Congress and officials thereof classified as Grade "27'" and up under the
Compensation and Position Classification Act of 1989;
" (3) Members of the judiciary without prejudice to the provisions of the Constitution;
" (4) Chairmen and members of Constitutional Commission, without prejudice to the provisions
of the Constitution; and
" (5) All other national and local officials classified as Grade "27'" and higher under the
Compensation and Position Classification Act of 1989.
B. Other offenses of felonies whether simple or complexed with other crimes committed by the
public officials and employees mentioned in subsection a of this section in relation to their
office.
C. Civil and criminal cases filed pursuant to and in connection with Executive Order Nos. 1, 2,
14 and 14-A, issued in 1986.
" In cases where none of the accused are occupying positions corresponding to Salary Grade
"27'" or higher, as prescribed in the said Republic Act No. 6758, or military and PNP officer
mentioned above, exclusive original jurisdiction thereof shall be vested in the proper regional
court, metropolitan trial court, municipal trial court, and municipal circuit trial court, as the case
may be, pursuant to their respective jurisdictions as provided in Batas Pambansa Blg. 129, as
amended.
" The Sandiganbayan shall exercise exclusive appellate jurisdiction over final judgments,
resolutions or order of regional trial courts whether in the exercise of their own original
jurisdiction or of their appellate jurisdiction as herein provided.
" The Sandiganbayan shall have exclusive original jurisdiction over petitions for the issuance of
the writs of mandamus, prohibition, certiorari, habeas corpus, injunctions, and other ancillary
writs and processes in aid of its appellate jurisdiction and over petitions of similar nature,
including quo warranto, arising or that may arise in cases filed or which may be filed under
Executive Order Nos. 1, 2, 14 and 14-A, issued in 1986: Provided, That the jurisdiction over
these petitions shall not be exclusive of the Supreme Court.
55
(b) It shall be unlawful for any person knowingly to induce or cause any public official to
commit any of the offenses defined in Section 3 hereof.
In fine, the two statutes differ in that P.D. No. 1606, as amended, defines the jurisdiction of the
Sandiganbayan while R.A. No. 3019, as amended, defines graft and corrupt practices and provides for their
penalties.
Sandiganbayan has jurisdiction over
the offense of estafa.
Relying on Section 4 of P.D. No. 1606, petitioner contends that estafa is not among those crimes cognizable
by the Sandiganbayan. We note that in hoisting this argument, petitioner isolated the first paragraph of
Section 4 of P.D. No. 1606, without regard to the succeeding paragraphs of the said provision.
The rule is well-established in this jurisdiction that statutes should receive a sensible construction so as to
avoid an unjust or an absurd conclusion.33 Interpretatio talis in ambiguis semper fienda est, ut evitetur
inconveniens et absurdum. Where there is ambiguity, such interpretation as will avoid inconvenience and
absurdity is to be adopted.Kung saan mayroong kalabuan, ang pagpapaliwanag ay hindi dapat maging
mahirap at katawa-tawa.
Every section, provision or clause of the statute must be expounded by reference to each other in order to
arrive at the effect contemplated by the legislature.34 The intention of the legislator must be ascertained
from the whole text of the law and every part of the act is to be taken into view.35 In other words,
petitioners interpretation lies in direct opposition to the rule that a statute must be interpreted as a whole
under the principle that the best interpreter of a statute is the statute itself. 36 Optima statuti interpretatrix est
ipsum statutum. Ang isang batas ay marapat na bigyan ng kahulugan sa kanyang kabuuan sa ilalim
ng prinsipyo na ang pinakamainam na interpretasyon ay ang mismong batas.
Section 4(B) of P.D. No. 1606 reads:
R.A. No. 3019 does not contain an enumeration of the cases over which the Sandiganbayan has
jurisdiction. In fact, Section 4 of R.A. No. 3019 erroneously cited by petitioner, deals not with the
jurisdiction of the Sandiganbayan but with prohibition on private individuals. We quote:
Section 4. Prohibition on private individuals. (a) It shall be unlawful for any person having
family or close personal relation with any public official to capitalize or exploit or take
advantage of such family or close personal relation by directly or indirectly requesting or
receiving any present, gift or material or pecuniary advantage from any other person having
some business, transaction, application, request or contract with the government, in which such
public official has to intervene. Family relation shall include the spouse or relatives by
consanguinity or affinity in the third civil degree. The word "close personal relation" shall
include close personal friendship, social and fraternal connections, and professional employment
all giving rise to intimacy which assures free access to such public officer.
B. Other offenses or felonies whether simple or complexed with other crimes committed by the
public officials and employees mentioned in subsection a of this section in relation to their
office.
Evidently, the Sandiganbayan has jurisdiction over other felonies committed by public officials in relation
to their office. We see no plausible or sensible reason to exclude estafa as one of the offenses included in
Section 4(bB) of P.D. No. 1606. Plainly, estafa is one of those other felonies. The jurisdiction is simply
subject to the twin requirements that (a) the offense is committed by public officials and employees
mentioned in Section 4(A) of P.D. No. 1606, as amended, and that (b) the offense is committed in relation
to their office.
In Perlas, Jr. v. People,37 the Court had occasion to explain that the Sandiganbayan has jurisdiction over an
indictment for estafa versus a director of the National Parks Development Committee, a government
instrumentality. The Court held then:
56
conferring it (Mechem Ibid., Sec. 64). There is no such thing as a vested interest or an estate in
an office, or even an absolute right to hold office. Excepting constitutional offices which provide
for special immunity as regards salary and tenure, no one can be said to have any vested right in
an office or its salary (42 Am. Jur. 881).
In Laurel v. Desierto,41 the Court adopted the definition of Mechem of a public office:
"A public office is the right, authority and duty, created and conferred by law, by which, for a
given period, either fixed by law or enduring at the pleasure of the creating power, an individual
is invested with some portion of the sovereign functions of the government, to be exercised by
him for the benefit of the public. The individual so invested is a public officer." 42
Petitioner claims that she is not a public officer with Salary Grade 27; she is, in fact, a regular tuition feepaying student. This is likewise bereft of merit. It is not only the salary grade that determines the
jurisdiction of the Sandiganbayan. The Sandiganbayan also has jurisdiction over other officers enumerated
in P.D. No. 1606. InGeduspan v. People,43 We held that while the first part of Section 4(A) covers only
officials with Salary Grade 27 and higher, its second part specifically includes other executive officials
whose positions may not be of Salary Grade 27 and higher but who are by express provision of law placed
under the jurisdiction of the said court. Petitioner falls under the jurisdiction of the Sandiganbayan as she is
placed there by express provision of law.44
Section 4(A)(1)(g) of P.D. No. 1606 explictly vested the Sandiganbayan with jurisdiction over Presidents,
directors or trustees, or managers of government-owned or controlled corporations, state universities or
educational institutions or foundations. Petitioner falls under this category. As the Sandiganbayan pointed
out, the BOR performs functions similar to those of a board of trustees of a non-stock corporation. 45 By
express mandate of law, petitioner is, indeed, a public officer as contemplated by P.D. No. 1606.
Moreover, it is well established that compensation is not an essential element of public office. 46 At most, it
is merely incidental to the public office. 47
Delegation of sovereign functions is essential in the public office. An investment in an individual of some
portion of the sovereign functions of the government, to be exercised by him for the benefit of the public
makes one a public officer.48
The administration of the UP is a sovereign function in line with Article XIV of the Constitution. UP
performs a legitimate governmental function by providing advanced instruction in literature, philosophy,
the sciences, and arts, and giving professional and technical training. 49 Moreover, UP is maintained by the
Government and it declares no dividends and is not a corporation created for profit. 50
The offense charged was committed
in relation to public office, according
to the Information.
57
petition forcertiorari and his memorandum, unveils the misquotation. We urge petitioners counsel to
observe Canon 10 of the Code of Professional Responsibility, specifically Rule 10.02 of the Rules stating
that "a lawyer shall not misquote or misrepresent."
The Court stressed the importance of this rule in Pangan v. Ramos,55 where Atty Dionisio D. Ramos used
the name Pedro D.D. Ramos in connection with a criminal case. The Court ruled that Atty. Ramos resorted
to deception by using a name different from that with which he was authorized. We severely reprimanded
Atty. Ramos and warned that a repetition may warrant suspension or disbarment. 56
We admonish petitioners counsel to be more careful and accurate in his citation. A lawyers conduct before
the court should be characterized by candor and fairness. 57 The administration of justice would gravely
suffer if lawyers do not act with complete candor and honesty before the courts. 58
WHEREFORE, the petition is DENIED for lack of merit.
SO ORDERED.
Clearly, there was no grave abuse of discretion on the part of the Sandiganbayan when it did not quash the
information based on this ground.
Source of funds is a defense that should
be raised during trial on the merits.
It is contended anew that the amount came from President Estradas private funds and not from the
government coffers. Petitioner insists the charge has no leg to stand on.
We cannot agree. The information alleges that the funds came from the Office of the President and not its
then occupant, President Joseph Ejercito Estrada. Under the information, it is averred that "petitioner
requested the amount of Fifteen Million Pesos (P15,000,000.00), Philippine Currency, from the Office of
the President, and the latter relying and believing on said false pretenses and misrepresentation gave and
delivered to said accused Land Bank Check No. 91353 dated October 24, 2000 in the amount of Fifteen
Million Pesos (P15,000,000.00)."
Again, the Court sustains the Sandiganbayan observation that the source of the P15,000,000 is a matter of
defense that should be ventilated during the trial on the merits of the instant case. 54
THIRD DIVISION
June 5, 2013
58
On June 1, 2004, the CSC-CAR found the existence of a prima faciecase for misconduct and formally
charged Pat-og.
While the proceedings of the administrative case were ongoing, the RTC rendered its judgment in the
criminal case and found Pat-og guilty of the offense of slight physical injury. He was meted the penalty of
imprisonment from eleven (11) to twenty (20) days. Following his application for probation, the decision
became final and executory and judgment was entered.
Meanwhile, in the administrative case, a pre-hearing conference was conducted after repeated
postponement by Pat-og. With the approval of the CSC-CAR, the prosecution submitted its position paper
in lieu of a formal presentation of evidence and formally offered its evidence, which included the decision
in the criminal case. It offered the affidavits of Raymund Atuban, a classmate of Bang-on; and James
Domanog, a third year high school student, who both witnessed Pat-og hit Bang-on in the stomach.
For his defense, Pat-og offered the testimonies of his witnesses - Emiliano Dontongan (Dontongan), a
teacher in another school, who alleged that he was a member of the Municipal Council for the Protection of
Children, and that, in such capacity, he investigated the incident and came to the conclusion that it did not
happen at all; and Ernest Kimmot, who testified that he was in the basketball court at the time but did not
see such incident. Pat-og also presented the affidavits of thirteen other witnesses to prove that he did not
punch Bang-on.
Ruling of the CSC-CAR
In its Decision,3 dated September 19, 2006, the CSC-CAR found Pat-og guilty and disposed as follows:
WHEREFORE, all premises told, respondent Alberto Pat-og, Sr., Teacher Antadao National High School, is
hereby found guilty of Simple Misconduct.
Under the Uniform Rules on Administrative Cases in the Civil Service, the imposable penalty on the first
offense of Simple Misconduct is suspension of one (1) month and one (1) day to six (6) months.
Due to seriousness of the resulting injury to the fragile body of the minor victim, the CSC-CAR hereby
imposed upon respondent the maximum penalty attached to the offense which is six months suspension
without pay.
The CSC-CAR gave greater weight to the version posited by the prosecution, finding that a blow was
indeed inflicted by Pat-og on Bang-on. It found that Pat-og had a motive for doing so - his students failure
to follow his repeated instructions which angered him. Nevertheless, the CSCCAR ruled that a motive was
not necessary to establish guilt if the perpetrator of the offense was positively identified. The positive
identification of Pat-og was duly proven by the corroborative testimonies of the prosecution witnesses, who
were found to be credible and disinterested. The testimony of defense witness, Dontongan, was not given
credence considering that the students he interviewed for his investigation claimed that Pat-og was not even
angry at the time of the incident, contrary to the latters own admission.
59
the CSC upgraded Pat-ogs offense from Simple Misconduct to Grave Misconduct and ordered his
dismissal from the service.
The CSC-CAR believed that the act committed by Pat-og was sufficient to find him guilty of Grave
Misconduct. It, however, found the corresponding penalty of dismissal from the service too harsh under the
circumstances. Thus, it adjudged petitioner guilty of Simple Misconduct and imposed the maximum
penalty of suspension for six (6) months.
On November 5, 2007, the CSC denied his motion for reconsideration.7 It ruled that Pat-og was estopped
from challenging its jurisdiction considering that he actively participated in the administrative proceedings
against him, raising the issue of jurisdiction only after his appeal was dismissed by the CSC.
On December 11, 2006, the motion for reconsideration filed by Pat-og was denied for lack of merit. 4
The Ruling of the CSC
In its Resolution,5 dated April 11, 2007, the CSC dismissed Pat-ogs appeal and affirmed with modification
the decision of the CSC-CAR as follows:
WHEREFORE, foregoing premises considered, the instant appeal is hereby DISMISSED. The decision of
the CSC-CAR is affirmed with the modification that Alberto Pat-og, Sr., is adjudged guilty of grave
misconduct, for which he is meted out the penalty of dismissal from the service with all its accessory
penalties of cancellation of eligibilities, perpetual disqualification from reemployment in the government
service, and forfeiture of retirement benefits.6
After evaluating the records, the CSC sustained the CSC-CARs conclusion that there existed substantial
evidence to sustain the finding that Pat-og did punch Bang-on in the stomach. It gave greater weight to the
positive statements of Bang-on and his witnesses over the bare denial of Patog. It also highlighted the fact
that Pat-og failed to adduce evidence of any ill motive on the part of Bang-on in filing the administrative
case against him. It likewise gave credence to the medico-legal certificate showing that Bang-on suffered a
hematoma contusion in his hypogastric area.
Pat-og filed a motion for reconsideration, questioning for the first time the jurisdiction of CSC over the
case. He contended that administrative charges against a public school teacher should have been initially
heard by a committee to be constituted pursuant to the Magna Carta for Public School Teachers.
The CSC ruled that the affidavits of Bang-ons witnesses were not bereft of evidentiary value even if Pat-og
was not afforded a chance to cross-examine the witnesses of Bang-on. It is of no moment because the
cross- examination of witnesses is not an indispensable requirement of administrative due process.
The CSC noted that Pat-og did not question but, instead, fully acquiesced in his conviction in the criminal
case for slight physical injury, which was based on the same set of facts and circumstances, and involved
the same parties and issues. It, thus, considered his prior criminal conviction as evidence against him in the
administrative case.
Finding that his act of punching his student displayed a flagrant and wanton disregard of the dignity of a
person, reminiscent of corporal punishment that had since been outlawed for being harsh, unjust, and cruel,
60
In CSC v. Alfonso,18 it was held that special laws, such as R.A. No. 4670, do not divest the CSC of its
inherent power to supervise and discipline all members of the civil service, including public school
teachers. Pat-og, as a public school teacher, is first and foremost, a civil servant accountable to the people
and answerable to the CSC for complaints lodged against him as a public servant. To hold that R.A. No.
4670 divests the CSC of its power to discipline public school teachers would negate the very purpose for
which the CSC was established and would impliedly amend the Constitution itself.
To further drive home the point, it was ruled in CSC v. Macud 19 that R.A. No. 4670, in imposing a separate
set of procedural requirements in connection with administrative proceedings against public school
teachers, should be construed to refer only to the specific procedure to be followed in administrative
investigations conducted by the DepEd. By no means, then, did R.A. No. 4670 confer an exclusive
disciplinary authority over public school teachers on the DepEd.
At any rate, granting that the CSC was without jurisdiction, the petitioner is indeed estopped from raising
the issue. Although the rule states that a jurisdictional question may be raised at any time, such rule admits
of the exception where, as in this case, estoppel has supervened. 20 Here, instead of opposing the CSCs
exercise of jurisdiction, the petitioner invoked the same by actively participating in the proceedings before
the CSC-CAR and by even filing his appeal before the CSC itself; only raising the issue of jurisdiction later
in his motion for reconsideration after the CSC denied his appeal. This Court has time and again frowned
upon the undesirable practice of a party submitting his case for decision and then accepting the judgment
only if favorable, but attacking it for lack of jurisdiction when adverse. 21
On Administrative Due Process
On due process, Pat-og asserts that the affidavits of the complainant and his witnesses are of questionable
veracity having been subscribed in Bontoc, which is nearly 30 kilometers from the residences of the parties.
Furthermore, he claimed that considering that the said affiants never testified, he was never afforded the
opportunity to cross-examine them. Therefore, their affidavits were mere hearsay and insufficient to prove
his guilt.
The petitioner does not persuade.
Concurrent jurisdiction is that which is possessed over the same parties or subject matter at the same time
by two or more separate tribunals. When the law bestows upon a government body the jurisdiction to hear
and decide cases involving specific matters, it is to be presumed that such jurisdiction is exclusive unless it
be proved that another body is likewise vested with the same jurisdiction, in which case, both bodies have
concurrent jurisdiction over the matter.16
The essence of due process is simply to be heard, or as applied to administrative proceedings, a fair and
reasonable opportunity to explain ones side, or an opportunity to seek a reconsideration of the action or
ruling complained of.22 Administrative due process cannot be fully equated with due process in its strict
judicial sense. In administrative proceedings, a formal or trial-type hearing is not always necessary 23 and
technical rules of procedure are not strictly applied. Hence, the right to cross-examine is not an
indispensable aspect of administrative due process.24 The petitioner cannot, therefore, argue that the
affidavit of Bang-on and his witnesses are hearsay and insufficient to prove his guilt.
Where concurrent jurisdiction exists in several tribunals, the body that first takes cognizance of the
complaint shall exercise jurisdiction to the exclusion of the others. In this case, it was CSC which first
acquired jurisdiction over the case because the complaint was filed before it. Thus, it had the authority to
proceed and decide the case to the exclusion of the DepEd and the Board of Professional Teachers. 17
At any rate, having actively participated in the proceedings before the CSC-CAR, the CSC, and the CA, the
petitioner was apparently afforded every opportunity to explain his side and seek reconsideration of the
ruling against him.1wphi1
61
WHEREFORE, the Court PARTIALLY GRANTS the petition and MODIFIES the April 6, 2011 Decision
of the Court of Appeals in CA-G.R. SP No. 101700. Accordingly, Alberto Pat-og, Sr. is found GUlLTY of
Grave Misconduct, but the penalty is reduced from dismissal from the service to SUSPENSION for SIX
MONTHS.
On the Penalty
SO ORDERED.
Assuming that he did box Bang-on, Pat-og argues that there is no substantial evidence to prove that he did
so with a clear intent to violate the law or in flagrant disregard of the established rule, as required for a
finding of grave misconduct. He insists that he was not motivated by bad faith or ill will because he acted
in the belief that, as a teacher, he was exercising authority over Bang-on in loco parentis, and was,
accordingly, within his rights to discipline his student. Citing his 33 years in the government service
without any adverse record against him and the fact that he is at the edge of retirement, being already 62
years old, the petitioner prays that, in the name of substantial and compassionate justice, the CSC-CARs
finding of simple misconduct and the concomitant penalty of suspension should be upheld, instead of
dismissal.
The Court agrees in part.
Misconduct means intentional wrongdoing or deliberate violation of a rule of law or standard of behavior.
To constitute an administrative offense, misconduct should relate to or be connected with the performance
of the official functions and duties of a public officer. In grave misconduct, as distinguished from simple
misconduct, the elements of corruption, clear intent to violate the law or t1agrant disregard of an
established rule must be manifest.25
Teachers are duly licensed professionals who must not only be competent in the practice of their noble
profession, but must also possess dignity and a reputation with high moral values. They must strictly adhere
to, observe, and practice the set of ethical and moral principles, standards, and values laid down in the Code
of Ethics of Professional Teachers, which apply to all teachers in schools in the Philippines, whether public
or private, as provided in the preamble of the said Code.26 Section 8 of Article VIII of the same Code
expressly provides that "a teacher shall not inflict corporal punishment on offending learners."
Clearly then, petitioner cannot argue that in punching Bang-on, he was exercising his right as a teacher in
loco parentis to discipline his student. It is beyond cavil that the petitioner, as a public school teacher,
deliberately violated his Code of Ethics. Such violation is a flagrant disregard for the established rule
contained in the said Code tantamount to grave misconduct.
Under Section 52(A)(2) of Rule IV of the Uniform Rules on Administrative Cases in the Civil Service, the
penalty for grave misconduct is dismissal from the service, which carries with it the cancellation of
eligibility, forfeiture of retirement benefits and perpetual disqualification from reemployment in the
government service.27 This penalty must, however, be tempered with compassion as there was sut1icient
provocation on the part of Bang-on. Considering further the mitigating circumstances that the petitioner has
been in the government service for 33 years, that this is his first offense and that he is at the cusp of
retirement, the Court finds the penalty of suspension for six months as appropriate under the circumstances.
62
The trial court, in an Order dated 8 November 2004, denied the motion to dismiss for having been filed out
of time, citing Section 1, Rule 16 of the 1997 Rules of Court which states that: "Within the time for but
before filing the answer to the complaint or pleading asserting a claim, a motion to dismiss may be made x
x x."17 Respondents motion for reconsideration of the order of denial was likewise denied on the ground
that "defendants attack on the jurisdiction of this Court is now barred by estoppel by laches" since
respondent failed to raise the issue despite several chances to do so. 18
Aggrieved, respondent filed a petition for certiorari with the Court of Appeals alleging that the trial court
seriously erred and gravely abused its discretion in denying her motion to dismiss despite discovery, during
the trial of the case, of evidence that would constitute a ground for dismissal of the case. 19
The Court of Appeals granted the petition based on the following grounds:
It is elementary that courts acquire jurisdiction over the person of the defendant x x x only when the latter
voluntarily appeared or submitted to the court or by coercive process issued by the court to him, x x x. In
this case, it is undisputed that when petitioner Boston filed the complaint on December 24, 1997, defendant
Manuel S. Toledo was already dead, x x x. Such being the case, the court a quo could not have acquired
jurisdiction over the person of defendant Manuel S. Toledo.
x x x the court a quos denial of respondents motion to dismiss was based on its finding that respondents
attack on the jurisdiction of the court was already barred by laches as respondent failed to raise the said
ground in its [sic] amended answer and during the pre-trial, despite her active participation in the
proceedings.
However, x x x it is well-settled that issue on jurisdiction may be raised at any stage of the proceeding,
even for the first time on appeal. By timely raising the issue on jurisdiction in her motion to dismiss x x x
respondent is not estopped from raising the question on jurisdiction.
Moreover, when issue on jurisdiction was raised by respondent, the court a quo had not yet decided the
case, hence, there is no basis for the court a quo to invoke estoppel to justify its denial of the motion for
reconsideration;
It should be stressed that when the complaint was filed, defendant Manuel S. Toledo was already dead. The
complaint should have impleaded the estate of Manuel S. Toledo as defendant, not only the wife,
considering that the estate of Manuel S. Toledo is an indispensable party, which stands to be benefited or be
injured in the outcome of the case. x x x
xxxx
Respondents motion to dismiss the complaint should have been granted by public respondent judge as the
same was in order. Considering that the obligation of Manuel S. Toledo is solidary with another debtor, x x
x, the claim x x x should be filed against the estate of Manuel S. Toledo, in conformity with the provision
of Section 6, Rule 86 of the Rules of Court, x x x. 20
63
Even assuming that certiorari is the proper remedy, the trial court did not commit grave abuse of discretion
in denying respondents motion to dismiss. It, in fact, acted correctly when it issued the questioned orders
as respondents motion to dismiss was filed SIX YEARS AND FIVE MONTHS AFTER SHE FILED HER
AMENDED ANSWER. This circumstance alone already warranted the outright dismissal of the motion for
having been filed in clear contravention of the express mandate of Section 1, Rule 16, of the Revised Rules
of Court. Under this provision, a motion to dismiss shall be filed within the time for but before the filing of
an answer to the complaint or pleading asserting a claim.24
More importantly, respondents motion to dismiss was filed after petitioner has completed the presentation
of its evidence in the trial court, giving credence to petitioners and the trial courts conclusion that the
filing of the motion to dismiss was a mere ploy on the part of respondent to delay the prompt resolution of
the case against her.
Also worth mentioning is the fact that respondents motion to dismiss under consideration herein is not the
first motion to dismiss she filed in the trial court. It appears that she had filed an earlier motion to
dismiss26 on the sole ground of the unenforceability of petitioners claim under the Statute of Frauds, which
motion was denied by the trial court. More telling is the following narration of the trial court in its Order
denying respondents motion for reconsideration of the denial of her motion to dismiss:
As can be gleaned from the records, with the admission of plaintiffs exhibits, reception of defendants
evidence was set on March 31, and April 23, 2004 x x x . On motion of the defendants, the hearing on
March 31, 2004 was cancelled.
On April 14, 2004, defendants sought the issuance of subpoena ad testificandum and duces tecum to one
Gina M. Madulid, to appear and testify for the defendants on April 23, 2004. Reception of defendants
evidence was again deferred to May 26, June 2 and June 30, 2004, x x x.
On May 13, 2004, defendants sought again the issuance of a subpoena duces tecum and ad testificandum to
the said Gina Madulid. On May 26, 2004, reception of defendants [sic] evidence was cancelled upon the
agreement of the parties. On July 28, 2004, in the absence of defendants witness, hearing was reset to
September 24 and October 8, 2004 x x x.
On September 24, 2004, counsel for defendants was given a period of fifteen (15) days to file a demurrer to
evidence. On October 7, 2004, defendants filed instead a Motion to Dismiss x x x. 27
Respondents act of filing multiple motions, such as the first and earlier motion to dismiss and then the
motion to dismiss at issue here, as well as several motions for postponement, lends credibility to the
position taken by petitioner, which is shared by the trial court, that respondent is
deliberately impeding the early disposition of this case. The filing of the second motion to dismiss was,
therefore, "not only improper but also dilatory." 28 Thus, the trial court, "far from deviating or straying off
course from established jurisprudence on the matter, x x x had in fact faithfully observed the law and legal
precedents in this case."29 The Court of Appeals, therefore, erred not only in entertaining respondents
64
null and void for want of jurisdiction as her appeal should have been filed with the Court of Appeals or the
Supreme Court.
In all of these cases, the Supreme Court barred the attack on the jurisdiction of the respective courts
concerned over the subject matter of the case based on estoppel by laches, declaring that parties cannot be
allowed to belatedly adopt an inconsistent posture by attacking the jurisdiction of a court to which they
submitted their cause voluntarily.35
At the outset, it must be here stated that, as the succeeding discussions will demonstrate, jurisdiction over
the person of Manuel should not be an issue in this case. A protracted discourse on jurisdiction is,
nevertheless, demanded by the fact that jurisdiction has been raised as an issue from the lower court, to the
Court of Appeals and, finally, before this Court. For the sake of clarity, and in order to finally settle the
controversy and fully dispose of all the issues in this case, it was deemed imperative to resolve the issue of
jurisdiction.
1. Aspects of Jurisdiction
Petitioner calls attention to the fact that respondents motion to dismiss questioning the trial courts
jurisdiction was filed more than six years after her amended answer was filed. According to petitioner,
respondent had several opportunities, at various stages of the proceedings, to assail the trial courts
jurisdiction but never did so for six straight years. Citing the doctrine laid down in the case of Tijam, et al.
v. Sibonghanoy, et al.30 petitioner claimed that respondents failure to raise the question of jurisdiction at an
earlier stage bars her from later questioning it, especially since she actively participated in the proceedings
conducted by the trial court.
Petitioners argument is misplaced, in that, it failed to consider that the concept of jurisdiction has several
aspects, namely: (1) jurisdiction over the subject matter; (2) jurisdiction over the parties; (3) jurisdiction
over the issues of the case; and (4) in cases involving property, jurisdiction over the res or the thing which
is the subject of the litigation.31
The aspect of jurisdiction which may be barred from being assailed as a result of estoppel by laches is
jurisdiction over the subject matter. Thus, in Tijam, the case relied upon by petitioner, the issue involved
was the authority of the then Court of First Instance to hear a case for the collection of a sum of money in
the amount of P1,908.00 which amount was, at that time, within the exclusive original jurisdiction of the
municipal courts.
In subsequent cases citing the ruling of the Court in Tijam, what was likewise at issue was the jurisdiction
of the trial court over the subject matter of the case. Accordingly, in Spouses Gonzaga v. Court of
Appeals,32 the issue for consideration was the authority of the regional trial court to hear and decide an
action for reformation of contract and damages involving a subdivision lot, it being argued therein that
jurisdiction is vested in the Housing and Land Use Regulatory Board pursuant to PD 957 (The Subdivision
and Condominium Buyers Protective Decree). In Lee v. Presiding Judge, MTC, Legaspi City,33 petitioners
argued that the respondent municipal trial court had no jurisdiction over the complaint for ejectment
because the issue of ownership was raised in the pleadings. Finally, in People v. Casuga, 34 accusedappellant claimed that the crime of grave slander, of which she was charged, falls within the concurrent
jurisdiction of municipal courts or city courts and the then courts of first instance, and that the judgment of
the court of first instance, to which she had appealed the municipal court's conviction, should be deemed
Here, what respondent was questioning in her motion to dismiss before the trial court was that courts
jurisdiction over the person of defendant Manuel. Thus, the principle of estoppel by laches finds no
application in this case. Instead, the principles relating to jurisdiction over the person of the parties are
pertinent herein.
The Rules of Court provide:
RULE 9
EFFECT OF FAILURE TO PLEAD
Section 1. Defenses and objections not pleaded. Defenses and objections not pleaded either in a motion to
dismiss or in the answer are deemed waived. However, when it appears from the pleadings or the evidence
on record that the court has no jurisdiction over the subject matter, that there is another action pending
between the same parties for the same cause, or that the action is barred by a prior judgment or by statute of
limitations, the court shall dismiss the claim.
RULE 15
MOTIONS
Sec. 8. Omnibus motion. Subject to the provisions of Section 1 of Rule 9, a motion attacking a pleading,
order, judgment, or proceeding shall include all objections then available, and all objections not so included
shall be deemed waived.
Based on the foregoing provisions, the "objection on jurisdictional grounds which is not waived even if not
alleged in a motion to dismiss or the answer is lack of jurisdiction over the subject matter. x x x Lack of
jurisdiction over the subject matter can always be raised anytime, even for the first time on appeal, since
jurisdictional issues cannot be waived x x x subject, however, to the principle of estoppel by laches." 36
Since the defense of lack of jurisdiction over the person of a party to a case is not one of those defenses
which are not deemed waived under Section 1 of Rule 9, such defense must be invoked when an answer or
a motion to dismiss is filed in order to prevent a waiver of the defense. 37 If the objection is not raised either
in a motion to dismiss or in the answer, the objection to the jurisdiction over the person of the plaintiff or
the defendant is deemed waived by virtue of the first sentence of the above-quoted Section 1 of Rule 9 of
the Rules of Court.38
65
x x x We cannot countenance petitioners argument that the complaint against the other defendants should
have been dismissed, considering that the RTC never acquired jurisdiction over the person of Sereno. The
courts failure to acquire jurisdiction over ones person is a defense which is personal to the person
claiming it. Obviously, it is now impossible for Sereno to invoke the same in view of his death. Neither can
petitioner invoke such ground, on behalf of Sereno, so as to reap the benefit of having the case dismissed
against all of the defendants. Failure to serve summons on Serenos person will not be a cause for the
dismissal of the complaint against the other defendants, considering that they have been served with copies
of the summons and complaints and have long submitted their respective responsive pleadings. In fact, the
other defendants in the complaint were given the chance to raise all possible defenses and objections
personal to them in their respective motions to dismiss and their subsequent answers. 43 (Emphasis
supplied.)
Hence, the Supreme Court affirmed the dismissal by the trial court of the complaint against Sereno only.
Based on the foregoing pronouncements, there is no basis for dismissing the complaint against respondent
herein. Thus, as already emphasized above, the trial court correctly denied her motion to dismiss.
On whether or not the estate of Manuel
Toledo is an indispensable party
Rule 3, Section 7 of the 1997 Rules of Court states:
SEC. 7. Compulsory joinder of indispensable parties. Parties-in-interest without whom no final
determination can be had of an action shall be joined either as plaintiffs or defendants.
An indispensable party is one who has such an interest in the controversy or subject matter of a case that a
final adjudication cannot be made in his or her absence, without injuring or affecting that interest. He or she
is a party who has not only an interest in the subject matter of the controversy, but "an interest of such
nature that a final decree cannot be made without affecting that interest or leaving the controversy in such a
condition that its final determination may be wholly inconsistent with equity and good conscience. It has
also been considered that an indispensable party is a person in whose absence there cannot be a
determination between the parties already before the court which is effective, complete or equitable."
Further, an indispensable party is one who must be included in an action before it may properly proceed. 44
On the other hand, a "person is not an indispensable party if his interest in the controversy or subject matter
is separable from the interest of the other parties, so that it will not necessarily be directly or injuriously
affected by a decree which does complete justice between them. Also, a person is not an indispensable
party if his presence would merely permit complete relief between him or her and those already parties to
the action, or if he or she has no interest in the subject matter of the action." It is not a sufficient reason to
declare a person to be an indispensable party simply because his or her presence will avoid multiple
litigations.45
The Court, in the Sarsaba Case, resolved the issue in this wise:
66
Construing Section 698 of the Code of Civil Procedure from whence [Section 6, Rule 87] was taken, this
Court held that where two persons are bound in solidum for the same debt and one of them dies, the whole
indebtedness can be proved against the estate of the latter, the decedents liability being absolute and
primary; x x x. It is evident from the foregoing that Section 6 of Rule 87 provides the procedure should the
creditor desire to go against the deceased debtor, but there is certainly nothing in the said provision making
compliance with such procedure a condition precedent before an ordinary action against the surviving
solidary debtors, should the creditor choose to demand payment from the latter, could be entertained to the
extent that failure to observe the same would deprive the court jurisdiction to take cognizance of the action
against the surviving debtors. Upon the other hand, the Civil Code expressly allows the creditor to proceed
against any one of the solidary debtors or some or all of them simultaneously. There is, therefore, nothing
improper in the creditors filing of an action against the surviving solidary debtors alone, instead of
instituting a proceeding for the settlement of the estate of the deceased debtor wherein his claim could be
filed.
The foregoing ruling was reiterated and expounded in the later case of Philippine National Bank v.
Asuncion51where the Supreme Court pronounced:
A cursory perusal of Section 6, Rule 86 of the Revised Rules of Court reveals that nothing therein prevents
a creditor from proceeding against the surviving solidary debtors. Said provision merely sets up the
procedure in enforcing collection in case a creditor chooses to pursue his claim against the estate of the
deceased solidary debtor. The rule has been set forth that a creditor (in a solidary obligation) has the option
whether to file or not to file a claim against the estate of the solidary debtor. x x x
xxxx
It is crystal clear that Article 1216 of the New Civil Code is the applicable provision in this matter. Said
provision gives the creditor the right to "proceed against anyone of the solidary debtors or some or all of
them simultaneously." The choice is undoubtedly left to the solidary creditor to determine against whom he
will enforce collection. In case of the death of one of the solidary debtors, he (the creditor) may, if he so
chooses, proceed against the surviving solidary debtors without necessity of filing a claim in the estate of
the deceased debtors. It is not mandatory for him to have the case dismissed as against the surviving
debtors and file its claim against the estate of the deceased solidary debtor, x x x. For to require the creditor
to proceed against the estate, making it a condition precedent for any collection action against the surviving
debtors to prosper, would deprive him of his substantive rightsprovided by Article 1216 of the New Civil
Code. (Emphasis supplied.)
As correctly argued by petitioner, if Section 6, Rule 86 of the Revised Rules of Court were applied literally,
Article 1216 of the New Civil Code would, in effect, be repealed since under the Rules of Court, petitioner
has no choice but to proceed against the estate of [the deceased debtor] only. Obviously, this provision
diminishes the [creditors] right under the New Civil Code to proceed against any one, some or all of the
solidary debtors. Such a construction is not sanctioned by principle, which is too well settled to require
citation, that a substantive law cannot be amended by a procedural rule. Otherwise stated, Section 6, Rule
86 of the Revised Rules of Court cannot be made to prevail over Article 1216 of the New Civil Code, the
former being merely procedural, while the latter, substantive.
67
Parties may be either plaintiffs or defendants. x x x. In order to maintain an action in a court of justice, the
plaintiff must have an actual legal existence, that is, he, she or it must be a person in law and possessed of a
legal entity as either a natural or an artificial person, and no suit can be lawfully prosecuted save in the
name of such a person.
The rule is no different as regards party defendants. It is incumbent upon a plaintiff, when he institutes a
judicial proceeding, to name the proper party defendant to his cause of action. In a suit or proceeding in
personam of an adversary character, the court can acquire no jurisdiction for the purpose of trial or
judgment until a party defendant who actually or legally exists and is legally capable of being sued, is
brought before it. It has even been held that the question of the legal personality of a party defendant is a
question of substance going to the jurisdiction of the court and not one of procedure.
Section 11 of Rule 3 of the Rules of Court states that "neither misjoinder nor non-joinder of parties is
ground for dismissal of an action. Parties may be dropped or added by order of the court on motion of any
party or on its own initiative at any stage of the action and on such terms as are just. Any claim against a
misjoined party may be severed and proceeded with separately."
Based on the last sentence of the afore-quoted provision of law, a misjoined party must have the capacity to
sue or be sued in the event that the claim by or against the misjoined party is pursued in a separate case. In
this case, therefore, the inclusion of Manuel in the complaint cannot be considered a misjoinder, as in fact,
the action would have proceeded against him had he been alive at the time the collection case was filed by
petitioner. This being the case, the remedy provided by Section 11 of Rule 3 does not obtain here. The name
of Manuel as party-defendant cannot simply be dropped from the case. Instead, the procedure taken by the
Court in Sarsaba v. Vda. de Te,52whose facts, as mentioned earlier, resemble those of this case, should be
followed herein. There, the Supreme Court agreed with the trial court when it resolved the issue of
jurisdiction over the person of the deceased Sereno in this wise:
As correctly pointed by defendants, the Honorable Court has not acquired jurisdiction over the person of
Patricio Sereno since there was indeed no valid service of summons insofar as Patricio Sereno is concerned.
Patricio Sereno died before the summons, together with a copy of the complaint and its annexes, could be
served upon him.
However, the failure to effect service of summons unto Patricio Sereno, one of the defendants herein, does
not render the action DISMISSIBLE, considering that the three (3) other defendants, x x x, were validly
served with summons and the case with respect to the answering defendants may still proceed
independently. Be it recalled that the three (3) answering defendants have previously filed a Motion to
Dismiss the Complaint which was denied by the Court.
The original complaint of petitioner named the "estate of Carlos Ngo as represented by surviving spouse
Ms. Sulpicia Ventura" as the defendant.1wphi1 Petitioner moved to dismiss the same on the ground that
the defendant as named in the complaint had no legal personality. We agree.
x x x. Considering that capacity to be sued is a correlative of the capacity to sue, to the same extent, a
decedent does not have the capacity to be sued and may not be named a party defendant in a court action.
(Emphases supplied.)
Indeed, where the defendant is neither a natural nor a juridical person or an entity authorized by law, the
complaint may be dismissed on the ground that the pleading asserting the claim states no cause of action or
for failure to state a cause of action pursuant to Section 1(g) of Rule 16 of the Rules of Court, because a
complaint cannot possibly state a cause of action against one who cannot be a party to a civil action. 55
Since the proper course of action against the wrongful inclusion of Manuel as party-defendant is the
dismissal of the case as against him, thus did the trial court err when it ordered the substitution of Manuel
by his heirs. Substitution is proper only where the party to be substituted died during the pendency of the
case, as expressly provided for by Section 16, Rule 3 of the Rules of Court, which states:
Death of party;duty of counsel. Whenever a party to a pending action dies, and the claim is not thereby
extinguished, it shall be the duty of his counsel to inform the court within thirty (30) days after such death
of the fact thereof, and to give the name and address of his legal representative or representatives. x x x
Hence, only the case against Patricio Sereno will be DISMISSED and the same may be filed as a claim
against the estate of Patricio Sereno, but the case with respect to the three (3) other accused [sic] will
proceed. (Emphasis supplied.)53
The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the
appointment of an executor or administrator x x x.
The court shall forthwith order said legal representative or representatives to appear and be substituted
within a period of thirty (30) days from notice. (Emphasis supplied.)
In addition, the dismissal of the case against Manuel is further warranted by Section 1 of Rule 3 of the
Rules of Court, which states that: only natural or juridical persons, or entities authorized by law may be
parties in a civil action." Applying this provision of law, the Court, in the case of Ventura v.
Militante,54 held:
Here, since Manuel was already dead at the time of the filing of the complaint, the court never acquired
jurisdiction over his person and, in effect, there was no party to be substituted.
68
69
70
Respondent contends that by reason of the death of Secretary Enrile, there is no public officer who was
charged in the Information and, as such, prosecution against respondent may not prosper.
The Court is not persuaded.
III
WHETHER OR NOT THE COURT A QUO GRAVELY ERRED WHEN, IN COMPLETE DISREGARD
OF THE EQUAL PROTECTION CLAUSE OF THE CONSTITUTION, IT QUASHED THE
INFORMATION AND DISMISSED CRIMINAL CASE NO. 2809010
The Court finds the petition meritorious.
Section 3 (g) of R.A. 3019 provides:
Sec. 3. Corrupt practices of public officers. In addition to acts or omissions of public officers already
penalized by existing law, the following shall constitute corrupt practices of any public officer and are
hereby declared to be unlawful:
xxxx
(g) Entering, on behalf of the Government, into any contract or transaction manifestly and grossly
disadvantageous to the same, whether or not the public officer profited or will profit thereby.
The elements of the above provision are:
(1) that the accused is a public officer;
(2) that he entered into a contract or transaction on behalf of the government; and
(3) that such contract or transaction is grossly and manifestly disadvantageous to the
government.11
At the outset, it bears to reiterate the settled rule that private persons, when acting in conspiracy with public
officers, may be indicted and, if found guilty, held liable for the pertinent offenses under Section 3 of R.A.
3019, in consonance with the avowed policy of the anti-graft law to repress certain acts of public officers
and private persons alike constituting graft or corrupt practices act or which may lead thereto. 12 This is the
controlling doctrine as enunciated by this Court in previous cases, among which is a case involving herein
private respondent.13
The only question that needs to be settled in the present petition is whether herein respondent, a private
person, may be indicted for conspiracy in violating Section 3(g) of R.A. 3019 even if the public officer,
with whom he was alleged to have conspired, has died prior to the filing of the Information.
It is true that by reason of Secretary Enrile's death, there is no longer any public officer with whom
respondent can be charged for violation of R.A. 3019. It does not mean, however, that the allegation of
conspiracy between them can no longer be proved or that their alleged conspiracy is already expunged. The
only thing extinguished by the death of Secretary Enrile is his criminal liability. His death did not
extinguish the crime nor did it remove the basis of the charge of conspiracy between him and private
respondent. Stated differently, the death of Secretary Enrile does not mean that there was no public officer
who allegedly violated Section 3 (g) of R.A. 3019. In fact, the Office of the Deputy Ombudsman for Luzon
found probable cause to indict Secretary Enrile for infringement of Sections 3 (e) and (g) of R.A.
3019.14 Were it not for his death, he should have been charged.
The requirement before a private person may be indicted for violation of Section 3(g) of R.A. 3019, among
others, is that such private person must be alleged to have acted in conspiracy with a public officer. The
law, however, does not require that such person must, in all instances, be indicted together with the public
officer. If circumstances exist where the public officer may no longer be charged in court, as in the present
case where the public officer has already died, the private person may be indicted alone.
Indeed, it is not necessary to join all alleged co-conspirators in an indictment for conspiracy.15 If two or
more persons enter into a conspiracy, any act done by any of them pursuant to the agreement is, in
contemplation of law, the act of each of them and they are jointly responsible therefor.16 This means that
everything said, written or done by any of the conspirators in execution or furtherance of the common
purpose is deemed to have been said, done, or written by each of them and it makes no difference whether
the actual actor is alive or dead, sane or insane at the time of trial. 17 The death of one of two or more
conspirators does not prevent the conviction of the survivor or survivors. 18 Thus, this Court held that:
x x x [a] conspiracy is in its nature a joint offense. One person cannot conspire alone. The crime depends
upon the joint act or intent of two or more persons. Yet, it does not follow that one person cannot be
convicted of conspiracy. So long as the acquittal or death of a co-conspirator does not remove the bases of a
charge for conspiracy, one defendant may be found guilty of the offense. 19
The Court agrees with petitioner's contention that, as alleged in the Information filed against respondent,
which is deemed hypothetically admitted in the latter's Motion to Quash, he (respondent) conspired with
Secretary Enrile in violating Section 3 (g) of R.A. 3019 and that in conspiracy, the act of one is the act of
all. Hence, the criminal liability incurred by a co-conspirator is also incurred by the other co-conspirators.
Moreover, the Court agrees with petitioner that the avowed policy of the State and the legislative intent to
repress "acts of public officers and private persons alike, which constitute graft or corrupt
practices,"20 would be frustrated if the death of a public officer would bar the prosecution of a private
person who conspired with such public officer in violating the Anti-Graft Law.
71
In fine, the convergence of the wills of the conspirators in the scheming and execution of the crime amply
justifies the imputation to all of them the act of any one of them. It is in this light that conspiracy is
generally viewed not as a separate indictable offense, but a rule for collectivizing criminal liability.
xxxx
x x x A time-honored rule in the corpus of our jurisprudence is that once conspiracy is proved, all of the
conspirators who acted in furtherance of the common design are liable as co-principals. This rule of
collective criminal liability emanates from the ensnaring nature of conspiracy. The concerted action of the
conspirators in consummating their common purpose is a patent display of their evil partnership, and for
the consequences of such criminal enterprise they must be held solidarily liable. 22
This is not to say, however, that private respondent should be found guilty of conspiring with Secretary
Enrile. It is settled that the absence or presence of conspiracy is factual in nature and involves evidentiary
matters.23 Hence, the allegation of conspiracy against respondent is better left ventilated before the trial
court during trial, where respondent can adduce evidence to prove or disprove its presence.
Respondent claims in his Manifestation and Motion 24 as well as in his Urgent Motion to Resolve25 that in a
different case, he was likewise indicted before the SB for conspiracy with the late Secretary Enrile in
violating the same Section 3 (g) of R.A. 3019 by allegedly entering into another agreement (Side
Agreement) which is separate from the Concession Agreement subject of the present case. The case was
docketed as Criminal Case No. 28091. Here, the SB, through a Resolution, granted respondent's motion to
quash the Information on the ground that the SB has no jurisdiction over the person of respondent. The
prosecution questioned the said SB Resolution before this Court via a petition for review on certiorari. The
petition was docketed as G.R. No. 168919. In a minute resolution dated August 31, 2005, this Court denied
the petition finding no reversible error on the part of the SB. This Resolution became final and executory
on January 11, 2006. Respondent now argues that this Court's resolution in G.R. No. 168919 should be
applied in the instant case.
The Court does not agree. Respondent should be reminded that prior to this Court's ruling in G.R. No.
168919, he already posted bail for his provisional liberty. In fact, he even filed a Motion for
Consolidation26 in Criminal Case No. 28091. The Court agrees with petitioner's contention that private
respondent's act of posting bail and filing his Motion for Consolidation vests the SB with jurisdiction over
his person. The rule is well settled that the act of an accused in posting bail or in filing motions seeking
affirmative relief is tantamount to submission of his person to the jurisdiction of the court. 27
Thus, it has been held that:
When a defendant in a criminal case is brought before a competent court by virtue of a warrant of arrest or
otherwise, in order to avoid the submission of his body to the jurisdiction of the court he must raise the
question of the courts jurisdiction over his person at the very earliest opportunity. If he gives bail, demurs
to the complaint or files any dilatory plea or pleads to the merits, he thereby gives the court jurisdiction
over his person. (State ex rel. John Brown vs. Fitzgerald, 51 Minn., 534)
72
WHEREFORE, the petition is GRANTED. The Resolution of the Sandiganbayan dated June 2, 2005,
granting respondent's Motion to Quash, is hereby REVERSED and SET ASIDE. The Sandiganbayan is
forthwith DIRECTED to proceed with deliberate dispatch in the disposition of Criminal Case No. 28090.
SO ORDERED.
Moreover, "[w]here the appearance is by motion for the purpose of objecting to the jurisdiction of the court
over the person, it must be for the sole and separate purpose of objecting to said jurisdiction. If the
appearance is for any other purpose, the defendant is deemed to have submitted himself to the jurisdiction
of the court. Such an appearance gives the court jurisdiction over the person."
Verily, petitioners participation in the proceedings before the Sandiganbayan was not confined to his
opposition to the issuance of a warrant of arrest but also covered other matters which called for respondent
courts exercise of its jurisdiction. Petitioner may not be heard now to deny said courts jurisdiction over
him. x x x.28
In the instant case, respondent did not make any special appearance to question the jurisdiction of the SB
over his person prior to his posting of bail and filing his Motion for Consolidation. In fact, his Motion to
Quash the Information in Criminal Case No. 28090 only came after the SB issued an Order requiring the
prosecution to show cause why the case should not be dismissed for lack of jurisdiction over his person.
As a recapitulation, it would not be amiss to point out that the instant case involves a contract entered into
by public officers representing the government. More importantly, the SB is a special criminal court which
has exclusive original jurisdiction in all cases involving violations of R.A. 3019 committed by certain
public officers, as enumerated in P.D. 1606 as amended by R.A. 8249. This includes private individuals
who are charged as co-principals, accomplices or accessories with the said public officers. In the instant
case, respondent is being charged for violation of Section 3(g) of R.A. 3019, in conspiracy with then
Secretary Enrile. Ideally, under the law, both respondent and Secretary Enrile should have been charged
before and tried jointly by the Sandiganbayan. However, by reason of the death of the latter, this can no
longer be done. Nonetheless, for reasons already discussed, it does not follow that the SB is already
divested of its jurisdiction over the person of and the case involving herein respondent. To rule otherwise
would mean that the power of a court to decide a case would no longer be based on the law defining its
jurisdiction but on other factors, such as the death of one of the alleged offenders.
Lastly, the issues raised in the present petition involve matters which are mere incidents in the main case
and the main case has already been pending for over nine (9) years. Thus, a referral of the case to the
Regional Trial Court would further delay the resolution of the main case and it would, by no means,
promote respondent's right to a speedy trial and a speedy disposition of his case.
February 4, 2014
THE CITY OF MANILA, represented by MAYOR JOSE L. ATIENZA, JR., and MS. LIBERTY M.
TOLEDO, in her capacity as the City Treasurer of Manila, Petitioners,
vs.
HON. CARIDAD H. GRECIA-CUERDO, in her capacity as Presiding Judge of the Regional Trial
73
In its Resolution promulgated on April 6, 2006, the CA dismissed petitioners' petition for certiorari holding
that it has no jurisdiction over the said petition. The CA ruled that since appellate jurisdiction over private
respondents' complaint for tax refund, which was filed with the RTC, is vested in the Court of Tax Appeals
(CTA), pursuant to its expanded jurisdiction under Republic Act No. 9282 (RA 9282), it follows that a
petition for certiorari seeking nullification of an interlocutory order issued in the said case should, likewise,
be filed with the CTA.
PERALTA, J.:
Petitioners filed a Motion for Reconsideration,7 but the CA denied it in its Resolution dated November 29,
2006.
Before the Court is a special civil action for certiorari under Rule 65 of the Rules of Court seeking to
reverse and set aside the Resolutions1 dated April 6, 2006 and November 29, 2006 of the Court of Appeals
(CA) in CA-G.R. SP No. 87948.
I- Whether or not the Honorable Court of Appeals gravely erred in dismissing the case for lack of
jurisdiction.
II- Whether or not the Honorable Regional Trial Court gravely abuse[d] its discretion amounting
to lack or excess of jurisdiction in enjoining by issuing a Writ of Injunction the petitioners, their
agents and/or authorized representatives from implementing Section 21 of the Revised Revenue
Code of Manila, as amended, against private respondents.
III- Whether or not the Honorable Regional Trial Court gravely abuse[d] its discretion amounting
to lack or excess of jurisdiction in issuing the Writ of Injunction despite failure of private
respondents to make a written claim for tax credit or refund with the City Treasurer of Manila.
IV- Whether or not the Honorable Regional Trial Court gravely abuse[d] its discretion amounting
to lack or excess of jurisdiction considering that under Section 21 of the Manila Revenue Code,
as amended, they are mere collecting agents of the City Government.
V- Whether or not the Honorable Regional Trial Court gravely abuse[d] its discretion amounting
to lack or excess of jurisdiction in issuing the Writ of Injunction because petitioner City of
Manila and its constituents would result to greater damage and prejudice thereof. (sic) 8
Without first resolving the above issues, this Court finds that the instant petition should be denied for being
moot and academic.
Upon perusal of the original records of the instant case, this Court discovered that a Decision 9 in the main
case had already been rendered by the RTC on August 13, 2007, the dispositive portion of which reads as
follows:
WHEREFORE, in view of the foregoing, this Court hereby renders JUDGMENT in favor of the plaintiff
and against the defendant to grant a tax refund or credit for taxes paid pursuant to Section 21 of the
Revenue Code of the City of Manila as amended for the year 2002 in the following amounts:
74
P 11,462,525.02
3,118,104.63
2,152,316.54
1,362,750.34
419,689.04
231,453.62
140,908.54
220,204.70
94,906.34
P 19,316,458.77
Petitioners availed of the wrong remedy when they filed the instant special civil action for certiorari under
Rule 65 of the Rules of Court in assailing the Resolutions of the CA which dismissed their petition filed
with the said court and their motion for reconsideration of such dismissal. There is no dispute that the
assailed Resolutions of the CA are in the nature of a final order as they disposed of the petition completely.
It is settled that in cases where an assailed judgment or order is considered final, the remedy of the
aggrieved party is appeal. Hence, in the instant case, petitioner should have filed a petition for review on
certiorari under Rule 45, which is a continuation of the appellate process over the original case. 15
Petitioners should be reminded of the equally-settled rule that a special civil action for certiorari under Rule
65 is an original or independent action based on grave abuse of discretion amounting to lack or excess of
jurisdiction and it will lie only if there is no appeal or any other plain, speedy, and adequate remedy in the
ordinary course of law.16 As such, it cannot be a substitute for a lost appeal. 17
TOTAL:
Defendants are further enjoined from collecting taxes under Section 21, Revenue Code of Manila from
herein plaintiff.
SO ORDERED.
10
The parties did not inform the Court but based on the records, the above Decision had already become final
and executory per the Certificate of Finality11 issued by the same trial court on October 20, 2008. In fact, a
Writ of Execution12 was issued by the RTC on November 25, 2009. In view of the foregoing, it clearly
appears that the issues raised in the present petition, which merely involve the incident on the preliminary
injunction issued by the RTC, have already become moot and academic considering that the trial court, in
its decision on the merits in the main case, has already ruled in favor of respondents and that the same
decision is now final and executory. Well entrenched is the rule that where the issues have become moot
and academic, there is no justiciable controversy, thereby rendering the resolution of the same of no
practical use or value.13
In any case, the Court finds it necessary to resolve the issue on jurisdiction raised by petitioners owing to
its significance and for future guidance of both bench and bar. It is a settled principle that courts will decide
a question otherwise moot and academic if it is capable of repetition, yet evading review.14
However, before proceeding, to resolve the question on jurisdiction, the Court deems it proper to likewise
address a procedural error which petitioners committed.
Nonetheless, in accordance with the liberal spirit pervading the Rules of Court and in the interest of
substantial justice, this Court has, before, treated a petition for certiorari as a petition for review on
certiorari, particularly (1) if the petition for certiorari was filed within the reglementary period within which
to file a petition for review on certiorari; (2) when errors of judgment are averred; and (3) when there is
sufficient reason to justify the relaxation of the rules. 18 Considering that the present petition was filed
within the 15-day reglementary period for filing a petition for review on certiorari under Rule 45, that an
error of judgment is averred, and because of the significance of the issue on jurisdiction, the Court deems it
proper and justified to relax the rules and, thus, treat the instant petition for certiorari as a petition for
review on certiorari.
Having disposed of the procedural aspect, we now turn to the central issue in this case. The basic question
posed before this Court is whether or not the CTA has jurisdiction over a special civil action for certiorari
assailing an interlocutory order issued by the RTC in a local tax case.
This Court rules in the affirmative.
On June 16, 1954, Congress enacted Republic Act No. 1125 (RA 1125) creating the CTA and giving to the
said court jurisdiction over the following:
(1) Decisions of the Collector of Internal Revenue in cases involving disputed assessments,
refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto, or
other matters arising under the National Internal Revenue Code or other law or part of law
administered by the Bureau of Internal Revenue;
(2) Decisions of the Commissioner of Customs in cases involving liability for customs duties,
fees or other money charges; seizure, detention or release of property affected fines, forfeitures
or other penalties imposed in relation thereto; or other matters arising under the Customs Law or
other law or part of law administered by the Bureau of Customs; and
75
respectively, of the Tariff and Customs Code, and safeguard measures under Republic Act No.
8800, where either party may appeal the decision to impose or not to impose said duties.
b. Jurisdiction over cases involving criminal offenses as herein provided:
On March 30, 2004, the Legislature passed into law Republic Act No. 9282 (RA 9282) amending RA 1125
by expanding the jurisdiction of the CTA, enlarging its membership and elevating its rank to the level of a
collegiate court with special jurisdiction. Pertinent portions of the amendatory act provides thus:
Sec. 7. Jurisdiction. - The CTA shall exercise:
a. Exclusive appellate jurisdiction to review by appeal, as herein provided:
1. Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments,
refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other
matters arising under the National Internal Revenue or other laws administered by the Bureau of
Internal Revenue;
2. Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments,
refunds of internal revenue taxes, fees or other charges, penalties in relations thereto, or other
matters arising under the National Internal Revenue Code or other laws administered by the
Bureau of Internal Revenue, where the National Internal Revenue Code provides a specific
period of action, in which case the inaction shall be deemed a denial;
3. Decisions, orders or resolutions of the Regional Trial Courts in local tax cases originally
decided or resolved by them in the exercise of their original or appellate jurisdiction;
4. Decisions of the Commissioner of Customs in cases involving liability for customs duties, fees
or other money charges, seizure, detention or release of property affected, fines, forfeitures or
other penalties in relation thereto, or other matters arising under the Customs Law or other laws
administered by the Bureau of Customs;
5. Decisions of the Central Board of Assessment Appeals in the exercise of its appellate
jurisdiction over cases involving the assessment and taxation of real property originally decided
by the provincial or city board of assessment appeals;
6. Decisions of the Secretary of Finance on customs cases elevated to him automatically for
review from decisions of the Commissioner of Customs which are adverse to the Government
under Section 2315 of the Tariff and Customs Code;
7. Decisions of the Secretary of Trade and Industry, in the case of nonagricultural product,
commodity or article, and the Secretary of Agriculture in the case of agricultural product,
commodity or article, involving dumping and countervailing duties under Section 301 and 302,
1. Exclusive original jurisdiction over all criminal offenses arising from violations of the
National Internal Revenue Code or Tariff and Customs Code and other laws administered by the
Bureau of Internal Revenue or the Bureau of Customs: Provided, however, That offenses or
felonies mentioned in this paragraph where the principal amount of taxes and fees, exclusive of
charges and penalties, claimed is less than One million pesos (P1,000,000.00) or where there is
no specified amount claimed shall be tried by the regular Courts and the jurisdiction of the CTA
shall be appellate. Any provision of law or the Rules of Court to the contrary notwithstanding,
the criminal action and the corresponding civil action for the recovery of civil liability for taxes
and penalties shall at all times be simultaneously instituted with, and jointly determined in the
same proceeding by the CTA, the filing of the criminal action being deemed to necessarily carry
with it the filing of the civil action, and no right to reserve the filing of such civil action
separately from the criminal action will be recognized.
2. Exclusive appellate jurisdiction in criminal offenses:
a. Over appeals from the judgments, resolutions or orders of the Regional Trial Courts in tax cases
originally decided by them, in their respected territorial jurisdiction.
b. Over petitions for review of the judgments, resolutions or orders of the Regional Trial Courts in the
exercise of their appellate jurisdiction over tax cases originally decided by the Metropolitan Trial Courts,
Municipal Trial Courts and Municipal Circuit Trial Courts in their respective jurisdiction.
c. Jurisdiction over tax collection cases as herein provided:
1. Exclusive original jurisdiction in tax collection cases involving final and executory
assessments for taxes, fees, charges and penalties: Provides, however, that collection cases where
the principal amount of taxes and fees, exclusive of charges and penalties, claimed is less than
One million pesos (P1,000,000.00) shall be tried by the proper Municipal Trial Court,
Metropolitan Trial Court and Regional Trial Court.
2. Exclusive appellate jurisdiction in tax collection cases:
a. Over appeals from the judgments, resolutions or orders of the Regional Trial Courts in tax collection
cases originally decided by them, in their respective territorial jurisdiction.
b. Over petitions for review of the judgments, resolutions or orders of the Regional Trial Courts in the
Exercise of their appellate jurisdiction over tax collection cases originally decided by the Metropolitan Trial
Courts, Municipal Trial Courts and Municipal Circuit Trial Courts, in their respective jurisdiction. 19
76
Consistent with the above pronouncement, this Court has held as early as the case of J.M. Tuason & Co.,
Inc. v. Jaramillo, et al.29 that "if a case may be appealed to a particular court or judicial tribunal or body,
then said court or judicial tribunal or body has jurisdiction to issue the extraordinary writ of certiorari, in
aid of its appellate jurisdiction."30 This principle was affirmed in De Jesus v. Court of Appeals,31 where the
Court stated that "a court may issue a writ of certiorari in aid of its appellate jurisdiction if said court has
jurisdiction to review, by appeal or writ of error, the final orders or decisions of the lower court." 32 The
rulings in J.M. Tuason and De Jesus were reiterated in the more recent cases of Galang, Jr. v.
Geronimo33 and Bulilis v. Nuez.34
Furthermore, Section 6, Rule 135 of the present Rules of Court provides that when by law, jurisdiction is
conferred on a court or judicial officer, all auxiliary writs, processes and other means necessary to carry it
into effect may be employed by such court or officer.
If this Court were to sustain petitioners' contention that jurisdiction over their certiorari petition lies with
the CA, this Court would be confirming the exercise by two judicial bodies, the CA and the CTA, of
jurisdiction over basically the same subject matter precisely the split-jurisdiction situation which is
anathema to the orderly administration of justice.35 The Court cannot accept that such was the legislative
motive, especially considering that the law expressly confers on the CTA, the tribunal with the specialized
competence over tax and tariff matters, the role of judicial review over local tax cases without mention of
any other court that may exercise such power. Thus, the Court agrees with the ruling of the CA that since
appellate jurisdiction over private respondents' complaint for tax refund is vested in the CTA, it follows that
a petition for certiorari seeking nullification of an interlocutory order issued in the said case should,
likewise, be filed with the same court. To rule otherwise would lead to an absurd situation where one court
decides an appeal in the main case while another court rules on an incident in the very same case.
Stated differently, it would be somewhat incongruent with the pronounced judicial abhorrence to split
jurisdiction to conclude that the intention of the law is to divide the authority over a local tax case filed
with the RTC by giving to the CA or this Court jurisdiction to issue a writ of certiorari against interlocutory
orders of the RTC but giving to the CTA the jurisdiction over the appeal from the decision of the trial court
in the same case. It is more in consonance with logic and legal soundness to conclude that the grant of
appellate jurisdiction to the CTA over tax cases filed in and decided by the RTC carries with it the power to
issue a writ of certiorari when necessary in aid of such appellate jurisdiction. The supervisory power or
jurisdiction of the CTA to issue a writ of certiorari in aid of its appellate jurisdiction should co-exist with,
and be a complement to, its appellate jurisdiction to review, by appeal, the final orders and decisions of the
RTC, in order to have complete supervision over the acts of the latter.36
A grant of appellate jurisdiction implies that there is included in it the power necessary to exercise it
effectively, to make all orders that will preserve the subject of the action, and to give effect to the final
determination of the appeal. It carries with it the power to protect that jurisdiction and to make the
decisions of the court thereunder effective. The court, in aid of its appellate jurisdiction, has authority to
control all auxiliary and incidental matters necessary to the efficient and proper exercise of that
jurisdiction.1wphi1 For this purpose, it may, when necessary, prohibit or restrain the performance of any
act which might interfere with the proper exercise of its rightful jurisdiction in cases pending before it. 37
Lastly, it would not be amiss to point out that a court which is endowed with a particular jurisdiction should
have powers which are necessary to enable it to act effectively within such jurisdiction. These should be
77
78
Section 21. Non-profit Character of the Authority; Exemption from Taxes. The Authority shall be nonprofit and shall devote and use all its returns from its capital investment, as well as excess revenues from its
operations, for the development, improvement and maintenance and other related expenditures of the
Authority to pay its indebtedness and obligations and in furtherance and effective implementation of the
policy enunciated in Section 1 of this Decree. In consonance therewith, the Authority is hereby declared
exempt:
....
LEONEN, J.:
The Philippine Economic Zone Authority is exempt from payment of real property taxes.
These are consolidated1 petitions for review on certiorari the City of Lapu-Lapu and the Province of Bataan
separately filed against the Philippine Economic Zone Authority (PEZA).
In G.R. No. 184203, the City of Lapu-Lapu (the City) assails the Court of Appeals decision 2 dated January
11, 2008 and resolution3 dated August 6, 2008, dismissing the Citys appeal for being the wrong mode of
appeal. The City appealed the Regional Trial Court,Branch 111, Pasay Citys decision finding the PEZA
exempt from payment of real property taxes.
In G.R. No. 187583, the Province of Bataan (the Province) assails the Court of Appeals decision 4 dated
August 27, 2008 and resolution5 dated April 16, 2009, granting the PEZAs petition for certiorari. The Court
of Appeals ruled that the Regional Trial Court, Branch 115, Pasay City gravely abused its discretion in
finding the PEZA liable for real property taxes to the Province of Bataan.
Facts common to the consolidated petitions
In the exercise of his legislative powers,6 President Ferdinand E. Marcos issued Presidential Decree No. 66
in 1972, declaring as government policy the establishment of export processing zones in strategic locations
in the Philippines. Presidential Decree No. 66 aimed "to encourage and promote foreign commerce as a
means of making the Philippines a center of international trade, of strengthening our export trade and
foreign exchange position, of hastening industrialization,of reducing domestic unemployment, and of
accelerating the development of the country."7
To carry out this policy, the Export Processing Zone Authority (EPZA) was created to operate, administer,
and manage the export processing zones established in the Port of Mariveles, Bataan 8 and such other export
processing zones that may be created by virtue of the decree. 9
The decree declared the EPZA non-profit in character10 with all its revenues devoted to its development,
improvement, and maintenance.11 To maintain this non-profit character, the EPZA was declared exempt
from all taxes that may be due to the Republic of the Philippines, its provinces, cities, municipalities, and
other government agencies and instrumentalities.12 Specifically, Section 21 of Presidential Decree No. 66
declared the EPZA exempt from payment of real property taxes:
(b) From all income taxes, franchise taxes, realty taxes and all other kinds of taxes and licenses to be paid
to the National Government, its provinces, cities, municipalities and other government agenciesand
instrumentalities[.]
In 1979, President Marcos issued Proclamation No. 1811, establishing the Mactan Export Processing Zone.
Certain parcels of land of the public domain located in the City of Lapu-Lapuin Mactan, Cebu were
reserved to serve as site of the Mactan Export Processing Zone.
In 1995, the PEZA was created by virtue of Republic Act No. 7916 or "the Special Economic Zone Act of
1995"13 to operate, administer, manage, and develop economic zones in the country.14 The PEZA was
granted the power to register, regulate, and supervise the enterprises located in the economic zones. 15 By
virtue of the law, the export processing zone in Mariveles, Bataan became the Bataan Economic Zone 16 and
the Mactan Export Processing Zone the Mactan Economic Zone.17
As for the EPZA, the law required it to "evolve into the PEZA in accordance with the guidelines and
regulations set forth in an executive order issued for [the] purpose." 18
On October 30, 1995, President Fidel V. Ramos issued Executive Order No. 282, directing the PEZA to
assume and exercise all of the EPZAs powers, functions, and responsibilities "as provided in Presidential
Decree No. 66, as amended, insofar as they are not inconsistent with the powers, functions, and
responsibilities of the PEZA, as mandated under [the Special Economic Zone Act of 1995]." 19 All of
EPZAs properties, equipment, and assets, among others, were ordered transferred to the PEZA. 20
Facts of G.R. No. 184203
In the letter21 dated March 25, 1998, the City of Lapu-Lapu, through the Office of the Treasurer, demanded
from the PEZA 32,912,350.08 in real property taxes for the period from 1992 to 1998 on the PEZAs
properties located in the Mactan Economic Zone.
The City reiterated its demand in the letter22 dated May 21, 1998. It cited Sections 193 and 234 of the Local
Government Code of 1991 that withdrew the real property tax exemptions previously granted to or
presently enjoyed by all persons. The City pointed out that no provision in the Special Economic Zone Act
of 1995 specifically exempted the PEZA from payment of real property taxes, unlike Section 21 of
Presidential Decree No. 66 that explicitly provided for EPZAs exemption. Since no legal provision
79
Based on Section 51, the trial court held that all privileges, benefits, advantages, or exemptions granted
tospecial economic zones created under the Bases Conversion and Development Act of 1992 apply to
special economic zones created under the Special Economic ZoneAct of 1995.
Since these benefits include exemption from payment of national or local taxes, these benefits apply to
special economic zones owned by the PEZA.
According to the trial court, the PEZA remained tax-exempt regardless of Section 24 of the Special
Economic Zone Act of 1995. It ruled that Section 24, which taxes real property owned by developers of
economic zones, only applies to private developers of economic zones, not to public developers like the
PEZA. The PEZA, therefore, is not liable for real property taxes on the land it owns.
Characterizing the PEZA as an agency of the National Government, the trial court ruled that the City had
no authority to tax the PEZA under Sections 133(o) and 234(a) of the Local Government Code of 1991.
In the resolution32 dated June 14, 2006, the trial court granted the PEZAs petition for declaratory relief and
declared it exempt from payment of real property taxes.
The City filed a motion for reconsideration, 33 which the trial court denied in its resolution 34 dated
September 26, 2006.
The City then appealed35 to the Court of Appeals.
The trial court agreed with the Solicitor General. Section 24 of the Special Economic Zone Act of 1995
provides:
SEC. 24. Exemption from National and Local Taxes. Except for real property taxes on land owned by
developers, no taxes, local and national, shall be imposed on business establishments operating within the
ECOZONE. In lieu thereof, five percent (5%) of the gross income earned by all business enterprises within
the ECOZONE shall be paid and remitted as follows:
a. Three percent (3%) to the National Government;
b. Two percent (2%) which shall be directly remitted by the business establishments to the
treasurers office of the municipality or city where the enterprise is located.
The Court of Appeals noted the following issues the City raised in its appellants brief: (1) whether the trial
court had jurisdiction over the PEZAs petition for declaratory relief; (2) whether the PEZA is a government
agency performing governmental functions; and (3) whether the PEZA is exempt from payment of real
property taxes.
The issues presented by the City, according to the Court of Appeals, are pure questions of law which should
have been raised in a petition for review on certiorari directly filed before this court. Since the City availed
itself of the wrong mode of appeal, the Court of Appeals dismissed the Citys appeal in the decision 36 dated
January 11, 2008.
The City filed a motion for extension of time to file a motion for reconsideration, 37 which the Court of
Appeals denied in the resolution38 dated April 11, 2008.
Despite the denial of its motion for extension, the City filed a motion for reconsideration. 39 In the
resolution40 dated August 6, 2008, the Court of Appeals denied that motion.
In its petition for review on certiorari with this court, 41 the City argues that the Court of Appeals "hid under
the skirts of technical rules"42 in resolving its appeal. The City maintains that its appeal involved mixed
questions of fact and law. According to the City, whether the PEZA performed governmental functions
80
Even assuming that the petition involves pure questions of law, the City contends that the subject matter of
the case "is of extreme importance with [far-reaching] consequence that [its magnitude] would surely shape
and determine the course ofour nations future." 44 The Court of Appeals, the City argues, should have
resolved the case on the merits.
After the City of Lapu-Lapu had demanded payment of real property taxes from the PEZA, the Province of
Bataan followed suit. In its letter55 dated May 29, 2003, the Province, through the Office of the Provincial
Treasurer, informed the PEZA that it would be sending a real property tax billing to the PEZA. Arguing that
the PEZA is a developer of economic zones, the Province claimed that the PEZA is liable for real property
taxes under Section 24 of the Special Economic Zone Act of 1995.
The City insists that the trial court had no jurisdiction to hear the PEZAs petition for declaratory relief.
According to the City, the case involves real property located in the City of Lapu-Lapu. The petition for
declaratory relief should have been filed before the Regional Trial Court of the City of Lapu-Lapu. 45
In its reply letter56 dated June 18, 2003, the PEZA requested the Province to suspend the service of the real
property tax billing. It cited its petition for declaratory relief against the City of Lapu-Lapu pending before
the Regional Trial Court, Branch 111, Pasay City as basis.
Moreover, the Province of Bataan, the City of Baguio, and the Province of Cavite allegedly demanded real
property taxes from the PEZA. The City argues that the PEZA should have likewise impleaded these local
government units as respondents in its petition for declaratory relief. For its failure to do so, the PEZA
violated Rule 63, Section 2 of the Rules of Court, and the trial court should have dismissed the petition. 46
The Province argued that serving a real property tax billing on the PEZA "would not in any way affect [its]
petition for declaratory relief before [the Regional Trial Court] of Pasay City." 57 Thus, in its letter58 dated
June 27, 2003, the Province notified the PEZAof its real property tax liabilities for June 1, 1995 to
December 31, 2002 totallingP110,549,032.55.
This court ordered the PEZA to comment on the Citys petition for review on certiorari. 47
After having been served a tax billing, the PEZA again requested the Province to suspend collecting its
alleged real property tax liabilities until the Regional Trial Court of Pasay Cityresolves its petition for
declaratory relief.59
At the outset of its comment, the PEZA argues that the Court of Appeals decision dated January 11, 2008
had become final and executory. After the Court of Appeals had denied the Citys appeal, the City filed a
motion for extension of time to file a motion for reconsideration. Arguing that the time to file a motion for
reconsideration is not extendible, the PEZA filed its motion for reconsideration out of time. The Cityhas no
more right to appeal to this court.48
The PEZA maintains that the City availed itself of the wrong mode of appeal before the Court of Appeals.
Since the City raised pure questions of law in its appeal, the PEZA argues that the proper remedy is a
petition for review on certiorari with this court, not an ordinary appeal before the appellate court. The Court
of Appeals, therefore, correctly dismissed outright the Citys appeal under Rule 50, Section 2 of the Rules
of Court.49
On the merits, the PEZA argues that it is an agency and instrumentality of the National Government. It is
therefore exempt from payment of real property taxes under Sections 133(o) and 234(a) of the Local
Government Code.50 It adds that the tax privileges under Sections 24 and 51 of the Special Economic Zone
Act of 1995 applied to it.51
Considering that the site of the Mactan Economic Zoneis a reserved land under Proclamation No. 1811, the
PEZA claims that the properties sought to be taxed are lands of public dominion exempt from real property
taxes.52
The Province ignored the PEZAs request. On January 20, 2004, the Province served on the PEZA a
statement of unpaid real property tax for the period from June 1995 to December 2004. 60
The PEZA again requested the Province to suspend collecting its alleged real property taxes. 61 The Province
denied the request in its letter62 dated January 29, 2004, then servedon the PEZA a warrant of
levy63 covering the PEZAs real properties located in Mariveles, Bataan.
The PEZAs subsequent requests64 for suspension of collection were all denied by the Province.65 The
Province then served on the PEZA a notice of delinquency in the payment of real property taxes 66 and a
notice of sale of real property for unpaid real property tax. 67 The Province finally sent the PEZA a notice of
public auction of the latters properties in Mariveles, Bataan. 68
On June 14, 2004, the PEZA filed a petition for injunction 69 with prayer for issuance of a temporary
restraining order and/or writ of preliminary injunction before the Regional Trial Court of Pasay City,
arguing that it is exempt from payment ofreal property taxes. It added that the notice of sale issued by the
Province was void because it was not published in a newspaper ofgeneral circulation asrequired by Section
260 of the Local Government Code.70
The case was raffled to Branch 115.
As to the jurisdiction issue, the PEZA counters that the Regional Trial Court of Pasay had jurisdiction to
hear its petition for declaratory relief under Rule 63, Section 1 of the Rules of Court.[53]] It also argued
that it need not implead the Province of Bataan, the City of Baguio, and the Province of Cavite as
respondents considering that their demands came after the PEZA had already filed the petition in court. 54
81
The Province then filed a motion86 for leave to admit attached rejoinder with motion to dismiss. In the
rejoinder with motion to dismiss,87 the Province argued for the first time that the Court of Appeals had no
jurisdiction over the subject matter of the action.
On March 3, 2006, the PEZA and Province both manifested that each would file a memorandum after
which the case would be deemed submitted for decision. The parties then filed their respective
memoranda.74
According to the Province, the PEZA erred in filing a petition for certiorari. Arguing that the PEZA sought
to reverse a Regional Trial Court decision in a local tax case, the Province claimed that the court with
appellate jurisdiction over the action is the Court of Tax Appeals. The PEZA then prayed that the Court of
Appeals dismiss the petition for certiorari for lack of jurisdiction over the subject matter of the action.
In the order75 dated January 31, 2007, the trial court denied the PEZAs petition for injunction. The trial
court ruled that the PEZA is not exempt from payment of real property taxes. According to the trial court,
Sections 193 and 234 of the Local Government Code had withdrawn the real property tax exemptions
previously granted to all persons, whether natural or juridical. 76 As to the tax exemptions under Section 51
of the Special Economic Zone Act of 1995, the trial court ruled that the provision only applies to businesses
operating within the economic zones, not to the PEZA. 77
The PEZA filed before the Court of Appeals a petition for certiorari 78 with prayer for issuance of a
temporary restraining order.
The Court of Appeals issued a temporary restraining order, enjoining the Province and its Provincial
Treasurer from selling PEZA's properties at public auction scheduled on October 17, 2007. 79 It also ordered
the Province to comment on the PEZAs petition.
In its comment,80 the Province alleged that it received a copy of the temporary restraining order only on
October 18, 2007 when it had already sold the PEZAs properties at public auction. Arguing that the act
sought to be enjoined was already fait accompli, the Province prayed for the dismissal of the petition for
certiorari.
The PEZA then filed a supplemental petition for certiorari, prohibition, and mandamus 81 against the
Province, arguing that the Provincial Treasurer of Bataan acted with grave abuse of discretion in issuing the
notice of delinquency and notice of sale. It maintained that it is exempt from payment of real property taxes
because it is a government instrumentality. It added that its lands are property of public dominion which
cannot be sold at public auction.
The PEZA also filed a motion82 for issuance of an order affirming the temporary restraining order and a
writ of preliminary injunction to enjoin the Province from consolidating title over the PEZAs properties.
In its resolution83 dated January 16, 2008,the Court of Appeals admitted the supplemental petition for
certiorari, prohibition, and mandamus. It required the Province to comment on the supplemental petition
and to file a memorandum on the PEZAs prayer for issuance of temporary restraining order.
The Province commented84 on the PEZAs supplemental petition, to which the PEZA replied.85
The Court of Appeals held that the issue before it was whether the trial court judge gravely abused his
discretion in dismissing the PEZAs petition for prohibition. This issue, according to the Court of Appeals,
is properly addressed in a petition for certiorari over which it has jurisdiction to resolve. It, therefore,
maintained jurisdiction to resolve the PEZAs petition for certiorari. 88
Although it admitted that appeal, not certiorari, was the PEZAs proper remedy to reverse the trial courts
decision,89the Court of Appeals proceeded to decide the petition for certiorari in "the broader interest of
justice."90
The Court of Appeals ruled that the trial court judge gravely abused his discretion in dismissing the PEZAs
petition for prohibition. It held that Section 21 of Presidential Decree No. 66 and Section 51 of the Special
Economic Zone Act of 1995 granted the PEZA exemption from payment of real property taxes. 91 Based on
the criteria set in Manila International Airport Authority v. Court of Appeals, 92 the Court of Appeals found
that the PEZA is an instrumentality of the national government. No taxes, therefore, could be levied on it by
local government units.93
In the decision94 dated August 27, 2008, the Court of Appeals granted the PEZAs petition for certiorari. It
set aside the trial courts decision and nullified all the Provinces proceedings with respect to the collection
of real property taxes from the PEZA.
The Province filed a motion for reconsideration,95 which the Court of Appeals denied in the
resolution96 dated April 16, 2009 for lack of merit.
In its petition for review on certiorari with this court, 97 the Province of Bataan insists that the Court of
Appeals had no jurisdiction to take cognizance of the PEZAs petition for certiorari. The Province maintains
that the Court of Tax Appeals had jurisdiction to hear the PEZAs petition since it involved a local tax case
decided by a Regional Trial Court.98
The Province reiterates that the PEZA is not exempt from payment of real property taxes. The Province
points out that the EPZA, the PEZAs predecessor, had to be categorically exempted from payment of real
property taxes. The EPZA, therefore, was not inherently exempt from payment of real property taxes and so
is the PEZA. Since Congress omitted from the Special Economic Zone Act of 1995 a provision specifically
exempting the PEZA from payment of real property taxes, the Province argues that the PEZA is a taxable
entity. It cited the rule in statutory construction that provisions omitted in revised statutes are deemed
repealed.99
82
of Court governs petitions for review before the Court of Appeals. In petitions for review under Rule 42,
questions of fact, of law, or mixed questions of fact and law may be raised. 107
The third mode is through an appealby certiorari before this court under Rule 45 where only questions of
law shall be raised.108
A question of fact exists when there is doubt as to the truth or falsity of the alleged facts. 109 On the other
hand, there is a question of law if the appeal raises doubt as to the applicable law on a certain set of facts. 110
Under Rule 50, Section 2, an improper appeal before the Court of Appeals is dismissed outright and shall
not be referred to the proper court:
SEC. 2. Dismissal of improper appeal to the Court of Appeals. An appeal under Rule 41 taken from the
Regional Trial Court to the Court of Appeals raising only questions of law shall be dismissed, issues purely
of law not being reviewable by said court. Similarly, an appeal by notice of appeal instead of by petition for
review from the appellate judgment of a Regional Trial Court shall be dismissed.
An appeal erroneously taken to the Court of Appeals shall not be transferred to the appropriate court but
shall be dismissed outright.
Rule 50, Section 2 repealed Rule 50, Section 3 of the 1964 Rules of Court, which provided that improper
appeals to the Court of Appeals shall not be dismissed but shall be certified to the proper court for
resolution:
Sec. 3. Where appealed case erroneously, brought. Where the appealed case has been erroneously
brought to the Court of Appeals, it shall not dismiss the appeal, but shall certify the case to the proper court,
with a specific and clear statement of the grounds therefor.
With respect to appeals by certiorari directly filed before this court but which raise questions of fact,
paragraph 4(b) of Circular No. 2-90 dated March 9, 1990 states that this court "retains the option, in the
exercise of its sound discretion and considering the attendant circumstances, either itself to take cognizance
of and decide such issues or to refer them to the Court of Appeals for determination." In Indoyon, Jr. v.
Court of Appeals,111 we said that this court "cannot tolerate ignorance of the law on appeals." 112 It is not this
courts task to determine for litigants their proper remedies under the Rules. 113
We agree that the City availed itself of the wrong mode of appeal before the Court of Appeals. The City
raised pure questions of law in its appeal. The issue of whether the Regional Trial Court of Pasay had
jurisdiction over the PEZAs petition for declaratory relief is a question of law, jurisdiction being a matter
of law.114 The issue of whether the PEZA is a government instrumentality exempt from payment of real
property taxes is likewise a question of law since this question is resolved by examining the provisions of
the PEZAs charter as well as other laws relating to the PEZA. 115
The second mode is through a petition for review before the Court of Appeals where the decision assailed
was rendered by the Regional Trial Court in the exercise of its appellate jurisdiction. Rule 42 of the Rules
83
Regional Trial Court to determine any question of construction or validity arising, and for a declaration of
his rights or duties, thereunder.
Nevertheless, considering the important questions involved in this case, we take cognizance of the Citys
petition for review on certiorari in the interest of justice.
An action for reformation of an instrument, to quiet title to real property or remove clouds therefrom, or to
consolidate ownership under Article 1607 of the Civil Code, may be brought under this Rule.
In Municipality of Pateros v. The Honorable Court of Appeals,116 the Municipality of Pateros filed an appeal
under Rule 42 before the Court of Appeals, which the Court of Appeals denied outright for raising pure
questions of law. This court agreed that the Municipality of Pateros "committed a procedural
infraction"117 and should have directly filed a petition for review on certiorari before this court.
Nevertheless, "in the interest of justice and in order to write finisto [the] controversy," 118 this court "opt[ed]
to relax the rules"119 and proceeded to decide the case. This court said:
The court with jurisdiction over petitions for declaratory relief is the Regional Trial Court, the subject
matter of litigation in an action for declaratory relief being incapable of pecuniary estimation. 121 Section 19
of the Judiciary Reorganization Act of 1980 provides:
While it is true that rules of procedure are intended to promote rather than frustrate the ends of justice, and
while the swift unclogging of the dockets of the courts is a laudable objective, it nevertheless must not be
met at the expense of substantial justice.
The Court has allowed some meritorious cases to proceed despite inherent procedural defects and lapses.
Thisis in keeping with the principle that rules of procedure are mere tools designed to facilitate the
attainment of justice, and that strict and rigid application ofrules which should result in technicalities that
tend to frustrate rather than promote substantial justice must always be avoided. It is a far better and more
prudent cause of action for the court to excuse a technical lapse and afford the parties a review of the case
to attain the ends of justice, rather than dispose of the case on technicality and cause grave injustice to the
parties, giving a false impression of speedy disposal of cases while actually resulting in more delay, if not a
miscarriage of justice.120
Similar to Municipality of Pateros, we opt to relax the rules in this case. The PEZA operates or otherwise
administers special economic zones all over the country. Resolving the substantive issue of whether the
PEZA is taxable for real property taxes will clarify the taxing powers of all local government units where
special economic zones are operated. This case, therefore, should be decided on the merits.
II.
The Regional Trial Court of Pasay had no
jurisdiction to hear, try, and decide the
PEZAs petition for declaratory relief
against the City of Lapu-Lapu
Rule 63 of the Rules of Court governs actions for declaratory relief. Section 1 of Rule 63 provides:
SECTION 1. Who may file petition. Any person interested under a deed, will, contract or other written
instrument, or whose rights are affected by a statute, executive order or regulation, ordinance, or any other
governmental regulation may, before breach or violation, thereof, bring an action in the appropriate
SEC. 19. Jurisdiction in Civil Cases. Regional Trial Courts shall exercise exclusive original jurisdiction:
(1) In all civil actions in which the subject of litigation is incapable of pecuniary estimation[.]
Consistent with the law, the Rules state that a petition for declaratory relief is filed "in the appropriate
Regional Trial Court."122
A special civil action for declaratory relief is filed for a judicial determination of any question of
construction or validity arising from, and for a declaration of rights and duties, under any of the following
subject matters: a deed, will, contract or other written instrument, statute, executive order or regulation,
ordinance, orany other governmental regulation. 123 However, a declaratory judgment may issue only if there
has been "no breach of the documents in question." 124 If the contract or statute subject matter of the action
has already been breached, the appropriate ordinary civil action must be filed. 125 If adequate relief is
available through another form of action or proceeding, the other action must be preferred over an action
for declaratory relief.126
In Ollada v. Central Bank of the Philippines,127 the Central Bank issued CB-IED Form No. 5 requiring
certified public accountants to submit an accreditation under oath before they were allowed to certify
financial statements submitted to the bank. Among those financial statements the Central Bank disallowed
were those certified by accountant Felipe B. Ollada.128 Claiming that the requirement "restrained the
legitimate pursuit of ones trade,"129
Ollada filed a petition for declaratory relief against the Central Bank.
This court ordered the dismissal of Olladas petition "without prejudice to [his] seeking relief in another
appropriate action."130 According to this court, Olladas right had already been violated when the Central
Bank refused to accept the financial statements he prepared. Since there was already a breach, a petition for
declaratory relief was not proper. Ollada must pursue the "appropriate ordinary civil action or
proceeding."131 This court explained:
Petitioner commenced this action as, and clearly intended it to be one for Declaratory Relief under the
provisions of Rule 66 of the Rules of Court. On the question of when a special civil action of this nature
would prosper, we have already held that the complaint for declaratory relief will not prosper if filed after a
84
All that the 5-page SJS Petition prayed for was "that the question raised in paragraph 9 hereof be resolved."
In other words, it merely sought an opinion of the trial court on whether the speculated acts of religious
leaders endorsing elective candidates for political offices violated the constitutional principle on the
separation of church and state. SJS did not ask for a declaration of its rights and duties; neither did it pray
for the stoppage of any threatened violation of its declared rights. Courts, however, are proscribed from
rendering an advisory opinion.141 In sum, a petition for declaratory relief must satisfy six requisites:
[F]irst, the subject matter of the controversy must be a deed, will, contract or other written instrument,
statute, executive order or regulation, or ordinance; second, the terms of said documents and the validity
thereof are doubtful and require judicial construction; third, there must have been no breach of the
documents in question; fourth, there must be an actual justiciable controversy or the "ripening seeds" of one
between persons whose interests are adverse; fifth, the issue must be ripe for judicial determination; and
sixth, adequate relief is not available through other means or other forms of action or
proceeding.142 (Emphases omitted)
We rule that the PEZA erred in availing itself of a petition for declaratory relief against the City. The City
had already issued demand letters and real property tax assessment against the PEZA, in violation of the
PEZAs alleged tax-exempt status under its charter. The Special Economic Zone Act of 1995, the subject
matter of PEZAs petition for declaratory relief, had already been breached. The trial court, therefore, had
no jurisdiction over the petition for declaratory relief. There are several aspects of
jurisdiction.143 Jurisdiction over the subject matter is "the power to hear and determine cases of the general
class to which the proceedings in question belong." 144 It is conferred by law, which may either be the
Constitution or a statute.145 Jurisdiction over the subject matter means "the nature of the cause of action and
the relief sought."146 Thus, the cause of action and character of the relief sought as alleged in the complaint
are examinedto determine whether a court had jurisdiction over the subject matter.147 Any decision rendered
by a court without jurisdiction over the subjectmatter of the action is void. 148
Another aspect of jurisdiction is jurisdiction over the person. It is "the power of [a] court to render a
personal judgment or to subject the parties in a particular action to the judgment and other rulings rendered
in the action."149A court automatically acquires jurisdiction over the person of the plaintiff upon the filing of
the initiatory pleading.150With respect to the defendant, voluntary appearance in court or a valid service of
summons vests the court with jurisdiction over the defendants person. 151 Jurisdiction over the person of the
defendant is indispensable in actions in personamor those actions based on a partys personal
liability.152 The proceedings in an action in personamare void if the court had no jurisdiction over the person
of the defendant.153
Jurisdiction over the resor the thing under litigation is acquired either "by the seizure of the property under
legal process, whereby it is brought into actual custody of the law; or asa result of the institution of legal
proceedings, in which the power of the court is recognized and made effective." 154 Jurisdiction over the res
is necessary in actions in remor those actions "directed against the thing or property or status of a person
and seek judgments with respect thereto as against the whole world." 155 The proceedings in an action in rem
are void if the court had no jurisdiction over the thing under litigation. 156
In the present case, the Regional Trial Court had no jurisdiction over the subject matter of the action,
specifically, over the remedy sought. As this court explained in Malana v. Tappa: 157
85
(d) In the event that the protest is denied or upon the lapse of the sixty day period prescribed in
subparagraph (a), the taxpayer may avail of the remedies as provided for in Chapter 3, Title II,
Book II of this Code.
Should the taxpayer find the action on the protest unsatisfactory, the taxpayer may appeal with the Local
Board of Assessment Appeals within 60 days from receipt of the decision on the protest:
SECTION 226. Local Board of Assessment Appeals. - Any owner or person having legal interest in the
property who is not satisfied with the action of the provincial, city or municipal assessor in the assessment
of his property may, within sixty (60) days from the date of receipt of the written notice of assessment,
appeal to the Board of Assessment Appeals of the provincial or city by filing a petition under oath in the
form prescribed for the purpose, together with copies of the tax declarations and such affidavits or
documents submitted in support of the appeal.
Payment under protest and appeal to the Local Board of Assessment Appeals are "successive administrative
remedies to a taxpayer who questions the correctness of an assessment." 160 The Local Board Assessment
Appeals shall not entertain an appeal "without the action of the local assessor" 161 on the protest.
If the taxpayer is still unsatisfied after appealing with the Local Board of Assessment Appeals, the taxpayer
may appeal with the Central Board of Assessment Appeals within 30 days from receipt of the Local Boards
decision:
SECTION 229. Action by the Local Board of Assessment Appeals. - (a) The Board shall decide the appeal
within one hundred twenty (120) days from the date of receipt of such appeal. The Board, after hearing,
shall render its decision based on substantial evidence or such relevant evidence on record as a reasonable
mind might accept as adequate to support the conclusion. (b) In the exercise ofits appellate jurisdiction, the
Board shall have the power to summon witnesses, administer oaths, conduct ocular inspection, take
depositions, and issue subpoena and subpoena duces tecum. The proceedings of the Board shall be
conducted solely for the purpose of ascertaining the facts without necessarily adhering to technical rules
applicable in judicial proceedings.
(c) The secretary of the Board shall furnish the owner of the property or the person having legal interest
therein and the provincial or city assessor with a copy of the decision of the Board. In case the provincial or
city assessor concurs in the revision or the assessment, it shall be his duty to notify the owner of the
property or the person having legal interest therein of such factusing the form prescribed for the purpose.
The owner of the property or the person having legal interest therein or the assessor who is not satisfied
with the decision of the Board, may, within thirty (30) days after receipt of the decision of said Board,
appeal to the Central Board of Assessment Appeals, as herein provided. The decision of the Central Board
shall be final and executory. (Emphasis supplied)
On the other hand, an assessment is illegal if it was made without authority under the law.162 In case of an
illegal assessment, the taxpayer may directly resort to judicial action without paying under protest the
assessed tax and filing an appeal with the Local and Central Board of Assessment Appeals.
86
filed only with the court or tribunal where the Constitution or a statute says it can be brought. 172 Objections
to jurisdiction cannot be waived and may be brought at any stage of the proceedings, even on
appeal.173 When a case is filed with a court which has no jurisdiction over the action, the court shall motu
propriodismiss the case.174
On the other hand, venue is "the place of trial or geographical location in which an action or proceeding
should be brought." 175 In civil cases, venue is a matter of procedural law.176 A partys objections to venue
must be brought at the earliest opportunity either in a motion to dismiss or in the answer; otherwise the
objection shall be deemed waived.177 When the venue of a civil action is improperly laid, the court cannot
motu propriodismiss the case.178
The venue of an action depends on whether the action is a real or personal action. Should the action affect
title to or possession of real property, or interest therein, it is a real action. The action should be filed in the
proper court which has jurisdiction over the area wherein the real property involved, or a portion thereof, is
situated.179 If the action is a personal action, the action shall be filed with the proper court where the
plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants
resides, or in the case of a non-resident defendant where he may be found, at the election of the plaintiff. 180
The City was objecting to the venue of the action, not to the jurisdiction of the Regional Trial Court of
Pasay. In essence, the City was contending that the PEZAs petition is a real action as it affects title to or
possession of real property, and, therefore, the PEZA should have filed the petition with the Regional Trial
Court of Lapu-Lapu City where the real properties are located. However, whatever objections the City has
against the venue of the PEZAs action for declaratory relief are already deemed waived. Objections to
venue must be raised at the earliest possible opportunity.181 The City did not file a motion to dismiss the
petition on the ground that the venue was improperly laid. Neither did the City raise this objection in its
answer.
In any event, the law sought to be judicially interpreted in this case had already been breached. The
Regional Trial Court of Pasay, therefore, had no jurisdiction over the PEZAs petition for declaratory relief
against the City.
III.
Injunction "is a judicial writ, process or proceeding whereby a party is ordered to do or refrain from doing a
certain act."167 "It may be the main action or merely a provisional remedy for and as incident in the main
action."168 The essential requisites of a writ of injunction are: "(1) there must be a right in esseor the
existence of a right to be protected; and (2) the act against which the injunction is directed to constitute a
violation of such right."169
We note, however, that the City confused the concepts of jurisdiction and venue in contending that the
Regional Trial Court of Pasay had no jurisdiction because the real properties involved in this case are
located in the City of Lapu-Lapu.
On the one hand, jurisdiction is "the power to hear and determine cases of the general class to which the
proceedings in question belong."170 Jurisdiction is a matter of substantive law.171 Thus, an action may be
87
This court, "in the liberal spirit pervading the Rules of Court and in the interest of substantial justice," 199 has
treated petitions for certiorari as an appeal: "(1) if the petition for certiorari was filed within the
reglementary period within which to file a petition for review on certiorari; (2) when errors of judgment are
averred; and (3) when there is sufficient reason to justify the relaxation of the rules." 200 Considering that
"the nature of an action is determined by the allegationsof the complaint or the petition and the character of
the relief sought,"201 a petition which "actually avers errors of judgment rather than errors than that of
jurisdiction"202 may be considered a petition for review.
However, suspending the application of the Rules has its disadvantages. Relaxing procedural rules may
reduce the "effective enforcement of substantive rights," 203 leading to "arbitrariness, caprice, despotism, or
whimsicality in the settlement of disputes." 204 Therefore, for this court to suspend the application of the
Rules, the accomplishment of substantial justice must outweigh the importance of predictability of court
procedures.
The PEZAs petition for certiorari may be treated as an appeal. First, the petition for certiorari was filed
withinthe 15-day reglementary period for filing an appeal. The PEZA filed its petition for certiorari before
the Court of Appeals on October 15, 2007,205 which was 12 days from October 3, 2007206 when the PEZA
had notice of the trial courts order denying the motion for reconsideration.
Second, the petition for certiorari raised errors of judgment. The PEZA argued that the trial court erred in
ruling that it is not exempt from payment of real property taxes given Section 21 of Presidential Decree No.
66 and Sections 11 and 51 of the Special Economic Zone Act of 1995. 207
Third, there is sufficient reason to relax the rules given the importance of the substantive issue presented in
this case.
However, the PEZAs petition for certiorari was filed before the wrong court. The PEZA should have filed
its petition before the Court of Tax Appeals.
The Court of Tax Appeals has the exclusive appellate jurisdiction over local tax cases decided by Regional
Trial Courts. Section 7, paragraph (a)(3) of Republic Act No. 1125, as amended by Republic Act No. 9282,
provides:
Sec. 7. Jurisdiction. The [Court of Tax Appeals] shall exercise:
a. Exclusive appellate jurisdiction to review by appeal, as herein provided:
....
3. Decisions, orders or resolutions of the Regional Trial Courts in local tax cases originally
decided or resolved by them in the exercise of their original or appellate jurisdiction[.]
88
If this Court were to sustain petitioners' contention that jurisdiction over their certiorari petition lies with
the CA, this Court would be confirming the exercise by two judicial bodies, the CA and the CTA, of
jurisdiction over basically the same subject matter precisely the split-jurisdiction situation which is
anathema to the orderly administration of justice.The Court cannot accept that such was the legislative
motive, especially considering that the law expressly confers on the CTA, the tribunal with the specialized
competence over tax and tariff matters, the role of judicial review over local tax cases without mention of
any other court that may exercise such power. Thus, the Court agrees with the ruling of the CA that since
appellate jurisdiction over private respondents' complaint for tax refund is vested in the CTA, it follows that
a petition for certiorari seeking nullification of an interlocutory order issued in the said case should,
likewise, be filed with the same court. To rule otherwise would lead to an absurd situation where one court
decides an appeal in the main case while another court rules on an incident in the very same case.
Stated differently, it would be somewhat incongruent with the pronounced judicial abhorrence to split
jurisdiction to conclude that the intention of the law is to divide the authority over a local tax case filed
with the RTC by giving to the CA or this Court jurisdiction to issue a writ of certiorari against interlocutory
orders of the RTC but giving to the CTA the jurisdiction over the appeal from the decision of the trial court
in the same case. It is more in consonance with logic and legal soundness to conclude that the grant of
appellate jurisdiction to the CTA over tax cases filed in and decided by the RTC carries withit the power to
issue a writ of certiorari when necessary in aid of such appellate jurisdiction. The supervisory power or
jurisdiction of the CTA to issue a writ of certiorari in aid of its appellate jurisdiction should co-exist with,
and be a complement to, its appellate jurisdiction to review, by appeal, the final orders and decisionsof the
RTC, in order to have complete supervision over the acts of the latter.217 (Citations omitted)
In this case, the petition for injunction filed before the Regional Trial Court of Pasay was a local tax case
originally decided by the trial court in its original jurisdiction. Since the PEZA assailed a judgment, not an
interlocutory order, of the Regional Trial Court, the PEZAs proper remedy was an appeal to the Court of
Tax Appeals.
Considering that the appellate jurisdiction of the Court of Tax Appeals is to the exclusion of all other
courts, the Court of Appeals had no jurisdiction to take cognizance of the PEZAs petition. The Court of
Appeals acted without jurisdiction in rendering the decision in CA-G.R. SP No. 100984. Its decision in CAG.R. SP No. 100984 is void.218
The filing of appeal in the wrong court does not toll the period to appeal. Consequently, the decision of the
Regional Trial Court, Branch 115, Pasay City, became final and executory after the lapse of the 15th day
from the PEZAs receipt of the trial courts decision.219 The denial of the petition for injunction became
final and executory.
IV.
The remedy of a taxpayer depends on the
stage in which the local government unit
is enforcing its authority to impose real
property taxes
89
90
(e) Machinery and equipment used for pollution control and environmental protection.
Except as provided herein, any exemption from payment of real property taxes previously granted to, or
presently enjoyed by, all persons, whether natural or juridical, including government-owned or -controlled
corporations are hereby withdrawn upon the effectivity of this Code. (Emphasis supplied)
Except as provided herein, any exemption from payment of real property tax previously granted to, or
presently enjoyed by, all persons, whether natural or juridical, including all government-owned or
-controlled corporations are hereby withdrawn upon the effectivity of this Code. (Emphasis supplied)
The person liable for real property taxes is the "taxable person who had actual or beneficial use and
possession [of the real property for the taxable period,] whether or not [the person owned the property for
the period he or she is being taxed]."239
For persons granted tax exemptions or incentives before the effectivity of the Local Government Code,
Section 193 withdrew these tax exemption privileges. These persons consist of both natural and juridical
persons, including government-owned or controlled corporations:
The exceptions to the rule are provided in the Local Government Code. Under Section 133(o), local
government units have no power to levy taxes of any kind on the national government, its agencies and
instrumentalities and local government units:
SEC. 193. Withdrawal of Tax Exemption Privileges. Unless otherwise provided in this code, tax
exemptions or incentives granted to or presently enjoyed by all persons, whether natural or juridical,
including government-owned or controlled corporations, except local water districts, cooperatives duly
registered under R.A. 6938, non stock and non profit hospitals and educational institutions, are hereby
withdrawn upon effectivity of this Code.
SEC. 133. Common Limitations on the Taxing Powers of Local Government Units. Unless otherwise
provided herein, the exercise of taxing powers of provinces, cities, municipalities, and barangays shall not
extend to the levy of the following:
....
(o) Taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities and
local government units.
Specifically on real property taxes, Section 234 enumerates the persons and real property exempt from real
property taxes:
SEC. 234. Exemptions from Real Property Tax. The following are exempted from payment of real
property tax:
(a) Real property owned by the Republic of the Philippines or any of its political subdivisions
except when the beneficial use thereof has been granted, for consideration or otherwise, to a
taxable person;
(b) Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques,
nonprofitor religious cemeteries and all lands, buildings, and improvements actually, directly,
and exclusively used for religious, charitable or educational purposes;
(c) All machineries and equipment that are actually, directly and exclusively used by local water
districts and government-owned or controlled corporations engaged in the supply and
distribution of water and/or generation and transmission of electric power;
(d) All real property owned by duly registered cooperatives as provided under R.A. No. 6938;
and
As discussed, Section 234 withdrew all tax privileges with respect to real property taxes. Nevertheless,
local government units may grant tax exemptions under such terms and conditions asthey may deem
necessary:
SEC. 192. Authority to Grant Tax Exemption Privileges. Local government units may, through ordinances
duly approved, grant tax exemptions, incentives or reliefs under such terms and conditions as they may
deem necessary.
In Mactan Cebu International Airport Authority v. Hon. Marcos, 240 this court classified the exemptions from
real property taxes into ownership, character, and usage exemptions. Ownership exemptions are exemptions
based on the ownership of the real property. The exemptions of real property owned by the Republic of the
Philippines, provinces, cities, municipalities, barangays, and registered cooperatives fall under this
classification.241 Character exemptions are exemptions based on the character of the real property. Thus, no
real property taxes may be levied on charitable institutions, houses and temples of prayer like churches,
parsonages, or convents appurtenant thereto, mosques, and non profitor religious cemeteries. 242
Usage exemptions are exemptions based on the use of the real property. Thus, no real property taxes may
be levied on real property such as: (1) lands and buildings actually, directly, and exclusively used for
religious, charitable or educational purpose; (2) machineries and equipment actually, directly and
exclusively used by local water districts or by government-owned or controlled corporations engaged in the
supply and distribution of water and/or generation and transmission of electric power; and (3) machinery
and equipment used for pollution control and environmental protection. 243
Persons may likewise be exempt from payment of real properties if their charters, which were enacted or
reenacted after the effectivity of the Local Government Code, exempt them payment of real property
taxes.244
V.
91
With the PEZA as an attached agency to the Department of Trade and Industry, the 13-person PEZA Board
is chaired by the Department Secretary.254 Among the powers and functions of the PEZA is its ability to
coordinate with the Department of Trade and Industry for policy and program formulation and
implementation.255 In strategizing and prioritizing the development of special economic zones, the PEZA
coordinates with the Department of Trade and Industry.256
The PEZA also administers its own funds and operates autonomously, with the PEZA Board formulating
and approving the PEZAs annual budget.257 Appointments and other personnel actions in the PEZA are also
free from departmental interference, with the PEZA Board having the exclusive and final authority to
promote, transfer, assign and reassign officers of the PEZA.258
As an instrumentality of the national government, the PEZA is vested with special functions or jurisdiction
by law. Congress created the PEZA to operate, administer, manage and develop special economic zones in
the Philippines.259 Special economic zones are areas with highly developed or which have the potential to
be developed into agro-industrial, industrial tourist/recreational, commercial, banking, investment and
financial centers.260 By operating, administering, managing, and developing special economic zones which
attract investments and promote use of domestic labor, the PEZA carries out the following policy of the
Government: SECTION 2. Declaration of Policy. It is the declared policy of the government to translate
into practical realities the following State policies and mandates in the 1987 Constitution, namely:
(a) "The State recognizes the indispensable role of the private sector, encourages private
enterprise, and provides incentives to needed investments." (Sec. 20, Art. II)
(b) "The State shall promote the preferential use of Filipino labor, domestic materials and locally
produced goods, and adopt measures that help make them competitive." (Sec. 12, Art. XII) In
pursuance of these policies, the government shall actively encourage, promote, induce and
accelerate a sound and balanced industrial, economic and social development of the country in
order to provide jobs to the people especially those in the rural areas, increase their productivity
and their individual and family income, and thereby improve the level and quality of their living
condition through the establishment, among others, of special economic zones in suitable and
strategic locations in the country and through measures that shall effectively attract legitimate
and productive foreign investments. 261
Being an instrumentality of the national government, the PEZA cannot be taxed by local government units.
Although a body corporate vested with some corporate powers,262 the PEZA is not a government-owned or
controlled corporation taxable for real property taxes.
Section 2(13) of the Introductory Provisions of the Administrative Code of 1987 defines the term
"government-owned or controlled corporation":
SEC. 2. General Terms Defined. Unless the specific words of the text, or the context as a whole, or a
particular statute, shall require a different meaning:
92
creates through special charters corporations that perform economic or commercial activities, such entities
known as "government-owned or controlled corporations" must meetthe test of economic viability
because they compete in the market place.
....
Commissioner Blas F. Ople, proponent of the test of economic viability, explained to the Constitutional
Commission the purpose of this test, as follows:
MR. OPLE: Madam President, the reason for this concern is really that when the government creates a
corporation, there is a sense in which this corporation becomes exempt from the test of economic
performance. We know what happened in the past. If a government corporation loses, then it makes its
claim upon the taxpayers' money through new equity infusions from the government and what is always
invoked is the common good. That is the reason why this year, out of a budget of P115 billion for the entire
government, about P28 billion of this will go into equity infusions to support a few government financial
institutions. And this is all taxpayers' money which could have been relocated to agrarian reform, to social
services like health and education, to augment the salaries of grossly underpaid public employees. And yet
this is all going down the drain.
Therefore, when we insert the phrase "ECONOMIC VIABILITY" together with the "common good," this
becomes a restraint on future enthusiasts for state capitalism to excuse themselves from the responsibility
of meeting the market test so that they become viable. And so, Madam President, I reiterate, for the
committee's consideration and I am glad that I am joined in this proposal by Commissioner Foz, the
insertion of the standard of "ECONOMIC VIABILITY OR THE ECONOMIC TEST," together with the
common good.
....
Government instrumentalities, on the other hand, are also created by law but partake of sovereign
functions. When a government entity performs sovereign functions, it need not meet the test of economic
viability. In Manila International Airport Authority v. Court of Appeals, 268 this court explained:
Clearly, the test of economic viability does not apply to government entities vested with corporate powers
and performing essential public services. The State is obligated to render essential public services
regardless of the economic viability of providing such service. The noneconomic viability of rendering
such essential public service does not excuse the State from withholding such essential services from the
public.269 (Emphases and citations omitted)
In contrast, government instrumentalities vested with corporate powers and performing governmental
orpublic functions need not meet the test of economic viability. These instrumentalities perform essential
public services for the common good, services that every modern State must provide its citizens. These
instrumentalities need not be economically viable since the government may even subsidize their entire
operations. These instrumentalities are not the "government-owned or controlled corporations" referred to
in Section 16, Article XII of the 1987 Constitution.
The law created the PEZAs charter. Under the Special Economic Zone Act of 1995, the PEZA was
established primarily to perform the governmental function of operating,administering, managing, and
developing special economic zones to attract investments and provide opportunities for preferential use of
Filipino labor.
Thus, the Constitution imposes no limitation when the legislature creates government instrumentalities
vested with corporate powers but performing essential governmental or public functions. Congress has
plenary authority to create government instrumentalities vested with corporate powers provided these
instrumentalities perform essential government functions or public services. However, when the legislature
Under its charter, the PEZA was created a body corporate endowed with some corporate powers. However,
it was not organized as a stock270 or non-stock271 corporation. Nothing in the PEZAs charter provides that
the PEZAs capital is divided into shares.272 The PEZA also has no members who shall share in the PEZAs
profits.
93
SECTION 1. Assumption of EPZAs Powers and Functions by PEZA. All the powers, functions and
responsibilities of EPZA as provided under its Charter, Presidential Decree No. 66, as amended, insofar as
they are not inconsistent with the powers,functions and responsibilities of the PEZA, as mandated under
Republic Act No. 7916, shall hereafter be assumed and exercised by the PEZA. Henceforth, the EPZA shall
be referred to as the PEZA.
The following sections of the Special Economic Zone Act of 1995 provide for the PEZAs
powers,functions, and responsibilities:
V. (B)
The PEZA assumed the non-profit character, including the tax exempt status, of the EPZA
The PEZAs predecessor, the EPZA, was declared non-profit in character with all its revenues devoted for
its development, improvement, and maintenance. Consistent with this non-profit character, the EPZA was
explicitly declared exempt from real property taxes under its charter. Section 21 of Presidential Decree No.
66 provides:
Section 21. Non-profit Character of the Authority; Exemption from Taxes. The Authority shall be nonprofit and shall devote and use all its returns from its capital investment, as well as excess revenues from its
operations, for the development, improvement and maintenance and other related expenditures of the
Authority to pay its indebtedness and obligations and in furtherance and effective implementation of the
policy enunciated in Section 1 of this Decree. In consonance therewith, the Authority is hereby declared
exempt:
....
(b) From all income taxes, franchise taxes, realty taxes and all other kinds of taxes and licenses to be paid
to the National Government, its provinces, cities, municipalities and other government agencies and
instrumentalities[.]
The Special Economic Zone Act of 1995, on the other hand, does not specifically exempt the PEZA from
payment of real property taxes.
Nevertheless, we rule that the PEZA is exempt from real property taxes by virtue of its charter. A provision
in the Special Economic Zone Act of 1995 explicitly exempting the PEZA is unnecessary. The PEZA
assumed the real property exemption of the EPZA under Presidential Decree No. 66.
Section 11 of the Special Economic Zone Act of 1995 mandated the EPZA "to evolve into the PEZA in
accordance with the guidelines and regulations set forth in an executive order issued for this purpose."
President Ramos then issued Executive Order No. 282 in 1995, ordering the PEZA to assume the EPZAs
powers, functions, and responsibilities under Presidential Decree No. 66 not inconsistent with the Special
Economic Zone Act of 1995:
94
SEC. 9. Defense and Security. The defense of the ECOZONE and the security of its perimeter fence shall
be the responsibility of the national government in coordination with the PEZA. Military forces sent by the
national government for the purpose of defense shall not interfere in the internal affairs of any of the
ECOZONE and expenditure for these military forces shall be borne by the national government. The PEZA
may provide and establish the ECOZONES internal security and firefighting forces.
SEC. 10. Immigration. Any investor within the ECOZONE whose initial investment shall not be less than
One Hundred Fifty Thousand Dollars ($150,000.00), his/her spouse and dependent children under twentyone (21) years of age shall be granted permanent resident status within the ECOZONE. They shall have
freedom of ingress and egress to and from the ECOZONE without any need of special authorization from
the Bureau of Immigration.
The PEZA shall issue working visas renewable every two (2) years to foreign executives and other aliens,
processing highly-technical skills which no Filipino within the ECOZONE possesses, as certified by the
Department of Labor and Employment. The names of aliens granted permanent resident status and working
visas by the PEZA shall be reported to the Bureau of Immigration within thirty (30) days after issuance
thereof.
SEC. 13. General Powers and Functions of the Authority. The PEZA shall have the following powers and
functions:
(a) To operate, administer, manage and develop the ECOZONE according to the principles and
provisions set forth in this Act;
(b) To register, regulate and supervise the enterprises in the ECOZONE in an efficient and
decentralized manner;
(c) To coordinate with local government units and exercise general supervision over the
development, plans, activities and operations of the ECOZONES, industrial estates, export
processing zones, free trade zones, and the like;
(d) In coordination with local government units concerned and appropriate agencies, to
construct,acquire, own, lease, operate and maintain on its own or through contract, franchise,
license, bulk purchase from the private sector and build-operate-transfer scheme or joint venture,
adequate facilities and infrastructure, such as light and power systems, water supply and
distribution systems, telecommunication and transportation, buildings, structures, warehouses,
roads, bridges, ports and other facilities for the operation and development of the ECOZONE;
(e) To create, operate and/or contractto operate such agencies and functional units or offices of
the authority as it may deem necessary;
(f) To adopt, alter and use a corporate seal; make contracts, lease, own or otherwise dispose of
personal or real property; sue and be sued; and otherwise carry out its duties and functions as
provided for in this Act;
95
The PEZA, in coordination with the Department of Trade and Industry and the Bureau of Customs, shall
jointly issue the necessary implementing rules and guidelines for the effective Implementation of this
section.
SEC. 29. Eminent Domain. The areas comprising an ECOZONE may be expanded or reduced when
necessary. For this purpose, the government shall have the power to acquire, either by purchase, negotiation
or condemnation proceedings, any private lands within or adjacent to the ECOZONE for:
a. Consolidation of lands for zone development purposes;
b. Acquisition of right of way to the ECOZONE; and
c. The protection of watershed areas and natural assets valuable to the prosperity of the
ECOZONE.
If in the establishment of a publicly-owned ECOZONE, any person or group of persons who has been
occupying a parcel of land within the Zone has to be evicted, the PEZA shall provide the person or group of
persons concerned with proper disturbance compensation: Provided, however, That in the case of displaced
agrarian reform beneficiaries, they shall be entitled to the benefits under the Comprehensive Agrarian
Reform Law, including but not limited to Section 36 of Republic Act No. 3844, in addition to a homelot in
the relocation site and preferential employment in the project being undertaken.
SEC. 32. Shipping and Shipping Register. Private shipping and related business including private
container terminals may operate freely in the ECOZONE, subject only to such minimum reasonable
regulations of local application which the PEZA may prescribe.
The PEZA shall, in coordination with the Department of Transportation and Communications, maintain a
shipping register for each ECOZONE as a business register of convenience for ocean-going vessels and
issue related certification.
Ships of all sizes, descriptions and nationalities shall enjoy access to the ports of the ECOZONE, subject
only to such reasonable requirement as may be prescribed by the PEZA In coordination with the
appropriate agencies of the national government.
SEC. 33. Protection of Environment. - The PEZA, in coordination with the appropriate agencies, shall take
concrete and appropriate steps and enact the proper measure for the protection of the local environment.
SEC. 34. Termination of Business. - Investors In the ECOZONE who desire to terminate business or
operations shall comply with such requirements and procedures which the PEZA shall set, particularly
those relating to the clearing of debts. The assets of the closed enterprise can be transferred and the funds
con be remitted out of the ECOZONE subject to the rules, guidelines and procedures prescribed jointly by
the Bangko Sentral ng Pilipinas, the Department of Finance and the PEZA.
96
identified under Republic Act No. 7227, are hereby transferred to the PEZA as the holding agency. They are
hereby detached from their mother agencies and attached to the PEZA for policy, program and operational
supervision.
The Boards of the affected government-owned industrial estates shall be phased out and only the
management level and an appropriate number of personnel shall be retained.
Government personnel whose services are not retained by the PEZA or any government office within the
ECOZONE shall be entitled to separation pay and such retirement and other benefits theyare entitled to
under the laws then in force at the time of their separation: Provided, That in no case shall the separation
pay be less than one and one-fourth (1 1/4) month of every year of service.
The non-profit character of the EPZA under Presidential Decree No. 66 is not inconsistent with any of the
powers, functions, and responsibilities of the PEZA. The EPZAs non-profit character, including the
EPZAs exemption from real property taxes, must be deemed assumed by the PEZA.
In addition, the Local Government Code exempting instrumentalities of the national government from real
property taxes was already in force274 when the PEZAs charter was enacted in 1995. It would have been
redundant to provide for the PEZAs exemption in its charter considering that the PEZA is already exempt
by virtue of Section 133(o) of the Local Government Code.
As for the EPZA, Commonwealth Act No. 470 or the Assessment Law was in force when the EPZAs
charter was enacted. Unlike the Local Government Code, Commonwealth Act No. 470 does not contain a
provision specifically exempting instrumentalities of the national government from payment of real
property taxes.275 It was necessary to put an exempting provision in the EPZAs charter.
Contrary to the PEZAs claim, however, Section 24 of the Special Economic Zone Act of 1995 is not a basis
for the PEZAs exemption. Section 24 of the Special Economic Zone Act of 1995 provides:
Sec. 24. Exemption from National and Local Taxes. Except for real property taxes on land owned by
developers, no taxes, local and national, shall be imposed on business establishments operating within the
ECOZONE. In lieu thereof, five percent (5%) of the gross income earned by all business enterprises within
the ECOZONEshall be paid and remitted as follows:
(a) Three percent (3%) to the National Government;
(b) Two percent (2%) which shall be directly remitted by the business establishments to the
treasurer's office of the municipality or city where the enterprise is located. (Emphasis supplied)
Tax exemptions provided under Section 24 apply only to business establishments operating within
economic zones. Considering that the PEZA is not a business establishment but an instrumentality
performing governmental functions, Section 24 is inapplicable to the PEZA. Also, contrary to the PEZAs
claim, developers ofeconomic zones, whether public or private developers, are liable for real property taxes
97
public dominion is void for being contrary to public policy. Essential public services will stop if properties
of public dominion are subject to encumbrances, foreclosures and auction sale[.] 279
On the other hand, all other properties of the state that are not intended for public use or are not intended
for some public service or for the development of the national wealth are patrimonial properties. Article
421 of the Civil Code of the Philippines provides:
Art. 421. All other property of the State, which is not of the character stated in the preceding article, is
patrimonial property.
Patrimonial properties are also properties of the state, but the state may dispose of its patrimonial property
similar to private persons disposing of their property. Patrimonial properties are within the commerce of
man and are susceptible to prescription, unless otherwise provided. 280
In this case, the properties sought to be taxed are located in publicly owned economic zones. These
economic zones are property of public dominion. The City seeks to tax properties located within the
Mactan Economic Zone,281 the site of which was reserved by President Marcos under Proclamation No.
1811, Series of 1979. Reserved lands are lands of the public domain set aside for settlement or public use,
and for specific public purposes by virtue of a presidential proclamation. 282 Reserved lands are inalienable
and outside the commerce of man,283 and remain property of the Republic until withdrawn from publicuse
either by law or presidential proclamation.284 Since no law or presidential proclamation has been issued
withdrawing the site of the Mactan Economic Zone from public use, the property remains reserved land.
As for the Bataan Economic Zone, the law consistently characterized the property as a port. Under
Republic Act No. 5490, Congress declared Mariveles, Bataan "a principal port of entry" 285 to serve as site
of a foreign trade zone where foreign and domestic merchandise may be brought in without being subject to
customs and internal revenue laws and regulations of the Philippines. 286
Section 4 of Republic Act No. 5490 provided that the foreign trade zone in Mariveles, Bataan "shall at all
times remain to be owned by the Government":
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, banks, shores, roadsteads, and others of similar character;
SEC. 4. Powers and Duties. The Foreign Trade Zone Authority shall have the following powers and
duties:
(2) Those which belong to the State, without belonging for public use, and are intended for some
public service or for the development of the national wealth.
a. To fix and delimit the site of the Zone which at all times remain to be owned by the Government, and
which shall have a contiguous and adequate area with well defined and policed boundaries, with adequate
enclosures to segregate the Zone from the customs territory for protection of revenues, together with
suitable provisions for ingress and egress of persons, conveyance, vessels and merchandise sufficient for
the purpose of this Act[.] (Emphasis supplied)
Properties of public dominion are outside the commerce of man. These properties are exempt from "levy,
encumbrance or disposition through public or private sale." 278 As this court explained in Manila
International Airport Authority:
Properties of public dominion, being for public use, are not subject to levy, encumbrance or disposition
through public or private sale. Any encumbrance, levy on execution or auction sale of any property of
The port in Mariveles, Bataan then became the Bataan Economic Zone under the Special Economic Zone
Act of 1995.287 Republic Act No. 9728 then converted the Bataan Economic Zone into the Freeport Area of
Bataan.288
98
operating within the economic zones: SEC. 24. Exemption from National and Local Taxes. Except for
real property on land owned by developers, no taxes, local and national, shall be imposed on business
establishments operating within the ECOZONE. In lieu thereof, five percent (5%) of the gross income
earned by all business enterprises within the ECOZONE shall be paid and remitted as follows:
a. Three percent (3%) to the National Government;
Properties of public dominion, even if titled in the name of an instrumentality as in this case, remain owned
by the Republic of the Philippines. If property registered in the name of an instrumentality is conveyed to
another person,the property is considered conveyed on behalf of the Republic of the Philippines. Book I,
Chapter 12, Section 48 of the Administrative Code of 1987 provides:
SEC. 48. Official Authorized to Convey Real Property. Whenever real property of the government is
authorized by law to be conveyed, the deed of conveyance shall be executed in behalf of the government by
the following:
....
b. Two percent (2%) which shall be directly remitted by the business establishments to the treasurers office
of the municipality or city where the enterprise is located. 292 (Emphasis supplied)
In lieu of revenues from real property taxes, the City of Lapu-Lapu collects two-fifths of 5% final tax on
gross income paid by all business establishments operating withinthe Mactan Economic Zone:
SEC. 24. Exemption from National and Local Taxes. Except for real property on land owned by
developers, no taxes, local and national, shall be imposed on business establishments operating within the
ECOZONE. In lieu thereof, five percent (5%) of the gross income earned by all business enterprises within
the ECOZONE shall be paid and remitted as follows:
(2) For property belonging to the Republic of the Philippines, but titled in the name of any political
subdivision orof any corporate agency or instrumentality, by the executive head of the agency or
instrumentality. (Emphasis supplied)
b. Two percent (2%) which shall be directly remitted by the business establishments to the
treasurers office of the municipality or city where the enterprise is located. 293 (Emphasis
supplied)
[The exemption under Section 234(a) of the Local Government Code] should be read in relation with
Section 133(o) of the same Code, which prohibits local governments from imposing "[t]axes, fess or
charges of any kind on the National Government, its agencies and instrumentalitiesx x x." The real
properties owned by the Republic are titled either in the name of the Republic itself or in the name of
agencies or instrumentalities of the National Government.The Administrative Code allows real property
owned by the Republic to be titled in the name of agencies or instrumentalities of the national government.
Such real properties remained owned by the Republic of the Philippines and continue to be exempt from
real estate tax.
The Republic may grant the beneficialuse of its real property to an agency or instrumentality of the national
government. This happens when title of the real property is transferred to an agency or instrumentality even
as the Republic remains the owner of the real property. Such arrangement does not result in the loss of the
tax exemption/ Section 234(a) of the Local Government Code states that real property owned by the
Republic loses its tax exemption only if the "beneficial use thereof has been granted, for consideration or
otherwise, to a taxable person." . . .290 (Emphasis in the original; italics supplied)
Even the PEZAs lands and buildings whose beneficial use have been granted to other persons may not be
taxed with real property taxes. The PEZA may only lease its lands and buildings to PEZA-registered
economic zone enterprises and entities.291 These PEZA-registered enterprises and entities, which operate
within economic zones, are not subject to real property taxes. Under Section 24 of the Special Economic
Zone Act of 1995, no taxes, whether local or national, shall be imposed on all business establishments
For its part, the Province of Bataan collects a fifth of the 5% final tax on gross income paid by all business
establishments operating within the Freeport Area of Bataan:
Section 6. Imposition of a Tax Rate of Five Percent (5%) on Gross Income Earned. - No taxes, local and
national, shall be imposed on business establishments operating withinthe FAB. In lieu thereof, said
business establishments shall pay a five percent (5%) final tax on their gross income earned in the
following percentages:
(a) One per centum (1%) to the National Government;
(b) One per centum (1%) to the Province of Bataan;
(c) One per centum (1%) to the treasurer's office of the Municipality of Mariveles; and
(d) Two per centum (2%) to the Authority of the Freeport of Area of Bataan. 294 (Emphasis
supplied)
99
SECOND DIVISION
July 29, 2015
G.R. No. 210646
100
ALPI moved for reconsideration, but the motion was denied by the CTA Division in its September 24, 2012
Resolution. Aggrieved, ALPI filed a petition for review with the CTA En Banc.
CTA En Banc Ruling
DECISION
This is a petition for review on certiorari seeking to reverse and set aside the July 29, 2013 Decision 1 and
the December 17, 2013 Resolution2 of the Court of Tax Appeals En Banc (CTA En Banc), in CTA EB Case
No. 943, which reversed and set aside the July 3, 2012 Decision 3 and the September 24, 2012 Resolution of
the Court of Tax Appeals Second Division (CTA Division), in a case involving an application for issuance
of a tax credit certificate for unutilized input VAT.
On July 29, 2013, the CTA En Banc rendered the assailed decision and reversed the ruling of the CTA
Division, citing the consolidated cases of tax credit certificate for unutilized input VAT. CIR v. San Roque,
CIR v. Taganito andCIR v. Philex4 (San Roque). In these cases, the Court recognized the legal effects of
BIR Ruling No. DA-489-03, which stated that the "taxpayer-claimant need not wait for the lapse of the
120-day period before it could seek judicial relief with the CTA by way of Petition for Review." Thus, all
taxpayers could rely on BIR Ruling No. DA-489-03 from the time of its issuance on December 10, 2003 up
to its reversal by this Court in CIR v. Aichi5 (Aichi) on October 6, 2010, where it ruled that the 120+30-day
period was mandatory and jurisdictional.
Respondent Air Liquide Philippines, Inc. (ALPI) is a domestic corporation registered with the Bureau of
Internal Revenue (BIR) as a Value- Added Tax (VAT) entity. It sells chemical products and renders certain
related services to the Philippine Economic Zone Authority (PEZA) enterprises. On January 22, 2008, ALPI
filed with the BIR its Quarterly VAT Return for the 4th quarter of 2007.
Consequently, as ALPI filed its judicial claim for VAT credit on December 29, 2009, then it was covered by
BIR Ruling No. DA-489-03. ALPI need not wait for the lapse of the 120-day period before it could seek
judicial relief. The CTA En Banc remanded the case to the CTA Division for the determination of the
propriety of the VAT refund or credit claim. The dispositive portion of the assailed decision stated:
Subsequently, on December 23, 2009, ALPI filed with petitioner Commissioner of Internal
Revenue (CIR), through BIR Revenue District Office (RDO) No. 121, an application for issuance of a tax
credit certificate for its unutilized input VAT in the amount of P23,254,465.64 attributable to its transactions
with PEZA-registered enterprises for the 4th quarter of 2007.
WHEREFORE, premises considered, the instant Petition for Review filed on October 25, 2012 is hereby
GRANTED. The assailed Decision dated July 3, 2012 and the assailed Resolution dated September 24,
2012 promulgated by CTA-Second Division, which dismissed the Petition for Review docketed as CTA
Case No. 8017, are hereby REVERSED and SET ASIDE.
On December 29, 2009, or only six (6) days later, ALPI filed its petition for review with the CTA Division,
without awaiting the resolution of its application for tax credit certificate or the expiration of the 120-day
period under Section 112(C) of the National Internal Revenue Code (NIRC).
Accordingly, CTA Case No. 8017 is hereby REMANDED to the CTA-Second Division for the proper and
immediate determination of the propriety of the claim for refund or tax credit certificate. Thereafter, the
CTA-Second Division shall make a declaration of the specific amount of refund or tax credit certificate to
which petitioner is entitled to, if any.
MENDOZA, J.:
SO ORDERED.
The CIR filed its motion for reconsideration, but it was denied by the CTA En Banc in its December 17,
2013 Resolution.
Hence, this present petition.
ISSUE
WHEREFORE, premises considered, the present Petition for Review is hereby DISMISSED for lack of
jurisdiction.
SO ORDERED.
The CIR contends that the CTA Division did not acquire jurisdiction over ALPIs petition because of its
failure to observe the 120+30 day rule in filing a judicial claim for refund or tax credit certificate.
101
The Court answers in the negative. To reiterate, San Roque, held that BIR Ruling No. DA-489-03 was a
general interpretative rule because it was a response to a query made, not by a particular taxpayer, but by a
government agency tasked with processing tax refunds and credits. Thus, it applies to all taxpayers alike,
and not only to one particular taxpayer.
The Court agrees with ALPI in its survey of cases which shows that BIR Ruling No. DA-489-03 was
applied even though the taxpayer did not specifically invoke the same. As long as the judicial claim was
filed between December 10, 2003 and October 6, 2010, then the taxpayer would not be required to wait for
the lapse of 120-day period. This doctrine has been consistently upheld in the recent decisions of the
Court.13 On the other hand, in Nippon Express v. CIR,14 Applied Food Ingredients v. CIR15 and Silicon
Philippines v. CIR, 16 the taxpayer did not benefit from BIR Ruling No. DA-489-03 because they filed their
precipitate judicial claim before December 10, 2003.
Indeed, BIR Ruling No. DA-489-03 is a general interpretative law and it applies to each and every
taxpayer.1wphi1 To subscribe to the contention of the CIR would alter the Court's ruling in San Roque. It
will lead to an unreasonable classification of the beneficiaries of BIR Ruling No. DA-489-03 and further
complicate the doctrine. ALPI cannot be faulted for not specifically invoking BIR Ruling No. DA-489-03
as the rules for its application were not definite until the San Roque case was promulgated.
In the furtherance of the doctrinal pronouncements in San Roque, the better approach would be to apply
BIR Ruling No. DA-489-03 to all taxpayers who filed their judicial claim for VAT refund within the period
of exception from December 10, 2003 to October 6, 2010. Consequently, this case must be remanded to the
CT A Division for the proper determination of the refundable or creditable amount due to ALPI, if any.
WHEREFORE, the petition is DENIED. The July 29, 2013 Decision and the December 17, 2013
Resolution of the Court of Tax Appeals En Banc in CTA EB Case No. 943
are AFFIRMED in toto. Accordingly, the case isREMANDED to the CT A Second Division for the proper
determination of the refundable or creditable amount due to the respondent, if any.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
102
Initially, in a Resolution12 dated November 15, 2012, the CTA granted the CIR's motion and dismissed the
case. However, on Petron's motion for reconsideration,13 it reversed its earlier disposition in a
Resolution14 dated February 13, 2013, and eventually denied the CIR's motion for
reconsideration15 therefrom in a Resolution16 dated May 8, 2013. In effect, the CTA gave due course to
Petron's petition, finding that: (a) the controversy was not essentially for the determination of the
constitutionality, legality or validity of a law, rule or regulation but a question on the propriety or soundness
of the CIR's interpretation of Section 148 (e) of the NIRC which falls within the exclusive jurisdiction of
the CTA under Section 4 thereof, particularly under the phrase "other matters arising under [the
NIRC]";17 and (b) there are attending circumstances that exempt the case from the rule on non-exhaustion
of administrative remedies, such as the great irreparable damage that may be suffered by Petron from the
CIR's final assessment of excise tax on its importation. 18
Aggrieved, the CIR sought immediate recourse to the Court, through the instant petition, alleging that the
CTA committed grave abuse of discretion when it assumed authority to take cognizance of the case despite
its lack of jurisdiction to do so.19
The Issue Before the Court
The core issue to be resolved is whether or not the CTA properly assumed jurisdiction over the petition
assailing the imposition of excise tax on Petron's importation of alkylate based on Section 148 (e) of the
NIRC.
The Court's Ruling
The petition is meritorious.
The CIR asserts that the interpretation of the subject tax provision, i.e., Section 148 (e) of the NIRC,
embodied in CMC No. 164-2012, is an exercise of her quasi-legislative function which is reviewable by the
Secretary of Finance, whose decision, in turn, is appealable to the Office of
the President and, ultimately, to the regular courts, and that only her quasi-judicial functions or the
authority to decide disputed assessments, refunds, penalties and the like are subject to the exclusive
appellate jurisdiction of the CTA.20 She likewise contends that the petition suffers from prematurity due to
Petron 's failure to exhaust all available remedies within the administrative level in accordance with the
Tariff and Customs Code (TCC).21
The CIR's position is well-grounded.
Section 4 of the NIRC confers upon the CIR both: (a) the power to interpret tax laws in the exercise of her
quasi-legislative function; and (b) the power to decide tax cases in the exercise of her quasi-judicial
function. It also delineates the jurisdictional authority to review the validity of the CIR's exercise of the said
powers, thus:
On October 5, 2012, the CIR filed a motion to dismiss on the grounds of lack of jurisdiction and
prematurity.11
103
The power to decide disputed assessments, refunds of internal revenue taxes, fees or other charges,
penalties imposed in relation thereto, or other matters arising under this Code or other laws or portions
thereof administered by the Bureau of Internal Revenue is vested in the Commissioner, subject to the
exclusive appellate jurisdiction of the Court of Tax Appeals. (Emphases and underscoring supplied)
The CTA is a court of special jurisdiction, with power to review by appeal decisions involving tax disputes
rendered by either the CIR or the COC.1wphi1 Conversely, it has no jurisdiction to determine the validity
of a ruling issued by the CIR or the COC in the exercise of their quasi-legislative powers to interpret tax
laws. These observations may be deduced from a reading of Section 7 of RA 1125, 22 as amended by RA
9282,23 entitled "An Act Creating the Court of Tax Appeals," enumerating the cases over which the CT A
may exercise its jurisdiction:
Sec. 7. Jurisdiction. -The CTA shall exercise:
a. Exclusive appellate jurisdiction to review by appeal, as herein provided:
1. Decisions of the Commissioner of Internal Revenue in cases involving disputed
assessments, refunds of internal revenue taxes, fees or other charges, penalties in
relation thereto, or other matters arising under the National Internal Revenue or other
laws administered by the Bureau of Internal Revenue;
2. Inaction by the Commissioner of Internal Revenue in cases involving disputed
assessments, refunds of internal revenue taxes, fees or other charges, penalties in
relations thereto, or other matters arising under the National Internal Revenue Code or
other laws administered by the Bureau of Internal Revenue, where the National
Internal Revenue Code provides a specific period of action, in which case the inaction
shall be deemed a denial;
3. Decisions, orders or resolutions of the Regional Trial Comis in local tax cases
originally decided or resolved by them in the exercise of their original or appellate
jurisdiction;
4. Decisions of the Commissioner of Customs in cases involving liability for customs
duties, fees or other money charges, seizure, detention or release of property affected,
fines, forfeitures or other penalties in relation thereto, or other matters arising under
the Customs Law or other laws administered by the Bureau of Customs;
5. Decisions of the Central Board of Assessment Appeals in the exercise of its
appellate jurisdiction over cases involving the assessment and taxation of real property
originally decided by the provincial or city board of assessment appeals;
104
thereof administered by the Bureau of Internal Revenue is vested in the commissioner, subject to the
exclusive appellate jurisdiction of the Court of Tax Appeals. (Emphases and underscoring supplied)
a. Over appeals from the judgments, resolutions or orders of the Regional Trial Courts
in tax collection cases originally decided by them, in their respective territorial
jurisdiction.
b. Over petitions for review of the judgments, resolutions or orders of the Regional
Trial Courts in the exercise of their appellate jurisdiction over tax collection cases
originally decided by the Metropolitan Trial Courts, Municipal Trial Courts and
Municipal Circuit Trial Courts, in their respective jurisdiction. (Emphasis supplied)
In this case, Petron's tax liability was premised on the COC's issuance of CMC No. 164-2012, which gave
effect to the CIR's June 29, 2012 Letter interpreting Section 148 (e) of the NIRC as to include alkyl ate
among the articles subject to customs duties, hence, Petron's petition before the CTA ultimately challenging
the legality and constitutionality of the CIR's aforesaid interpretation of a tax provision. In line with the
foregoing discussion, however, the CIR correctly argues that the CT A had no jurisdiction to take
cognizance of the petition as its resolution would necessarily involve a declaration of the validity or
constitutionality of the CIR's interpretation of Section 148 (e) of the NIRC, which is subject to the
exclusive review by the Secretary of Finance and ultimately by the regular courts. In British American
Tobacco v. Camacho,24 the Court ruled that the CTA's jurisdiction to resolve tax disputes excludes the
power to rule on the constitutionality or validity of a law, rule or regulation, to wit:
While the above statute confers on the CTA jurisdiction to resolve tax disputes in general, this does not
include cases where the constitutionality of a law or rule is challenged. Where what is assailed is the
validity or constitutionality of a law, or a rule or regulation issued by the administrative agency in the
performance of its quasi-legislative function, the regular courts have jurisdiction to pass upon the same. x x
x.25
In asserting its jurisdiction over the present case, the CTA explained that Petron's petition filed before it
"simply puts in question" the propriety or soundness of the CIR's interpretation and application of Section
148 (e) of the NIRC (as embodied in CMC No. 164-2012) "in relation to" the imposition of excise tax on
Petron's importation of alkylate; thus, the CTA posits that the case should be regarded as "other matters
arising under [the NIRC]" under the second paragraph of Section 4 of the NIRC, therefore falling within
the CTA's jurisdiction:26
SEC. 4. Power of the Commissioner to Interpret Tax Laws and to Decide Tax Cases. - The power to
interpret the provisions of this Code and other tax laws shall be under the exclusive and original jurisdiction
of the Commissioner, subject to review by the Secretary of Finance.
As the CIR aptly pointed out, the phrase "other matters arising under this Code," as stated in the second
paragraph of Section 4 of the NIRC, should be understood as pertaining to those matters directly related to
the preceding phrase "disputed assessments, refunds of internal revenue taxes, fees or other charges,
penalties imposed in relation thereto" and must therefore not be taken in isolation to invoke the jurisdiction
of the CTA.27 In other words, the subject phrase should be used only in reference to cases that are, to begin
with, subject to the exclusive appellate jurisdiction of the CTA, i.e., those controversies over which the CIR
had exercised her quasi-judicial functions or her power to decide disputed assessments, refunds or internal
revenue taxes, fees or other charges, penalties imposed in relation thereto, not to those that involved the
CIR's exercise of quasi-legislative powers.
In Enrile v. Court of Appeals,28 the Court, applying the statutory construction principle of ejusdem
generis,29explained the import of using the general clause "other matters arising under the Customs Law or
other law or part of law administered by the Bureau of Customs" in the enumeration of cases subject to the
exclusive appellate jurisdiction of the CTA, saying that: [T]he 'other matters' that may come under the
general clause should be of the same nature as those that have preceded them applying the rule of
construction known as ejusdem generis.30(Emphasis and underscoring supplied)
Hence, as the CIR's interpretation of a tax provision involves an exercise of her quasi-legislative functions,
the proper recourse against the subject tax ruling expressed in CMC No. 164-2012 is a review by the
Secretary of Finance and ultimately the regular courts. In Commissioner of Customs v. Hypermix Feeds
Corporation,31 the Court has held that:
The determination of whether a specific rule or set of rules issued by an administrative agency contravenes
the law or the constitution is within the jurisdiction of the regular courts. Indeed, the Constitution vests the
power of judicial review or the power to declare a law, treaty, international or executive agreement,
presidential decree, order, instruction, ordinance, or regulation in the courts, including the regional trial
courts. This is within the scope of judicial power, which includes the authority of the courts to determine in
an appropriate action the validity of the acts of the political departments. x x x. 32
Besides, Petron prematurely invoked the jurisdiction of the CT A. Under Section 7 of RA 1125, as amended
by RA 9282, what is appealable to the CT A is the decision of the COC over a customs collector's adverse
ruling on a taxpayer's protest:
SEC. 7. Jurisdiction. -The CTA shall exercise:
a. Exclusive appellate jurisdiction to review by appeal, as herein provided:
The power to decide disputed assessments, refunds of internal revenue taxes, fees or other charges,
penalties imposed in relation thereto, or other matters arising under this Code or other laws or portions
105
customs collector that was appealed to the COC, the filing of the petition before the CTA was premature as
there was nothing yet to review.39
Verily, the fact that there is no decision by the COC to appeal from highlights Petron's failure to exhaust
administrative remedies prescribed by law. Before a party is allowed to seek the intervention of the courts,
it is a pre-condition that he avail of all administrative processes afforded him, such that if a remedy within
the administrative machinery can be resorted to by giving the administrative officer every opportunity to
decide on a matter that comes within his jurisdiction, then such remedy must be exhausted first before the
court's power of judicial review can be sought, otherwise, the premature resort to the court is fatal to one's
cause of action.40 While there are exceptions to the principle of exhaustion of administrative remedies, it
has not been sufficiently shown that the present case falls under any of the exceptions.
WHEREFORE, the petition is GRANTED. The Resolutions dated February 13, 2013 and May 8, 2013 of
the Court of Tax Appeals (CTA), Second Division in CTA Case No. 8544 are hereby REVERSED and SET
ASIDE. The petition for review filed by private respondent Petron Corporation before the CTA is
DISMISSED for lack of jurisdiction and prematurity.
SO ORDERED.
xxxx
In this case, there was even no tax assessment to speak of. While customs collector Federico Bulanhagui
himself admitted during the CTA's November 8, 2012 hearing that the computation he had written at the
back page of the IEIRD served as the final assessment imposing excise tax on Petron's importation of
alkylate,33 the Court concurs with the CIR's stance that the subject IEIRD was not yet the customs
collector's final assessment that could be the proper subject of review. And even if it were, the same should
have been brought first for review before the COC and not directly to the CTA. It should be stressed that
the CTA has no jurisdiction to review by appeal, decisions of the customs collector.34 The TCC prescribes
that a party adversely affected by a ruling or decision of the customs collector may protest such ruling or
decision upon payment of the amount due35 and, if aggrieved by the action of the customs collector on the
matter under protest, may have the same reviewed by the COC.36 It is only after the COC shall have made
an adverse ruling on the matter may the aggrieved party file an
appeal to the CT A.37
Notably, Petron admitted to not having filed a protest of the assessment before the customs collector and
elevating a possible adverse ruling therein to the COC, reasoning that such a procedure would be costly and
impractical, and would unjustly delay the resolution of the issues which, being purely legal in nature
anyway, were also beyond the authority of the customs collector to resolve with finality.38 This admission is
at once decisive of the issue of the CTA's jurisdiction over the petition. There being no protest ruling by the
106
On February 7, 2008, the SDC granted the motion10 for a writ of execution and the writ was issued with the
following fallo:
NOW THEREFORE, you are hereby commanded to cause the execution of the aforesaid judgment. If
defendants do not vacate the premises and remove the improvements, you must secure a special order of
the court to destroy, demolish or remove the improvements on the property. The total amount awarded to
and demanded by the prevailing party is P150,000.00 (damages, attorney's fees and the cost) which
defendants must satisfy, pursuant to Section 8 (d) and (e), Rule 39, Rules of Court. 11
On February 3, 2009, petitioners filed a Motion13 for the Issuance of a Writ of Demolition to implement the
SDC Decision dated January 31, 2005. The motion was set for hearing.
On March 4, 2009, the SDC issued an Order14 reading as follows:
The plaintiffs, the prevailing party, filed a Motion for Writ of Demolition and the motion was set for
hearing on February 16, 2009. On this date, the plaintiffs, without counsel, appeared. The defendants failed
to appear. Thus, the court issued an order submitting the motion for resolution. Resolution of the motion for
issuance of a Writ of Demolition should be held in abeyance. First, defendant Ambog Pangandamun has
filed on February 6, 2009 an Urgent Manifestation praying deferment of the hearing on the motion for writ
of execution. Second, Atty. Dimnatang T. Saro filed on February 13, 2009 a Notice of Appearance with
Motion to Postpone the hearing set on February 16, 2009 to study the records of the case as the records are
not yet in his possession. Third, the recent periodic report dated January 26, 2009 of the Sheriff shows
Sultan Alioden of Kabasaran is negotiating the parties whereby the defendant Ambog Pangandamun will be
made to pay the five (5)-meter land of the plaintiffs encroached by him and that what remains to be ironed
out is the fixing of the amount.
WHEREFORE, the resolution on the Motion for Writ of Demolition is HELD IN ABEYANCE. The Sheriff
is DIRECTED to exert efforts to bring the parties back to the negotiating table seeing to it that Sultan
Alioden of Kabasaran is involved in the negotiation. Atty. Saro is REQUIRED to file his comment on the
motion for writ of execution within fifteen (15) days from notice to guide the court in resolving the incident
in the event the negotiation fails.
SO ORDERED.15
On May 5, 2009, the SDC issued another Order16 which held in abeyance the resolution of the motion for
issuance of a writ of demolition and granted an ocular inspection or actual measurement of petitioners' 800sq.-meter land.
The SDC issued another Order17 dated May 14, 2009, which stated, among others, that: While the decision
has become final and executory and a Writ of Execution has been issued, there are instances when a Writ of
Execution cannot be enforced as when there is a supervening event that prevents the Sheriff to execute a
Writ of Execution.
107
Undaunted, petitioners filed with the CA-Cagayan de Oro City a petition for certiorari assailing the Orders
issued by the SDC on November 9, 2009, January 5, 2010 and February 10, 2010. In a Resolution 23 dated
April 27, 2010, the CA dismissed the petition for lack of jurisdiction, saying, among others, that:
xxxx
WHEREFORE, Engr. Hakim Laut Balt is hereby commissioned to conduct a survey of the 800 square
meters claimed by the plaintiffs. Said Eng. Balt is given a period of one (1) month from notice within
which to conduct the survey in the presence of the parties. 18
On November 9, 2009, the SDC issued the assailed Order19 denying petitioners' motion for demolition. The
Order reads in full:
It was on February 3, 2009 that the plaintiffs filed a Motion for Issuance of a Writ of Demolition. The
defendants filed their comment thereto on March 24, 2009. They prayed that an ocular inspection and/or
actual measurement of the 800 square meter land of the plaintiffs be made which the court granted, in the
greater interest of justice, considering that defendants claimed to have complied with the writ of execution,
hence there is no more encroachment of plaintiffs land.
The intercession of concerned leaders to effect amicable settlement and the order to conduct a survey
justified the holding in abeyance of the resolution of the pending incident, motion for writ of demolition.
After attempts for settlement failed and after the commissioned Geodetic Engineer to conduct the needed
survey asked for relief, plaintiffs asked anew for a writ of demolition. Defendants opposed the grant of the
motion, alleging compliance with the writ of execution, and prayed for appointment of another Geodetic
Engineer to conduct a survey and actual measurement of plaintiffs' 800 square meter land.
At this point in time, the court cannot issue a special order to destroy, demolish or remove defendants'
houses, considering their claim that they no longer encroach any portion of plaintiffs land.
Gleaned from Engineer Hakim Laut Balt's Narrative Report, he could have conducted the required survey
had not the plaintiffs dictated him where to start the survey.
WHERFORE, the motion for issuance of a writ of demolition is DENIED. A survey is still the best way to
find out if indeed defendants' houses are within plaintiffs' 800 square meter land. Parties are, therefore,
directed to choose and submit to the court their preferred Geodetic Engineer to conduct the survey within
ten (10) days from notice.20
Petitioners filed their motion for reconsideration which the SDC denied in an Order 21 dated January 5, 2010
saying that the motion failed to state the timeliness of the filing of said motion and failed to comply with
the requirements of notice of hearing. Petitioners' second motion for reconsideration was also denied in an
Order22 dated February10, 2010. The SDC directed the parties to choose and submit their preferred
Geodetic Engineer to conduct the survey within 15 days from notice.
In pursuing the creation of Shari'a Appellate Court, the Supreme Court En Banc even approved A.M. No.
99-4-06, otherwise known as Resolution Authorizing the Organization of the Shari'a Appellate Court.
However, the Shari'a Appellate Court has not yet been organized until the present. We, on our part,
therefore, cannot take cognizance of the instant case because it emanates from the Shari'a Courts, which is
not among those courts, bodies or tribunals enumerated under Chapter 1, Section 9 of [Batas] Pambansa
Bilang 129, as amended over which We can exercise appellate jurisdiction. Thus, the instant Petition should
be filed directly with the Supreme Court.24 Petitioners filed the instant petition for certiorari assailing the
SDC Orders, invoking the following grounds:
RESPONDENT JUDGE, HONORABLE RASAD G. BALINDONG, COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION OR IN EXCESS OF JURISDICTION IN
DENYING THE MOTION FOR ISSUANCE OF THE WRIT OF DEMOLITION AFTERTHE WRIT OF
EXECUTION ISSUED BY THE COURT COULD NOT BE IMPLEMENTED AND INSTEAD DIRECT
THE CONDUCT OF THE SURVEY.
RESPONDENT JUDGE HAD COMMITTED GRAVE ABUSE OF DISCRETION IN MAKING IT
APPEAR THAT HE WAS IN COURT AT HIS SALA IN MARAWI CITY LAST JANUARY 28, 2010
WHEN THE PARTIES WERE PRESENT AND HE WAS NOT THERE.25
Preliminarily, we would deal with a procedural matter. Petitioners, after receipt of the SDC Order denying
their second motion for reconsideration of the Order denying their motion for the issuance of a writ of
demolition, filed a petition for certiorari with the CA. The CA dismissed the petition for lack of jurisdiction
in a Resolution dated April 27, 2010 saying that, under RA 9054, it is the Sharia Appellate Court (SAC)
which shall exercise jurisdiction over petition for certiorari; that, however, since SAC has not yet been
organized, it cannot take cognizance of the case as it emanates from the Sharia Courts, which is not among
those courts, bodies or tribunals enumerated under Chapter 1, Section 9 of Batas Pambansa Bilang 129, as
amended, over which it can exercise appellate jurisdiction.
Under Republic Act No. 9054, An Act to Strengthen and Expand the Organic Act for the Autonomous
Region in Muslim Mindanao, amending for the purpose Republic Act No. 6734, entitled, "An Act
Providing for the Autonomous Region in Muslim Mindanao, as amended", the Shari'a Appellate Court shall
exercise appellate jurisdiction over petitions for certiorari of decisions of the Shari'a District Courts. In
Villagracia v. Fifth (5th) Sharia District Court,26 we said:
x x x We call for the organization of the court system created under Republic Act No. 9054 to effectively
enforce the Muslim legal system in our country. After all, the Muslim legal system a legal system
108
introduced. Thus, petitioners had established that they are recovering possession of 100 sq. meters of their
land which was occupied by respondent Pangandamun's house as indicated in Exhibit "K-1", and 200 sq.
meter portion being occupied by Diaca as indicated in Exhibit "K-2". Such decision had become final and
executory after we affirmed the same and an entry of judgment was made. Such decision can no longer be
modified or amended. In Dacanay v. Yrastorza, Sr.,31 we explained the concept of a final and executory
judgment, thus:
Once a judgment attains finality, it becomes immutable and unalterable. A final and executory judgment
may no longer be modified in any respect, even if the modification is meant to correct what is perceived to
be an erroneous conclusion of factor law and regardless of whether the modification is attempted to be
made by the court rendering it or by the highest court of the land. This is the doctrine of finality of
judgment. It is grounded on fundamental considerations of public policy and sound practice that, at the risk
of occasional errors, the judgments or orders of courts must become final at some definite time fixed by
law. Otherwise, there will be no end to litigations, thus negating the main role of courts of justice to assist
in the enforcement of the rule of law and the maintenance of peace and order by settling justiciable
controversies with finality.32
However, the SDC later found that while the decision has become final and executory and a writ of
execution has been issued, there are instances when a writ of execution cannot be enforced as when there is
a supervening event that prevents the sheriff to execute the writ of execution. It found that respondents'
claim that their buildings are not within the area claimed by petitioners is a supervening event and ordered
a survey of the land, hence, denied the motion for a writ of demolition.
We do not agree.
It is settled that there are recognized exceptions to the execution as a matter of right of a final and
immutable judgment, and one of which is a supervening event.
In Abrigo v. Flores,33 we said:
We deem it highly relevant to point out that a supervening event is an exception to the execution as a matter
of right of a final and immutable judgment rule, only if it directly affects the matter already litigated and
settled, or substantially changes the rights or relations of the parties therein as to render the execution
unjust, impossible or inequitable. A supervening event consists of facts that transpire after the judgment
became final and executory, or of new circumstances that develop after the judgment attained finality,
including matters that the parties were not aware of prior to or during the trial because such matters were
not yet in existence at that time. In that event, the interested party may properly seek the stay of execution
or the quashal of the writ of execution, or he may move the court to modify or alter the judgment in order to
harmonize it with justice and the supervening event. The party who alleges a supervening event to stay the
execution should necessarily establish the facts by competent evidence; otherwise, it would become all too
easy to frustrate the conclusive effects of a final and immutable judgment. 34 In this case, the matter of
whether respondents' houses intruded petitioners' land is the issue in the recovery of possession complaint
filed by petitioners in the SDC which was already ruled upon, thus cannot be considered a supervening
event that would stay the execution of a final and immutable judgment. To allow a survey as ordered by the
109
WHEREFORE, the petition is GRANTED. The Orders dated November 9, 2009, January 5, 2010 and
February 10, 2010, of the Shari'a District Court, Fourth Shari'a Judicial District, Marawi City are hereby
CANCELLED and SET ASIDE. The Shari'a District Court is hereby ORDERED to ISSUE a writ of
demolition to enforce its Decision dated January 31, 2005 in Civil Case No. 055-91.
Let a copy of this Decision be furnished the Presiding Justice of the Court of Appeals for whatever action
he may undertake in light of our pronouncement in the Tomawis v. Hon. Balindong case quoted earlier on
the creation of a Special Division to handle appeals or petitions from trial orders or decisions of the Shari' a
District Court.
SO ORDERED.
(d) Removal of improvements on property subject of execution. - when the property subject of the
execution contains improvements constructed or planted by the judgment obligor or his agent, the officer
shall not destroy, demolish or remove said improvements except upon special order of the court, issued
upon motion of the judgment obligee after due hearing and after the former has failed to remove the same
within a reasonable time fixed by the court.
Notably, this case was decided in 2005 and its execution has already been delayed for years now. It is
almost trite to say that execution is the fruit and end of the suit and is the life of law.36 A judgment, if left
unexecuted, would be nothing but an empty victory for the prevailing party.37
110