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Remedial Law Review 1 || I. Jurisdiction

G.R. No. 167702 March 20, 2009

LOURDES L. ERISTINGCOL, Petitioner, vs.COURT OF APPEALS and RANDOLPH C.LIMJOCO, Respondents.

D E C I S I O N

NACHURA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court which assailsthe Court of Appeals (CA) Decision1 in CA-G.R. SP. No. 64642 dismissing Civil Case No. 99-

297 before the Regional Trial Court (RTC) for lack of jurisdiction. The facts, as narrated by the CA, are simple.

[Petitioner Lourdes] Eristingcol is an owner of a residential lot in Urdaneta Village (or"village"), Makati City and covered by Transfer Certificate of Title No. 208586. On the otherhand, [respondent Randolph] Limjoco, [Lorenzo] Tan and [June] Vilvestre were the formerpresident and chairman of the board of governors (or "board"), construction committeechairman and village manager of [Urdaneta Village Association Inc.] UVAI, respectively. UVAIis an association of homeowners at Urdaneta Village.

[Eristingcol’s] action [against UVAI, Limjoco, Tan and Vilvestre] is founded on the allegationsthat in compliance with the National Building Code and after UVAI’s approval of her buildingplans and acceptance of the construction bond and architect’s fee, Eristingcol startedconstructing a house on her lot with "concrete canopy directly above the main door andhighway"; that for alleged violation of its Construction Rules and Regulations (or "CRR") on"Set Back Line" vis-a-vis the canopy easement, UVAI imposed on her a penalty of P400,000.00 and barred her workers and contractors from entering the village and working

on her property; that the CRR, particularly on "Set Back Line," is contrary to law; and thatthe penalty is unwarranted and excessive.

On February 9, 1999, or a day after the filing of the complaint, the parties reached atemporary settlement whereby UVAI, Limjoco, Tan and Vilvestre executed an undertakingwhich allowed Eristingcol’s workers, contractors and suppliers to leave and enter the village,subject only to normal security regulations of UVAI.

On February 26, 1999, UVAI, Limjoco, Tan and Vilvestre filed a motion to dismiss on groundof lack of jurisdiction over the subject matter of the action. They argued that it is the HomeInsurance Guaranty Corporation (or "HIGC")2 which has jurisdiction over intra-corporatedisputes involving homeowners associations, pursuant to Exec. Order No. 535, Series of 1979, as amended by Exec. Order No. 90, Series of 1986.

Opposing the motion, Eristingcol alleged, among others, that UVAI, Limjoco, Tan andVilvestre did not comply with the mandatory provisions of Secs. 4 and 6, Rule 15 of the 1997Rules of Civil Procedure and are estopped from questioning the jurisdiction of the [RTC] afterthey voluntarily appeared therein "and embraced its authority by agreeing to sign an

Undertaking."

On May 20, 1999, Eristingcol filed an amended complaint by (i) impleading Manuel Carmona(or "Carmona") and Rene Cristobal (or "Cristobal"), UVAI’s newly-elected president andchairman of the board and newly-designated construction committee chairman,respectively, as additional defendants and (ii) increasing her claim for moral damagesagainst each petitioner from P500,000.00 to P1,000,000.00.

On May 25, 1999, Eristingcol filed a motion for production and inspection of documents,which UVAI, Limjoco, Tan, Vilvestre, Carmona and Cristobal opposed. The motion sought tocompel [UVAI and its officers] to produce the documents used by UVAI as basis for theimposition of the P400,000.00 penalty on Eristingcol as well as letters and documentsshowing that UVAI had informed the other homeowners of their violations of the CRR.

On May 26, 1999, the [RTC] issued an order which pertinently reads:

IN VIEW OF THE FOREGOING, for lack of merit, the defendants’ Motion to Dismiss is Denied,and plaintiff’s motion to declare defendants in default and for contempt are also Denied."

The [RTC] ratiocinated that [UVAI, Limjoco, Tan and Vilvestre] may not assail its jurisdiction"after they voluntarily entered their appearance, sought reliefs therein, and embraced itsauthority by agreeing to sign an undertaking to desist from prohibiting (Eristingcol’s)workers from entering the village." In so ruling, it applied the doctrine enunciated in Tijam v.Sibonghanoy.

On June 7, 1999, Eristingcol filed a motion reiterating her earlier motion for production andinspection of documents.

On June 8, 1999, [UVAI, Limjoco, Tan and Vilvestre] moved for partial reconsideration of theorder dated May 26, 1999. Eristingcol opposed the motion.

On March 24, 2001, the [RTC] issued an order granting Eristingcol’s motion for productionand inspection of documents, while on March 26, 2001, it issued an order denying [UVAI’s,Limjoco’s, Tan’s and Vilvestre’s] motion for partial reconsideration.

On May 10, 2001, [UVAI, Limjoco, Tan and Vilvestre] elevated the dispute before [the CA] via[a] petition for certiorari alleging that the [RTC] acted without jurisdiction in issuing theorders of May 26, 1999 and March 24 and 26, 2001. 3 The CA issued the herein assailedDecision reversing the RTC Order4 and dismissing Eristingcol’s complaint for lack of

jurisdiction.

Hence, this appeal positing a sole issue for our resolution:

Whether it is the RTC or the Housing and Land Use Regulatory Board (HLURB) which has jurisdiction over the subject matter of Eristingcol’s complaint.

Before anything else, we note that the instant petition impleads only Limjoco as privaterespondent. The rest of the defendants sued by Eristingcol before the RTC, who then

collectively filed the petition for certiorari before the CA assailing the RTC’s Order, were,curiously, not included as private respondents in this particular petition.

Eristingcol explains that only respondent Limjoco was retained in the instant petition as herdiscussions with UVAI and the other defendants revealed their lack of participation in thework-stoppage order which was supposedly single-handedly thought of and implemented byLimjoco.

The foregoing clarification notwithstanding, the rest of the defendants should have beenimpleaded as respondents in this petition considering that the complaint before the RTC,where the petition before the CA and the instant petition originated, has yet to be amended.Furthermore, the present petition maintains that it was serious error for the CA to have ruledthat the RTC did not have jurisdiction over a complaint for declaration of nullity of UVAI’sConstruction Rules. Clearly, UVAI and the rest of the defendants should have beenimpleaded herein as respondents.

Section 4(a), Rule 45 of the Rules of Court, requires that the petition shall "state the fullname of the appealing party as petitioner and the adverse party as respondent, without

impleading the lower courts or judges thereof either as petitioners or respondents." As thelosing party in defendants’ petition for certiorari before the CA, Eristingcol should haveimpleaded all petitioners, the winning and adverse parties therein.

On this score alone, the present petition could have been dismissed outright. 5 However, tosettle the issue of jurisdiction, we have opted to dispose of this case on the merits.

Despite her having dropped UVAI, Lorenzo Tan (Tan) and June Vilvestre (Vilvestre) from thissuit, Eristingcol insists that her complaint against UVAI and the defendants was properlyfiled before the RTC as it prays for the declaration of nullity of UVAI’s Construction Rules andasks that damages be paid by Limjoco and the other UVAI officers who had inflicted injuryupon her. Eristingcol asseverates that since the case before the RTC is one for declaration of nullity, the nature of the question that is the subject of controversy, not just the status orrelationship of the parties, should determine which body has jurisdiction. In any event,Eristingcol submits that the RTC’s jurisdiction over the case was foreclosed by the prayer of UVAI and its officers, including Limjoco, for affirmative relief from that court.

Well-settled in jurisprudence is the rule that in determining which body has jurisdiction over




a case, we should consider not only the status or relationship of the parties, but also thenature of the question that is the subject of their controversy. 6 To determine the nature of an action and which court has jurisdiction, courts must look at the averments of thecomplaint or petition and the essence of the relief prayed for.7 Thus, we examine thepertinent allegations in Eristingcol’s complaint, specifically her amended complaint, to wit:

Allegations Common to All Causes of Action

3. In 1958 and upon its incorporation, [UVAI] adopted a set of By-laws and Rules andRegulations, x x x. Item 5 of [UVAI’s] Construction Rules pertinently provides:

"Set back line: All Buildings, including garage servants’ quarters, or parts thereof (coveredterraces, portes cocheres) must be constructed at a distance of not less than three (3)meters from the boundary fronting a street and not less than four (4) meters fronting thedrainage creek or underground culvert and two (2) meters from other boundaries of a lot.Distance will be measured from the vertical projection of the roof nearest the property line.Completely open and unroofed terraces are not included in these restrictions."

Suffice it to state that there is nothing in the same By-laws which deals explicitly withcanopies or marquees which extend outward from the main building.

4. [Eristingcol] has been a resident of Urdaneta Village for eleven (11) years. In February1997, she purchased a parcel of land in the Village, located at the corner of UrdanetaAvenue and Cerrada Street. x x x.

5. In considering the design for the house (the "Cerrada property") which she intended toconstruct on Cerrada Street, [Eristingcol] referred to the National Building Code of thePhilippines. After assuring herself that the said law does not expressly provide anyrestrictions in respect thereof, and after noting that other houses owned by prominent

families had similar structures without being cited by the Village’s Construction Committee,[Eristingcol] decided that the Cerrada property would have a concrete canopy directly abovethe main door and driveway.

6. In compliance with [UVAI’s] rules, [Eristingcol] submitted to [UVAI] copies of her buildingplans in respect of the Cerrada property and the building plans were duly approved by[UVAI]. x x x.

7. [Eristingcol] submitted and/or paid the "cash bond/construction bond deposit andarchitect’s inspection fee" of P200,000.00 and the architect’s inspection fee of P500.00 asrequired under Construction Rules x x x.

8. In the latter part of 1997, and while the construction of the Cerrada property wasongoing, [Eristingcol] received a notice from [UVAI], charging her with alleged violations of the Construction Rules, i.e., those on the height restriction of eleven (11.0) meters, and thecanopy extension into the easement. On 22nd January 1998, [Eristingcol] (through herrepresentatives) met with, among others, defendant Limjoco. In said meeting, and afterdeliberation on the definition of the phrase "original ground elevation" as a reference point,

[Eristingcol’s] representatives agreed to revise the building plan by removing what wasintended to be a parapet or roof railing, and thereby reduce the height of the structure by40 centimeters, which proposal was accepted by the Board through defendant Limjoco, Gov.Catalino Macaraig Jr. ([UVAI’s] Construction Committee chairman), and the Village’sArchitect. However, the issue of the alleged violation in respect of the canopy/extensionremained unresolved.

x x x x

9. In compliance with the agreement reached at the 22nd January 1998 meeting,[Eristingcol] caused the revision of her building plans such that, as it now stands, theCerrada property has a vertical height of 10.96 meters and, thus, was within the Village’sallowed maximum height of 11 meters.

10. Sometime in June 1998, [Eristingcol] was surprised to receive another letter from [UVAI],this time from the Construction Committee chairman (defendant Tan), again calling herattention to alleged violations of the Construction Rules. On 15th June 1998, [UVAI] barred[Eristingcol’s] construction workers from entering the Village. Thus, [Eristingcol’s]

Construction Manager (Mr. Jaime M. Hidalgo) wrote defendant Tan to explain her position,and attached photographs of similar "violations" by other property owners which have notmerited the same scrutiny and sanction from [UVAI].

x x x x

11. On 26th October 1998, and for reasons known only to him, defendant Vilvestre sent aletter to Mr. Geronimo delos Reyes, demanding for an "idea of how [Mr. delos Reyes] candemonstrate in concrete terms [his] good faith as a quid pro quo for compromise to"[UVAI’s] continued insistence that [Eristingcol] had violated [UVAI’s] Construction Rules. x xx.

x x x x

12. [Eristingcol] through Mr. Hidalgo sent a letter dated 24th November 1998 to defendant Tan, copies of which were furnished defendants Limjoco, Vilvestre and the Board, reiteratingthat, among others: (i) the alleged height restriction violation is untrue, since the Cerradaproperty now has a height within the limits imposed by [UVAI]; and (ii) the demand toreduce the canopy by ninety (90) centimeters is without basis, in light of the existence of thirty-five (35) similar "violations" of the same nature by other homeowners. [Eristingcol]through Mr. Hidalgo further mentioned that she had done nothing to deserve the crude andcoercive Village letters and the Board’s threats of work stoppage, and she cited instanceswhen she dealt with [UVAI] and her fellow homeowners in good faith and goodwill such as in1997, when she very discreetly spent substantial amounts to landscape the entire VillagePark, concrete the Park track oval which was being used as a jogging path, and donate tothe Association molave benches used as Park benches.

x x x x

13. On the same date (24th November 1998), defendant Vilvestre sent another letteraddressed to [Eristingcol’s] construction manager Hidalgo, again threatening to enjoin allconstruction activity on the Cerrada property as well as ban entry of all workers andconstruction deliveries effective 1st December 1998 unless Mr. delos Reyes met withdefendants. x x x.

x x x x

14. On 2nd December 1998, [Eristingcol’s] representatives met with defendants Limjoco, Tan, and Vilvestre. During that meeting, defendants were shown copies of the architecturalplans for the Cerrada property. [Eristingcol’s] representatives agreed to allow [UVAI’s]Construction Committee’s architect to validate the measurements given. However, on theissue of the canopy extension, the defendants informed [Eristingcol’s] representatives thatthe Board would impose a penalty of Four Hundred Thousand Pesos (P400,000.00) forviolation of [UVAI’s] "set back" or easement rule. Defendants cited the Board’s imposition of similar fines to previous homeowners who had violated the same rule, and they undertookto furnish [Eristingcol] with a list of past penalties imposed and paid by homeowners foundby the Board to have violated the Village’s "set back" provision.

15. On 22nd December 1998, defendant Vilvestre sent [Eristingcol] a letter dated 18thDecember 1998 formally imposing a penalty of P400,000.00 for the "canopy easementviolation." x x x.

16. On 29th December 1998, x x x, Vilvestre sent a letter to [Eristingcol], stating that "as faras [his] administration is concerned, there has been no past penalties executed by [UVAI],similar to the one we are presently demanding on your on going construction. x x x

17. On 4th January 1999, [Eristingcol’s] representative sent a letter to the Board, asking fora reconsideration of the imposition of the P400,000.00 penalty on the ground that the sameis unwarranted and excessive. On 6th January 1999, [Eristingcol] herself sent a letter to theBoard, expounding on the reasons for opposing the Board’s action. On 18th January 1999,[Eristingcol] sent another letter in compliance with defendants’ request for a breakdown of her expenditures in respect of her donations relative to the Village park.

18. On 3rd February 1999, [Eristingcol] through her lawyers sent defendants a letter,requesting that her letters of 4th and 6th January 1999 be acted upon.




19. On 4th February 1999, x x x, defendant Limjoco gave a verbal order to [UVAI’s] guardsto bar the entry of workers working on the Cerrada property.

20. In the morning of 5th February 1999, defendants physically barred [Eristingcol’s]workers and contractors from entering the Village and working at the Cerrada property. 8

Eristingcol then lists the following causes of action:

1. Item 5 of UVAI’s Construction Rules constitutes an illegal and unwarranted intrusion uponEristingcol’s proprietary rights as it imposes a set-back or horizontal easement of 3.0 metersfrom the property line greater than the specification in Section 1005(b) of the Building Code

that "the horizontal clearance between the outermost edge of the marquee and the curb lineshall be not less than 300 millimeters." As such, Eristingcol prays for the declaration of nullity of this provision in UVAI’s Construction Rules insofar as she is concerned.

2. UVAI’s imposition of a P400,000.00 penalty on Eristingcol has no factual basis, isarbitrary, whimsical and capricious as rampant violations of the set-back rule by otherhomeowners in the Village were not penalized by UVAI. Eristingcol prays to put a stop todefendants’ arbitrary exercise of power pursuant to UVAI’s by-laws.

3. Absent any factual or legal bases for the imposition of a P400,000.00 penalty, defendantsand all persons working under their control should be permanently barred or restrained fromimposing and/or enforcing any penalty upon Eristingcol for an alleged violation of UVAI’sConstruction Rules, specifically the provision on set-back.

4. Defendants Limjoco, Tan, and Vilvestre, in violation of Article 19 of the Civil Code,demonstrated bias against Eristingcol by zeroing in on her alone and her supposed violation,while other homeowners, who had likewise violated UVAI’s Construction Rules, were notcited or penalized therefor. Defendants’ actuations were in clear violation of their duty to

give all homeowners, including Eristingcol, their due.

5. Defendants’ actuations have seriously affected Eristingcol’s mental disposition and havecaused her to suffer sleepless nights, mental anguish and serious anxiety. Eristingcol’sreputation has likewise been besmirched by UVAI’s and defendants’ arbitrary charge thatshe had violated UVAI’s Construction Rules. In this regard, individual defendants should eachpay Eristingcol moral damages in the amount of P1,000,000.00.

6. Lastly, defendants should pay Eristingcol P1,000.000.00 for litigation expenses sheincurred in instituting this suit and for attorney’s fees.

At the outset, we note that the relationship between the parties is not in dispute and is, infact, admitted by Eristingcol in her complaint. Nonetheless, Eristingcol is adamant that thesubject matter of her complaint is properly cognizable by the regular courts and need not befiled before a specialized body or commission.

Eristingcol’s contention is wrong.

Ostensibly, Eristingcol’s complaint, designated as one for declaration of nullity, falls withinthe regular courts’ jurisdiction. However, we have, on more than one occasion, held that thecaption of the complaint is not determinative of the nature of the action.9

A scrutiny of the allegations contained in Eristingcol’s complaint reveals that the nature of the question subject of this controversy only superficially delves into the validity of UVAI’sConstruction Rules. The complaint actually goes into the proper interpretation andapplication of UVAI’s by-laws, specifically its construction rules. Essentially, the conflictbetween the parties arose as Eristingcol, admittedly a member of UVAI, now wishes to beexempt from the application of the canopy requirement set forth in UVAI’s ConstructionRules. Significantly, Eristingcol does not assail the height restriction of UVAI’s ConstructionRules, as she has readily complied therewith.

Distinctly in point is China Banking Corp. v. Court of Appeals,10 which upheld the jurisdictionof the Securities and Exchange Commission (SEC) over the suit and recognized its specialcompetence to interpret and apply Valley Golf and Country Club, Inc.’s (VGCCI’s) by-laws.We ruled, thus:

Applying the foregoing principles in the case at bar, to ascertain which tribunal has

jurisdiction we have to determine therefore whether or not petitioner is a stockholder of VGCCI and whether or not the nature of the controversy between petitioner and privaterespondent corporation is intra-corporate.

As to the first query, there is no question that the purchase of the subject share ormembership certificate at public auction by petitioner (and the issuance to it of thecorresponding Certificate of Sale) transferred ownership of the same to the latter and thusentitled petitioner to have the said share registered in its name as a member of VGCCI. x xx.

By virtue of the aforementioned sale, petitioner became a bona fide stockholder of VGCCI

and, therefore, the conflict that arose between petitioner and VGCCI aptly exemplifies anintra-corporate controversy between a corporation and its stockholder under Sec. 5(b) of P.D. 902-A.

An important consideration, moreover, is the nature of the controversy between petitionerand private respondent corporation. VGCCI claims a prior right over the subject shareanchored mainly on Sec. 3, Art. VIII of its by-laws which provides that "after a member shallhave been posted as delinquent, the Board may order his/her/its share sold to satisfy theclaims of the Club…" It is pursuant to this provision that VGCCI also sold the subject share atpublic auction, of which it was the highest bidder. VGCCI caps its argument by asserting thatits corporate by-laws should prevail. The bone of contention, thus, is the properinterpretation and application of VGCCI’s aforequoted by-laws, a subject which irrefutablycalls for the special competence of the SEC.

We reiterate herein the sound policy enunciated by the Court in Abejo v. De la Cruz:

6. In the fifties, the Court taking cognizance of the move to vest jurisdiction in administrativecommissions and boards the power to resolve specialized disputes in the field of labor (as incorporations, public transportation and public utilities) ruled that Congress in requiring theIndustrial Court’s intervention in the resolution of labor-management controversies likely tocause strikes or lockouts meant such jurisdiction to be exclusive, although it did not soexpressly state in the law. The Court held that under the "sense-making and expeditiousdoctrine of primary jurisdiction … the courts cannot or will not determine a controversyinvolving a question which is within the jurisdiction of an administrative tribunal, where thequestion demands the exercise of sound administrative discretion requiring the specialknowledge, experience, and services of the administrative tribunal to determine technicaland intricate matters of fact, and a uniformity of ruling is essential to comply with thepurposes of the regulatory statute administered.

x x x x

In this case, the need for the SEC’s technical expertise cannot be over-emphasized involvingas it does the meticulous analysis and correct interpretation of a corporation’s by-laws aswell as the applicable provisions of the Corporation Code in order to determine the validityof VGCCI’s claims. The SEC, therefore, took proper cognizance of the instant case. 11

Likewise in point is our illuminating ruling in Sta. Clara Homeowners’ Association v. Sps.Gaston,12 although it ultimately held that the question of subject matter jurisdiction over thecomplaint of respondent- spouses Gaston for declaration of nullity of a board resolutionissued by Sta. Clara Homeowners’ Association (SCHA) was vested in the regular courts. InSta. Clara, the main issue raised by SCHA reads: "Whether [the CA] erred in upholding the

jurisdiction of the [RTC], ‘to declare as null and void the resolution of the Board of SCHA,decreeing that only members [in] good standing of the said association were to be issuedstickers for use in their vehicles.’" In holding that the regular courts had jurisdiction overrespondent-spouses Gaston’s complaint for declaration of nullity, we stressed the absenceof relationship and the consequent lack of privity of contract between the parties, thus:

Are [Respondent-Spouses Gaston] SCHA Members?

In order to determine if the HIGC has jurisdiction over the dispute, it is necessary to resolvepreliminarily—on the basis of the allegations in the Complaint—whether [respondent-spouses Gaston] are members of the SCHA.

[SCHA] contend[s] that because the Complaint arose from intra-corporate relations between




the SCHA and its members, the HIGC therefore has jurisdiction over the dispute. To supporttheir contention that [respondent-spouses Gaston] are members of the association, [SCHA]cite[s] the SCHA’s Articles of Incorporation and By-laws which provide that all landowners of the Sta. Clara Subdivision are automatically members of the SCHA.

We are not persuaded. The constitutionally guaranteed freedom of association includes thefreedom not to associate. The right to choose with whom one will associate oneself is thevery foundation and essence of that partnership. It should be noted that the provisionguarantees the right to form an association. It does not include the right to compel others toform or join one.

More to the point, [respondent-spouses Gaston] cannot be compelled to become membersof the SCHA by the simple expedient of including them in its Articles of Incorporation andBy-laws without their express or implied consent. x x x. In the present case, however, otherthan the said Articles of Incorporation and By-laws, there is no showing that [respondent-spouses Gaston] have agreed to be SCHA members.

x x x x

No privity of Contract

Clearly then, no privity of contract exists between [SCHA] and [respondent-spouses Gaston].As a general rule, a contract is a meeting of minds between two persons. The Civil Codeupholds the spirit over the form; thus, it deems an agreement to exist, provided theessential requisites are present. x x x. From the moment there is a meeting of minds

between the parties, it is perfected.

As already adverted to, there are cases in which a party who enters into a contract of sale isalso bound by a lien annotated on the certificate of title. We recognized this in Bel Air VillageAssociation, Inc. v. Dionisio, in which we ruled:

There is no dispute that Transfer Certificate of Title No. 81136 covering the subject parcel of land issued in the name of the petitioner contains an annotation to the effect that the lotowner becomes an automatic member of the respondent Bel-Air Association and must abideby such rules and regulations laid down by the Association in the interest of the sanitation,security and the general welfare of the community. It is likewise not disputed that theprovision on automatic membership was expressly annotated on the petitioner’s TransferCertificate of Title and on the title of his predecessor-in-interest.

The question, therefore, boils down to whether or not the petitioner is bound by suchannotation.

Section 39 of Art. 496 (The Land Registration Act) states:

Sec. 39. Every person receiving a certificate of title in pursuance of a decree of registration,and every subsequent purchaser of registered land who takes a certificate of title for valuein good faith shall hold the same free of all encumbrances except those noted on saidcertificate x x x. (Italics supplied)

The above ruling, however, does not apply to the case at bar. When [respondent-spousesGaston] purchased their property in 1974 and obtained Transfer Certificates of Title Nos. T-126542 and T-127462 for Lots 11 and 12 of Block 37 along San Jose Avenue in Sta. ClaraSubdivision, there was no annotation showing their automatic membership in the SCHA.

Thus, no privity of contract arising from the title certificate exists between [SCHA] and[respondent-spouses Gaston].

Further, the records are bereft of any evidence that would indicate that private respondentsintended to become members of the SCHA. Prior to the implementation of the aforesaidResolution, they and the other homeowners who were not members of the association wereissued non-member gate pass stickers for their vehicles. This fact has not been disputed by[SCHA]. Thus, the SCHA recognized that there were subdivision landowners who were not

members thereof, notwithstanding the provisions of its Articles of Incorporation and By-laws.

Jurisdiction Determined by Allegations in the Complaint

It is a settled rule that jurisdiction over the subject matter is determined by the allegationsin the complaint. Jurisdiction is not affected by the pleas or the theories set up by thedefendant in an answer or a motion to dismiss. Otherwise, jurisdiction would becomedependent almost entirely upon the whims of the defendant.

The Complaint does not allege that [respondent-spouses Gaston] are members of the SCHA.In point of fact, they deny such membership. Thus, the HIGC has no jurisdiction over thedispute.13

In stark contrast, the relationship between the parties in the instant case is well-established.Given this admitted relationship, the privity of contract between UVAI and Eristingcol ispalpable, despite the latter’s deft phraseology of its primary cause of action as a declarationof nullity of UVAI’s Construction Rules. In short, the crux of Eristingcol’s complaint is UVAI’ssupposed arbitrary implementation of its construction rules against Eristingcol, a memberthereof.

Moreover, as in Sta. Clara (had respondent-spouses Gaston been members of SCHA), thecontroversy which arose between the parties in this case partook of the nature of an intra-corporate dispute. Executive Order (E.O.) No. 535,14 which amended Republic Act No. 580creating the HIGC, transferred to the HIGC the regulatory and administrative functions overhomeowners’ associations originally vested with the SEC. Section 2 of E.O. No. 535 providesin pertinent part:

2. In addition to the powers and functions vested under the Home Financing Act, theCorporation, shall have among others, the following additional powers:

(a) x x x; and exercise all the powers, authorities and responsibilities that are vested on the

Securities and Exchange Commission with respect to home owners association, theprovision of Act 1459, as amended by P.D. 902-A, to the contrary notwithstanding;

(b) To regulate and supervise the activities and operations of all houseowners associationregistered in accordance therewith.

By virtue thereof, the HIGC likewise assumed the SEC’s original and exclusive jurisdiction tohear and decide cases involving controversies arising from intra-corporate or partnershiprelations.15 Thereafter, with the advent of Republic Act No. 8763, the foregoing powers andresponsibilities vested in the HIGC, with respect to homeowners’ associations, weretransferred to the HLURB.

As regards the defendants’ supposed embrace of the RTC’s jurisdiction by appearing thereatand undertaking to desist from prohibiting Eristingcol’s workers from entering the village,suffice it to state that the invocation of the doctrine in Tijam, et al. v. Sibonghanoy, et al.16 isquite a long stretch.

The factual milieu obtaining in Tijam and in the case at bench are worlds apart. As found by

the CA, defendants’ appearance before the RTC was pursuant to, and in compliance with, asubpoena issued by that court in connection with Eristingcol’s application for a TemporaryRestraining Order (TRO). On defendants’ supposed agreement to sign the Undertakingallowing Eristingcol’s workers, contractors, and suppliers to enter and exit the village, thistemporary settlement cannot be equated with full acceptance of the RTC’s authority, aswhat actually transpired in Tijam.1avvphi1.zw+

The landmark case of Tijam is, in fact, only an exception to the general rule that anobjection to the court’s jurisdiction over a case may be raised at any stage of theproceedings, as the lack of jurisdiction affects the very authority of the court to takecognizance of a case.17 In that case, the Surety filed a Motion to Dismiss before the CA,raising the question of lack of jurisdiction for the first time—fifteen years after the actionwas commenced in the Court of First Instance (CFI) of Cebu. Indeed, in several stages of theproceedings in the CFI, as well as in the CA, the Surety invoked the jurisdiction of said courtsto obtain affirmative relief, and even submitted its case for a final adjudication on themerits. Consequently, it was barred by laches from invoking the CFI’s lack of jurisdiction.

To further highlight the distinction in this case, the TRO hearing was held on February 9,




1999, a day after the filing of the complaint. On even date, the parties reached a temporarysettlement reflected in the Undertaking. Fifteen days thereafter, defendants, includingLimjoco, filed a Motion to Dismiss. Certainly, this successive and continuous chain of eventscannot be characterized as laches as would bar defendants from questioning the RTC’s

jurisdiction.

In fine, based on the allegations contained in Eristingcol’s complaint, it is the HLURB, not theRTC, which has jurisdiction over this case.

WHEREFORE, premises considered, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP. No. 64642 is hereby AFFIRMED. Costs against petitioner.

SO ORDERED.

G.R. No. 131282 January 4, 2002

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

QUISUMBING, J.:

This petition for certiorari assails the Decisionl dated September 17, 1997, of the Court of Appeals in CA-G.R. No. SP No.. 2340- UDK, entitled Bernardo Eradel vs. Non. Ermelino G.

Andal, setting aside all proceedings in Civil Case No.1075, Gabriel L. Duero vs. BernardoEradel, before the Branch 27 of the Regional Trial Court of Tandag, Surigao del Sur .

The pertinent facts are as follow.

Sometime in 1988, according to petitioner, private respondent Bemardo Eradel2 entered andoccupied petitioner's land covered by Tax Declaration No. A-16-13-302, located in Baras,San Miguel, Surigao del Sur. As shown in the tax declaration, the land had an assessed valueof P5,240. When petitioner politely informed private respondent that the land was his andrequested the latter to vacate the land, private respondent refused, but instead threatenedhim with bodily harm. Despite repeated demands, private respondent remained steadfast inhis refusal to leave the land.

On June 16, 1995, petitioner filed before the RTC a complaint for Recovery of Possession andOwnership with Damages and Attorney's Fees against private respondent and two others,namely, Apolinario and Inocencio Ruena. Petitioner appended to the complaint theaforementioned tax declaration. The counsel of the Ruenas asked for extension to file theirAnswer and was given until July 18, 1995. Meanwhile, petitioner and the, Ruenas executed acompromise agreement, which became the trial court's basis for a partial judgmentrendered on January 12, 1996. In this agreement, the Ruenas through their counsel, Atty.

Eusebio Avila, entered into a Compromise Agreement with herein petitioner, Gabriel Duero.Inter alia, the agreement stated that the Ruenas recognized and bound themselves torespect the ownership and possession of Duero.3 Herein private respondent Eradel was not aparty to the agreement, and he was declared in default for failure to file his answer to thecomplaint.4

Petitioner presented his evidence ex parte on February 13, 1996. On May 8, 1996, judgmentwas rendered in his favor, and private respondent was ordered to peacefully vacate and turnover Lot No.1065 Cad. 537-D to petitioner; pay petitioner P2,000 annual rental from 1988 upthe time he vacates the land, and P5,000 as attorney's fees and the cost of the suit.5 Privaterespondent received a copy of the decision on May 25, 1996.

On June 10, 1996, private respondent filed a Motion for New Trial, alleging that he has beenoccupying the land as a tenant of Artemio Laurente, Sr., since 1958. He explained that heturned over the complaint and summons to Laurente in the honest belief that as landlord,the latter had a better right to the land and was responsible to defend any adverse claim onit. However, the trial court denied the motion for new trial.1âwphi1.nêt

Meanwhile, RED Conflict Case No.1029, an administrative case between petitioner andapplicant-contestants Romeo, Artemio and Jury Laurente, remained pending with the Officeof the Regional Director of the Department of Environment and Natural Resources in DavaoCity. Eventually, it was forwarded to the DENR Regional Office in Prosperidad, Agusan delSur .

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 unlessthere 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 forIntervention. 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 andtherefore 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, privaterespondent filed his petition for certiorari before the Court of Appeals.

The Court of Appeals gave due course to the petition, maintaining that private respondent isnot 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/OrAnnulment of Judgment. The Court of Appeals decreed as follows:

IN THE LIGHT OF ALL THE FOREGOING, the Petition is GRANTED. All proceedings in "GabrielL. Duero vs. Bernardo Eradel, et. al. Civil Case 1075" filed in the Court a quo, including itsDecision, 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 nulland 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 graveabuse of discretion amounting to lack or in excess of jurisdiction when it held that:

I.

...THE LOWER COURT HAS NO JURISDICTION OVER THE SUBJECT MA TTER OF THE CASE.

II

...PRIVATE RESPONDENT WAS NOT THEREBY ESTOPPED FROM QUESTIONING THE JURISDICTION OF THE LOWER COURT EVEN AFTER IT SUCCESSFULLY SOUGHT AFFIRMATIVERELIEF THEREFROM.

III

...THE FAlLURE OF PRIVATE RESPONDENT TO FILE HIS ANSWER IS JUSTIFIED. 7

The main issue before us is whether the Court of Appeals gravely abused its discretion whenit held that the municipal trial court had jurisdiction, and that private respondent was notestopped from assailing the jurisdiction of the RTC after he had filed several motions beforeit. The secondary issue is whether the Court of appeals erred in holding that privaterespondent's failure to file an answer to the complaint was justified.

At the outset, however, we note that petitioner through counsel submitted to this Courtpleadings that contain inaccurate statements. Thus, on page 5 of his petition,8 we find thatto bolster the claim that the appellate court erred in holding that the RTC had no jurisdiction,

petitioner pointed to Annex E9 of his petition which supposedly is the Certification issued bythe Municipal Treasurer of San Miguel, Surigao, specifically containing the notation, "Note:Subject for General Revision Effective 1994." But it appears that Annex E of his petition isnot a Certification but a xerox copy of a Declaration of Real Property. Nowhere does thedocument contain a notation, "Note: Subject for General Revision Effective 1994." Petitioneralso asked this Court to refer to Annex F ,10 where he said the zonal value of the disputedland was P1.40 per sq.m., thus placing the computed value of the land at the time thecomplaint was filed before the RTC at P57,113.98, hence beyond the jurisdiction of themunicipal court and within the jurisdiction of the regional trial court. However, we find thatthese annexes are both merely xerox copies. They are obviously without evidentiary weightor value.

Coming now to the principal issue, petitioner contends that respondent appellate courtacted with grave abuse of discretion. By "grave abuse of discretion" is meant suchcapricious and whimsical exercise of judgment which is equivalent to an excess or a lack of

jurisdiction. The abuse of discretion must be so patent and gross as to amount to an evasionof a positive duty or a virtual refusal to perform a duty enjoined by law, or to act at all in

contemplation of law as where the power is exercised in an arbitrary and despotic manner

by reason of passion or hostility.11 But here we find that in its decision holding that themunicipal court has jurisdiction over the case and that private respondent was not estoppedfrom questioning the jurisdiction of the RTC, respondent Court of Appeals discussed thefacts on which its decision is grounded as well as the law and jurisprudence on the matter.12

Its action was neither whimsical nor capricious.

Was private respondent estopped from questioning the jurisdiction of the RTC? In this case,we are in agreement with the Court of Appeals that he was not. While participation in allstages of a case before the trial court, including invocation of its authority in asking foraffirmative relief, effectively bars a party by estoppel from challenging the court's

jurisdiction,13 we note that estoppel has become an equitable defense that is bothsubstantive and remedial and its successful invocation can bar a right and not merely itsequitable enforcement.14 Hence, estoppel ought to be applied with caution. For estoppel toapply, the action giving rise thereto must be unequivocal and intentional because, if misapplied, estoppel may become a tool of injustice.15

In the present case, private respondent questions the jurisdiction of RTC in Tandag, Surigaodel Sur, on legal grounds. Recall that it was petitioner who filed the complaint againstprivate respondent and two other parties before the said court,16 believing that the RTC had

jurisdiction over his complaint. But by then, Republic Act 769117 amending BP 129 hadbecome effective, such that jurisdiction already belongs not to the RTC but to the MTCpursuant to said amendment. Private respondent, an unschooled farmer, in the mistakenbelief that since he was merely a tenant of the late Artemio Laurente Sr., his landlord, gavethe summons to a Hipolito Laurente, one of the surviving heirs of Artemio Sr., who did notdo anything about the summons. For failure to answer the complaint, private respondentwas declared in default. He then filed a Motion for New Trial in the same court and explainedthat he defaulted because of his belief that the suit ought to be answered by his landlord. Inthat 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 possessionas bona-fide tenant-lessee of the land.18But his motion was denied. He tried an alternativerecourse. He filed before the RTC a Motion for Relief from Judgment. Again, the same courtdenied his motion, hence he moved for reconsideration of the denial. In his Motion forReconsideration, he raised for the first time the RTC's lack of jurisdiction. This motion wasagain denied. Note that private respondent raised the issue of lack of jurisdiction, not whenthe case was already on appeal, but when the case, was still before the RTC that ruled himin default, denied his motion for new trial as well as for relief from judgment, and deniedlikewise his two motions for reconsideration. After the RTC still refused to reconsider thedenial of private respondent's motion for relief from judgment, it went on to issue the orderfor entry of judgment and a writ of execution.

Under these circumstances, we could not fault the Court of Appeals in overruling the RTCand 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 overan action cannot be waived by the parties, or even cured by their silence, acquiescence oreven 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 noterr 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, thedoctrine 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 tellus that as a general rule, the jurisdiction of a court is not a question of acquiescence as amatter of fact, but an issue of conferment as a matter of law. 22 Also, neither waiver norestoppel shall apply to confer jurisdiction upon a court, barring highly meritorious andexceptional circumstances.23 The Court of Appeals found support for its ruling in our decisionin 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 acourt that lacks jurisdiction to take cognizance of the same, such act may not at once bedeemed 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 aparty taking such course of action, part of the blame should be placed on thecourt which shall entertain the suit, thereby lulling the parties into believing thatthey 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 thesubject matter.' (Sec. 2, Rule 9, Rules of Court) Should the Court render a judgment without

jurisdiction, such judgment may be impeached or annulled for lack of jurisdiction (Sec. 30,Rule 132, Ibid), within ten (10) years from the finality of the same. [Emphasis ours.]24

Indeed, "...the trial court was duty-bound to take judicial notice of the parameters of its jurisdiction and its failure to do so, makes its decision a 'lawless' thing."25

Since a decision of a court without jurisdiction is null and void, it could logically neverbecome final and executory, hence appeal therefrom by writ of error would be out of thequestion. Resort by private respondent to a petition for certiorari before the Court of

Appeals was in order .

In holding that estoppel did not prevent private respondent from questioning the RTC's jurisdiction, the appellate court reiterated the doctrine that estoppel must be applied only inexceptional cases, as its misapplication could result in a miscarriage of justice. Here, we findthat petitioner, who claims ownership of a parcel of land, filed his complaint before a courtwithout appropriate jurisdiction. Defendant, a farmer whose tenancy status is still pendingbefore the proper administrative agency concerned, could have moved for dismissal of thecase on jurisdictional grounds. But the farmer as defendant therein could not be expected toknow the nuances of jurisdiction and related issues. This farmer, who is now the privaterespondent, ought not to be penalized when he claims that he made an honest mistakewhen he initially submitted his motions before the RTC, before he realized that thecontroversy was outside the RTC's cognizance but within the jurisdiction of the municipaltrial court. To hold him in estoppel as the RTC did would amount to foreclosing his avenue toobtain a proper resolution of his case. Furthermore, if the RTC's order were to be sustained,he would be evicted from the land prematurely, while RED Conflict Case No.1029 wouldremain unresolved. Such eviction on a technicality if allowed could result in an injustice, if it

is later found that he has a legal right to till the land he now occupies as tenant-lessee.1âwphi1.nêt

Having determined that there was no grave abuse of discretion by the appellate court inruling that private respondent was not estopped from questioning the jurisdiction of theRTC, we need not tarry to consider in detail the second issue. Suffice it to say that, given thecircumstances in this case, no error was committed on this score by respondent appellatecourt. Since the RTC had no jurisdiction over the case, private respondent had justifiablereason in law not to file an answer, aside from the fact that he believed the suit wasproperly his landlord's concern.

WHEREFORE, the petition is DISMISSED. The assailed decision of the Court of Appeals isAFFIRMED. The decision of the Regional Trial Court in Civil Case No.1075 entitled Gabriel L.Duero vs. Bernardo Eradel, its Order that private respondent turn over the disputed land topetitioner, and the Writ of Execution it issued, are ANNULLED and SET ASIDE. Costsagainst petitioner .

SO ORDERED.

G.R. No. 144025 December 27, 2002

SPS. RENE GONZAGA and LERIO GONZAGA, petitioners, vs.HON. COURT OFAPPEALS, Second Division, Manila, HON. QUIRICO G. DEFENSOR, Judge, RTC,Branch 36, Sixth Judicial Region, Iloilo City, and LUCKY HOMES, INC., representedby WILSON JESENA, JR., as Manager, respondents.

D E C I S I O N

CORONA, J.:

Before this Court is a petition for review on certiorari seeking the reversal of the decision

1

of the Court of Appeals dated December 29, 1999 and its resolution dated June 1, 2000 in CA-G.R. SP No. 54587.

The records disclose that, sometime in 1970, petitioner-spouses purchased a parcel of landfrom private respondent Lucky Homes, Inc., situated in Iloilo and containing an area of 240square meters. Said lot was specifically denominated as Lot No. 19 under TransferCertificate of Title (TCT) No. 28254 and was mortgaged to the Social Security System (SSS)as security for their housing loan. Petitioners then started the construction of their house,not on Lot No. 19 but on Lot No. 18, as private respondent mistakenly identified Lot No. 18as Lot No. 19. Upon realizing its error, private respondent, through its general manager,informed petitioners of such mistake but the latter offered to buy Lot No. 18 in order towiden their premises. Thus, petitioners continued with the construction of their house.However, petitioners defaulted in the payment of their housing loan from SSS.Consequently, Lot No. 19 was foreclosed by SSS and petitioners’ certificate of title wascancelled and a new one was issued in the name of SSS. After Lot No. 19 was foreclosed,petitioners offered to swap Lot Nos. 18 and 19 and demanded from private respondent thattheir contract of sale be reformed and another deed of sale be executed with respect to Lot

No. 18, considering that their house was built therein. However, private respondent refused. This prompted petitioners to file, on June 13, 1996, an action for reformation of contract anddamages with the Regional Trial Court of Iloilo City, Branch 36, which was docketed as CivilCase No. 17115.

On January 15, 1998, the trial court2 rendered its decision dismissing the complaint for lackof merit and ordering herein petitioners to pay private respondent the amount of P10,000 asmoral damages and another P10,000 as attorney’s fees. The pertinent conclusion of the trialcourt reads as follows:

"Aware of such fact, the plaintiff nonetheless continued to stay in the premises of Lot 18 onthe proposal that he would also buy the same. Plaintiff however failed to buy Lot 18 andlikewise defaulted in the payment of his loan with the SSS involving Lot 19. ConsequentlyLot 19 was foreclosed and sold at public auction. Thereafter TCT No. T-29950 was cancelledand in lieu thereof TCT No. T-86612 (Exh. ‘9’) was issued in favor of SSS. This being thesituation obtaining, the reformation of instruments, even if allowed, or the swapping of Lot18 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 withoutany substitute therefore (sic). Upon the other hand, plaintiff will be unjustly enrichinghimself having in its favor both Lot 19 which was earlier mortgaged by him andsubsequently 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 isevident 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 asclaimed by the plaintiff. The contracts being clear and unmistakable, they reflect the trueintention 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 aquo had no jurisdiction to try the case as it was vested in the Housing and Land UseRegulatory Board (HLURB) pursuant to PD 957 (The Subdivision and Condominium BuyersProtective Decree). Conformably, petitioners filed a new complaint against privaterespondent 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 trialcourt 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 forannulment of judgment, relying mainly on the jurisprudential doctrine of estoppel as laiddown in the case of Tijam vs. Sibonghanoy .4

Their subsequent motion for reconsideration having been denied, petitioners filed thisinstant petition, contending that the Court of Appeals erred in dismissing the petition byapplying the principle of estoppel, even if the Regional Trial Court, Branch 36 of Iloilo Cityhad no jurisdiction to decide Civil Case No. 17115.

At the outset, it should be stressed that petitioners are seeking from us the annulment of atrial court judgment based on lack of jurisdiction. Because it is not an appeal, thecorrectness of the judgment is not in issue here. Accordingly, there is no need to delve intothe propriety of the decision rendered by the trial court.

Petitioners claim that the recent decisions of this Court have already abandoned thedoctrine laid down in Tijam vs. Sibonghanoy .5 We do not agree. In countless decisions, thisCourt has consistently held that, while an order or decision rendered without jurisdiction is atotal nullity and may be assailed at any stage, active participation in the proceedings in thecourt 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 fordifferent reasons. Thus we speak of estoppel in pais, or estoppel by deed or by record, andof estoppel by laches.

x x x

"It has been held that a party cannot invoke the jurisdiction of a court to secure affirmativerelief against his opponent and, after obtaining or failing to obtain such relief, repudiate, or

question that same jurisdiction x x x x [T]he question whether the court had jurisdictioneither of the subject matter of the action or of the parties was not important in such casesbecause 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 tolerated –– obviously for reasons of public policy."

Tijam has been reiterated in many succeeding cases. Thus, in Orosa vs. Court of Appeals;7

Ang Ping vs. Court of Appeals;8 Salva vs. Court of Appeals;9 National Steel Corporation vs.Court of Appeals;10 Province of Bulacan vs. Court of Appeals;11 PNOC Shipping and TransportCorporation vs. Court of Appeals,12 this Court affirmed the rule that a party’s activeparticipation in all stages of the case before the trial court, which includes invoking thecourt’s authority to grant affirmative relief, effectively estops such party from laterchallenging that same court’s jurisdiction.

In the case at bar, it was petitioners themselves who invoked the jurisdiction of the court a

quo by instituting an action for reformation of contract against private respondents. Itappears that, in the proceedings before the trial court, petitioners vigorously asserted theircause from start to finish. Not even once did petitioners ever raise the issue of the court’s

jurisdiction during the entire proceedings which lasted for two years. It was only after thetrial court rendered its decision and issued a writ of execution against them in 1998 didpetitioners first raise the issue of jurisdiction ─ and it was only because said decision wasunfavorable to them. Petitioners thus effectively waived their right to question the court’s

jurisdiction over the case they themselves filed.

Petitioners should bear the consequence of their act. They cannot be allowed to profit fromtheir omission to the damage and prejudice of the private respondent. This Court frownsupon the undesirable practice of a party submitting his case for decision and then acceptingthe judgment but only if favorable, and attacking it for lack of jurisdiction if not. 13

Public policy dictates that this Court must strongly condemn any double-dealing by partieswho are disposed to trifle with the courts by deliberately taking inconsistent positions, inutter disregard of the elementary principles of justice and good faith. 14 There is no denyingthat, in this case, petitioners never raised the issue of jurisdiction throughout the entire

proceedings in the trial court. Instead, they voluntarily and willingly submitted themselves tothe jurisdiction of said court. It is now too late in the day for them to repudiate the

jurisdiction they were invoking all along.

WHEREFORE, the petition for review is hereby DENIED.

SO ORDERED.

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G.R. No. 124644 February 5, 2004

ARNEL ESCOBAL, petitioner, vsHON. FRANCIS GARCHITORENA, Presiding Justice of the Sandiganbayan, Atty. Luisabel Alfonso-Cortez, Executive Clerk of Court IV of the Sandiganbayan, Hon. David C. Naval, Presiding Judge of the Regional TrialCourt of Naga City, Branch 21, Luz N. Nueca, respondents.

D E C I S I O N

CALLEJO, SR., J.:

This is a petition forcertiorari

with a prayer for the issuance of a temporary restraining orderand preliminary injunction filed by Arnel Escobal seeking the nullification of the remand bythe Presiding Justice of the Sandiganbayan of the records of Criminal Case No. 90-3184 tothe Regional Trial Court (RTC) of Naga City, Branch 21.

The petition at bench arose from the following milieu:

The petitioner is a graduate of the Philippine Military Academy, a member of the ArmedForces of the Philippines and the Philippine Constabulary, as well as the Intelligence Groupof the Philippine National Police. On March 16, 1990, the petitioner was conductingsurveillance operations on drug trafficking at the Sa Harong Café Bar and Restaurant locatedalong Barlin St., Naga City. He somehow got involved in a shooting incident, resulting in thedeath of one Rodney Rafael N. Nueca. On February 6, 1991, an amended Information wasfiled with the RTC of Naga City, Branch 21, docketed as Criminal Case No. 90-3184 chargingthe petitioner and a certain Natividad Bombita, Jr. alias "Jun Bombita" with murder. Theaccusatory portion of the amended Information reads:

That on or about March 16, 1990, in the City of Naga, Philippines, and within the jurisdiction

of this Honorable Court by virtue of the Presidential Waiver, dated June 1, 1990, with intentto kill, conspiring and confederating together and mutually helping each other, did, then andthere, willfully, unlawfully and feloniously attack, assault and maul one Rodney Nueca andaccused 2Lt Arnel Escobal armed with a caliber .45 service pistol shoot said Rodney Nuecathereby inflicting upon him serious, mortal and fatal wounds which caused his death, and asa consequence thereof, complainant LUZ N. NUECA, mother of the deceased victim, sufferedactual and compensatory damages in the amount of THREE HUNDRED SIXTY-SEVEN

THOUSAND ONE HUNDRED SEVEN & 95/100 (P367,107.95) PESOS, Philippine Currency, andmoral 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 fromthe service under Presidential Decree No. 971, as amended by P.D. No. 1847. Whenapprised of the said order, the General Headquarters of the PNP issued on October 6, 1992Special Order No. 91, preventively suspending the petitioner from the service until the casewas 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 tothe offense charged. Thereafter, on December 23, 1991, the petitioner filed a Motion toQuash4 the Information alleging that as mandated by Commonwealth Act No. 408,5 inrelation to Section 1, Presidential Decree No. 1822 and Section 95 of R.A. No. 6975, thecourt martial, not the RTC, had jurisdiction over criminal cases involving PNP members andofficers.

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 shouldlast for only 90 days, and, having served the same, he should now be reinstated. OnSeptember 23, 1993,6 the PNP Region V Headquarters wrote Judge David C. Navalrequesting information on whether he issued an order lifting the petitioner’s suspension. TheRTC did not reply. Thus, on February 22, 1994, the petitioner filed a motion in the RTC forthe lifting of the order of suspension. He alleged that he had served the 90-day preventivesuspension and pleaded for compassionate justice. The RTC denied the motion on March 9,1994.7 Trial thereafter proceeded, and the prosecution rested its case. The petitioner

commenced the presentation of his evidence. On July 20, 1994, he filed a Motion to Dismiss 8

the case. Citing Republic of the Philippines v. Asuncion, et al.,9 he argued that since hecommitted 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 chargedwas 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 anyevidence in connection with the petitioner’s motion. It reasoned that it had already rested its

case, and that its evidence showed that the petitioner did not commit the offense charged inconnection 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 petitionerwas not wearing his uniform during the incident; (b) the offense was committed just aftermidnight; (c) the petitioner was drunk when the crime was committed; (d) the petitioner wasin the company of civilians; and, (e) the offense was committed in a beerhouse called " SaHarong Café Bar and Restaurant ."11

For his part, the petitioner testified that at about 10:00 p.m. on March 15, 1990, he was atthe Sa Harong Café Bar and Restaurant at Barlin St., Naga City, to conduct surveillance onalleged drug trafficking, pursuant to Mission Order No. 03-04 issued by PoliceSuperintendent Rufo R. Pulido. The petitioner adduced in evidence the sworn statements of Benjamin Cariño and Roberto Fajardo who corroborated his testimony that he was on asurveillance mission on the aforestated date.12

On July 31, 1995, the trial court issued an Order declaring that the petitioner committed thecrime charged while not in the performance of his official function. The trial court added thatupon the enactment of R.A. No. 7975,13 the issue had become moot and academic. Theamendatory law transferred the jurisdiction over the offense charged from theSandiganbayan to the RTC since the petitioner did not have a salary grade of "27" asprovided for in or by Section 4(a)(1), (3) thereof. The trial court nevertheless ordered theprosecution to amend the Information pursuant to the ruling in Republic v. Asuncion 14 andR.A. No. 7975. The amendment consisted in the inclusion therein of an allegation that theoffense charged was not committed by the petitioner in the performance of hisduties/functions, nor in relation to his office. lawphi1.nêt

The petitioner filed a motion for the reconsideration15 of the said order, reiterating thatbased on his testimony and those of Benjamin Cariño and Roberto Fajardo, the offensecharged was committed by him in relation to his official functions. He asserted that the trialcourt 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, throughcounsel, categorically and unequivocably admitted in her complaint filed with the People’sLaw 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 andsetting aside its July 31, 1995 Order. It declared that based on the petitioner’s evidence, hewas on official mission when the shooting occurred. It concluded that the prosecution failedto adduce controverting evidence thereto. It likewise considered Luz Nacario Nueca’sadmission in her complaint before the PLEB that the petitioner was on official mission whenthe shooting happened.

The RTC ordered the public prosecutor to file a Re-Amended Information and to allege thatthe offense charged was committed by the petitioner in the performance of hisduties/functions or in relation to his office; and, conformably to R.A. No. 7975, to thereaftertransmit the same, as well as the complete records with the stenographic notes, to theSandiganbayan, to wit:

WHEREFORE, the Order dated July 31, 1995 is hereby SET ASIDE and RECONSIDERED, and itis hereby declared that after preliminary hearing, this Court has found that the offensecharged 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 theoffense charged was committed by the Accused in the performance of his duties/functionsor in relation to his office, within fifteen (15) days from receipt hereof;

(2) After the filing of the Re-Amended Information, the complete records of this case,together with the transcripts of the stenographic notes taken during the entire proceedings

herein, are hereby ordered transmitted immediately to the Honorable Sandiganbayan,through its Clerk of Court, Manila, for appropriate proceedings.17

On January 8, 1996, the Presiding Justice of the Sandiganbayan ordered the Executive Clerkof Court IV, Atty. Luisabel Alfonso-Cortez, to return the records of Criminal Case No. 90-3184to the court of origin, RTC of Naga City, Branch 21. It reasoned that under P.D. No. 1606, asamended by R.A. No. 7975,18 the RTC retained jurisdiction over the case, considering thatthe petitioner had a salary grade of "23." Furthermore, the prosecution had already restedits case and the petitioner had commenced presenting his evidence in the RTC; following therule 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 thepetitioner to continue presenting his evidence. Instead of adducing his evidence, thepetitioner filed a petition for certiorari, assailing the Order of the Presiding Justice of theSandiganbayan 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 onFebruary 6, 1991, P.D. No. 1606 was still in effect. Under Section 4(a) of the decree, theSandiganbayan had exclusive jurisdiction over the case against him as he was charged withhomicide with the imposable penalty of reclusion temporal, and the crime was committedwhile in the performance of his duties. He further asserts that although P.D. No. 1606, asamended by P.D. No. 1861 and by R.A. No. 7975 provides that crimes committed bymembers and officers of the PNP with a salary grade below "27" committed in relation tooffice are within the exclusive jurisdiction of the proper RTC, the amendment thusintroduced by R.A. No. 7975 should not be applied retroactively. This is so, the petitionerasserts, because under Section 7 of R.A. No. 7975, only those cases where trial has notbegun in the Sandiganbayan upon the effectivity of the law should be referred to the propertrial court.

The private complainant agrees with the contention of the petitioner. In contrast, the Officeof the Special Prosecutor contends that the Presiding Justice of the Sandiganbayan acted inaccordance 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 overthe crime committed by the petitioner when the amended information was filed with theRTC, by the time it resolved petitioner’s motion to dismiss on July 31, 1995, R.A. No. 7975had already taken effect. Thus, the law should be given retroactive effect.

The Ruling of the Court

The respondent Presiding Justice acted in accordance with law and the rulings of this Courtwhen he ordered the remand of the case to the RTC, the court of origin.

The jurisdiction of the court over criminal cases is determined by the allegations in theInformation 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 thecourt acquired at the inception of the case continues until the case is terminated.20

Under Section 4(a) of P.D. No. 1606 as amended by P.D. No. 1861, the Sandiganbayan had

exclusive jurisdiction in all cases involving the following:

(1) Violations of Republic Act No. 3019, as amended, otherwise known as the Anti-Graft andCorrupt Practices Act, Republic Act No. 1379, and Chapter II, Section 2, Title VII of theRevised Penal Code;

(2) Other offenses or felonies committed by public officers and employees in relation to theiroffice, including those employed in government-owned or controlled corporations, whethersimple or complexed with other crimes, where the penalty prescribed by law is higher thanprision 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 overcrimes committed by public officers in relation to their office, it is essential that the factsshowing the intimate relation between the office of the offender and the discharge of officialduties must be alleged in the Information. It is not enough to merely allege in theInformation that the crime charged was committed by the offender in relation to his officebecause that would be a conclusion of law. 22 The amended Information filed with the RTCagainst the petitioner does not contain any allegation showing the intimate relation betweenhis office and the discharge of his duties. Hence, the RTC had jurisdiction over the offensecharged when on November 24, 1995, it ordered the re-amendment of the Information toinclude 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. Itbears stressing that R.A. No. 7975 amending P.D. No. 1606 was already in effect and underSection 2 of the law:

In cases where none of the principal accused are occupying positions corresponding tosalary grade "27" or higher, as prescribed in the said Republic Act No. 6758, or PNP officersoccupying the rank of superintendent or higher, or their equivalent, exclusive jurisdictionthereof 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 theirrespective jurisdiction as provided in Batas Pambansa Blg. 129.

Under the law, even if the offender committed the crime charged in relation to his office butoccupies a position corresponding to a salary grade below "27," the proper Regional TrialCourt or Municipal Trial Court, as the case may be, shall have exclusive jurisdiction over thecase. In this case, the petitioner was a Police Senior Inspector, with salary grade "23." Hewas charged with homicide punishable by reclusion temporal. Hence, the RTC had exclusive

jurisdiction over the crime charged conformably to Sections 20 and 32 of Batas PambansaBlg. 129, as amended by Section 2 of R.A. No. 7691.

The petitioner’s contention that R.A. No. 7975 should not be applied retroactively has nolegal basis. It bears stressing that R.A. No. 7975 is a substantive procedural law which maybe applied retroactively.23

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

SO ORDERED.




G.R. No. 169914 April 18, 2008

ASIA'S EMERGING DRAGON CORPORATION, petitioner, vs.DEPARTMENT OFTRANSPORTATION AND COMMUNICATIONS, SECRETARY LEANDRO R. MENDOZAand MANILA INTERNATIONAL AIRPORT AUTHORITY, respondents.

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

G.R. No. 174166 April 18, 2008

REPUBLIC OF THE PHILIPPINES, represented by the DEPARTMENT OFTRANSPORTATION AND COMMUNICATIONS and MANILA INTERNATIONAL AIRPORTAUTHORITY, petitioner, vs.HON. COURT OF APPEALS and SALACNIB BATERINA, respondents.

D E C I S I O N

CHICO-NAZARIO, J.:

This Court is still continuously besieged by Petitions arising from the awarding of the NinoyAquino International Airport International Passenger Terminal III (NAIA IPT III) Project to thePhilippine International Air Terminals Co., Inc. (PIATCO), despite the promulgation by thisCourt of Decisions and Resolutions in two cases, Agan, Jr. v. Philippine International Air Terminals Co., Inc.1 and Republic v. Gingoyon,2 which already resolved the more basic andimmediate issues arising from the said award. The sheer magnitude of the project, thesubstantial cost of its building, the expected high profits from its operations, and itsremarkable impact on the Philippine economy, consequently raised significant interest in theproject from various quarters.

Once more, two new Petitions concerning the NAIA IPT III Project are before this Court. It isonly appropriate, however, that the Court first recounts its factual and legal findings in Aganand Gingoyon to ascertain that its ruling in the Petitions at bar shall be consistent and inaccordance therewith.

Agan, Jr. v. Philippine International Air Terminals Co., Inc. (G.R. Nos. 155001,155547, and 155661)

Already established and incontrovertible are the following facts in Agan:

In August 1989, the [Department of Trade and Communications (DOTC)] engaged theservices of Aeroport de Paris (ADP) to conduct a comprehensive study of the Ninoy AquinoInternational Airport (NAIA) and determine whether the present airport can cope with thetraffic development up to the year 2010. The study consisted of two parts: first, trafficforecasts, capacity of existing facilities, NAIA future requirements, proposed master plansand development plans; and second, presentation of the preliminary design of thepassenger terminal building. The ADP submitted a Draft Final Report to the DOTC inDecember 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 newinternational airport terminal. To signify their commitment to pursue the project, theyformed the Asia's Emerging Dragon Corp. (AEDC) which was registered with the Securitiesand Exchange Commission (SEC) on September 15, 1993.

On October 5, 1994, AEDC submitted an unsolicited proposal to the Government through theDOTC/[Manila International Airport Authority (MIAA)] for the development of NAIAInternational Passenger Terminal III (NAIA IPT III) under a build-operate-and-transferarrangement pursuant to RA 6957 as amended by RA 7718 (BOT Law).

On December 2, 1994, the DOTC issued Dept. Order No. 94-832 constituting thePrequalification Bids and Awards Committee (PBAC) for the implementation of the NAIA IPTIII project.

On March 27, 1995, then DOTC Secretary Jose Garcia endorsed the proposal of AEDC to theNational Economic and Development Authority (NEDA). A revised proposal, however, was

forwarded by the DOTC to NEDA on December 13, 1995. On January 5, 1996, the NEDAInvestment Coordinating Council (NEDA ICC) - Technical Board favorably endorsed theproject to the ICC - Cabinet Committee which approved the same, subject to certainconditions, on January 19, 1996. On February 13, 1996, the NEDA passed Board ResolutionNo. 2 which approved the NAIA IPT III project.

On June 7, 14, and 21, 1996, DOTC/MIAA caused the publication in two daily newspapers of an invitation for competitive or comparative proposals on AEDC's unsolicited proposal, inaccordance with Sec. 4-A of RA 6957, as amended. The alternative bidders were required tosubmit three (3) sealed envelopes on or before 5:00 p.m. of September 20, 1996. The firstenvelope should contain the Prequalification Documents, the second envelope the Technical

Proposal, and the third envelope the Financial Proposal of the proponent.

On June 20, 1996, PBAC Bulletin No. 1 was issued, postponing the availment of the BidDocuments and the submission of the comparative bid proposals. Interested firms werepermitted to obtain the Request for Proposal Documents beginning June 28, 1996, uponsubmission of a written application and payment of a non-refundable fee of P50,000.00(US$2,000).

The Bid Documents issued by the PBAC provided among others that the proponent musthave adequate capability to sustain the financing requirement for the detailed engineering,design, construction, operation, and maintenance phases of the project. The proponentwould be evaluated based on its ability to provide a minimum amount of equity to theproject, and its capacity to secure external financing for the project.

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

On August 16, 1996, the PBAC issued PBAC Bulletin No. 3 amending the Bid Documents. The

following amendments were made on the Bid Documents:

a. Aside from the fixed Annual Guaranteed Payment, the proponent shall include in itsfinancial proposal an additional percentage of gross revenue share of the Government, asfollows:

i. First 5 years 5.0%

ii. Next 10 years 7.5%

iii. Next 10 years 10.0%

b. The amount of the fixed Annual Guaranteed Payment shall be subject of the pricechallenge. Proponent may offer an Annual Guaranteed Payment which need not be of equalamount, but payment of which shall start upon site possession.

c. The project proponent must have adequate capability to sustain the financingrequirement for the detailed engineering, design, construction, and/or operation andmaintenance 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 theminimum amount of equity for the project; and

ii. a letter testimonial from reputable banks attesting that the project proponent and/or themembers of the consortium are banking with them, that the project proponent and/or themembers are of good financial standing, and have adequate resources.

d. The basis for the prequalification shall be the proponent's compliance with the minimumtechnical and financial requirements provided in the Bid Documents and the [ImplementingRules and Regulations (IRR)] of the BOT Law. The minimum amount of equity shall be 30%of the Project Cost.

e. Amendments to the draft Concession Agreement shall be issued from time to time. Said

amendments shall only cover items that would not materially affect the preparation of the




of the NAIA 3 after payment of the proffered value of the facilities to PIATCO. Such a readingis substantially compliant with the pronouncement in the 2004 Agan Resolution, and is inaccord with law and equity. In contrast, the Government's position, hewing to the strictapplication of Rule 67, would permit the Government to acquire possession over the NAIA 3and implement its operation without having to pay PIATCO a single centavo, a situation thatis obviously unfair. Whatever animosity the Government may have towards PIATCO does notacquit it from settling its obligations to the latter, particularly those which had already beenpreviously affirmed by this Court.14

The Court, in the same Resolution, denied all the three motions for intervention of Asakihosan Corporation, Takenaka Corporation, and Congressman Baterina, and ruled as

follows:

We now turn to the three (3) motions for intervention all of which were filed after thepromulgation of the Court's Decision. All three (3) motions must be denied. Under Section 2,Rule 19 of the 1997 Rules of Civil Procedure the motion to intervene may be filed at anytime before rendition of judgment by the court. Since this case originated from an originalaction filed before this Court, the appropriate time to file the motions-in-intervention in thiscase if ever was before and not after resolution of this case. To allow intervention at this

juncture would be highly irregular. It is extremely improbable that the movants wereunaware of the pendency of the present case before the Court, and indeed none of themallege such lack of knowledge.

Takenaka and Asahikosan rely on Mago v. Court of Appeals wherein the Court took theextraordinary step of allowing the motion for intervention even after the challenged order of the trial court had already become final. Yet it was apparent in Mago that the movantstherein were not impleaded despite being indispensable parties, and had not even known of the existence of the case before the trial court, and the effect of the final order was to

deprive the movants of their land. In this case, neither Takenaka nor Asahikosan stand to bedispossessed by reason of the Court's Decision. There is no palpable due process violationthat would militate the suspension of the procedural rule.

Moreover, the requisite legal interest required of a party-in-intervention has not beenestablished so as to warrant the extra-ordinary step of allowing intervention at this latestage. As earlier noted, the claims of Takenaka and Asahikosan have not been judiciallyproved or conclusively established as fact by any trier of facts in this jurisdiction. Certainly,they could not be considered as indispensable parties to the petition for certiorari. In thecase of Representative Baterina, he invokes his prerogative as legislator to curtail thedisbursement without appropriation of public funds to compensate PIATCO, as well as thatas a taxpayer, as the basis of his legal standing to intervene. However, it should be notedthat the amount which the Court directed to be paid by the Government to PIATCO wasderived from the money deposited by the Manila International Airport Authority, an agencywhich enjoys corporate autonomy and possesses a legal personality separate and distinctfrom those of the National Government and agencies thereof whose budgets have to beapproved by Congress.

It is also observed that the interests of the movants-in-intervention may be duly litigated inproceedings which are extant before lower courts. There is no compelling reason todisregard the established rules and permit the interventions belatedly filed after thepromulgation of the Court's Decision.15

Asia's Emerging Dragon Corporation v. Department of Transportation and Communications and Manila International Airport Authority (G.R. No. 169914)

Banking on this Court's declaration in Agan that the award of the NAIA IPT III Project toPIATCO is null and void, Asia's Emerging Dragon Corporation (AEDC) filed before this Courtthe present Petition for Mandamus and Prohibition (with Application for TemporaryRestraining Order), praying of this Court that:

(1) After due hearing, judgment be rendered commanding the Respondents, their officers,agents, successors, representatives or persons or entities acting on their behalf, to formallyaward the NAIA-APT [sic] III PROJECT to Petitioner AEDC and to execute and formalize withPetitioner AEDC the approved Draft Concession Agreement embodying the agreed termsand conditions for the operation of the NAIA-IPT III Project and directing Respondents to

cease and desist from awarding the NAIA-IPT Project to third parties or negotiating into anyconcession contract with third parties.

(2) Pending resolution on the merits, a Temporary Restraining Order be issued enjoiningRespondents, their officers, agents, successors or representatives or persons or entitiesacting on their behalf from negotiating, re-bidding, awarding or otherwise entering into anyconcession contract with PIATCO and other third parties for the operation of the NAIA-IPT IIIProject.

Other relief and remedies, just and equitable under the premises, are likewise prayed for. 16

AEDC bases its Petition on the following grounds:I. PETITIONER AEDC, BEING THE RECOGNIZED AND UNCHALLENGED ORIGINAL PROPONENT,HAS THE EXCLUSIVE, CLEAR AND VESTED STATUTORY RIGHT TO THE AWARD OF THE NAIA-IPT III PROJECT;

II. RESPONDENTS HAVE A STATUTORY DUTY TO PROTECT PETITIONER AEDC AS THEUNCHALLENGED ORIGINAL PROPONENT AS A RESULT OF THE SUPREME COURT'SNULLIFICATION OF THE AWARD OF THE NAIA-IPT III PROJECT TO PIATCO[; and]

III. RESPONDENTS HAVE NO LEGAL BASIS OR AUTHORITY TO TAKE OVER THE NAIA-IPT IIIPROJECT, TO THE EXCLUSION OF PETITIONER AEDC, OR TO AWARD THE PROJECT TO THIRDPARTIES.17

At the crux of the Petition of AEDC is its claim that, being the recognized and unchallengedoriginal proponent of the NAIA IPT III Project, it has the exclusive, clear, and vested statutoryright to the award thereof. However, the Petition of AEDC should be dismissed for lack of merit, being as it is, substantially and procedurally flawed.

SUBSTANTIVE INFIRMITY

A petition for mandamus is governed by Section 3 of Rule 65 of the Rules of Civil Procedure,which reads –

SEC. 3. Petition for mandamus. – When any tribunal, corporation, board, officer or personunlawfully neglects the performance of an act which the law specifically enjoins as a dutyresulting from an office, trust, or station, or unlawfully excludes another from the use andenjoyment of a right or office to which such other is entitled, and there is no other plain,speedy and adequate remedy in the ordinary course of law, the person aggrieved therebymay file a verified petition in the proper court, alleging the facts with certainty and prayingthat judgment be rendered commanding the respondent, immediately or some other time tobe specified by the court, to do the act required to be done to protect the rights of thepetitioner, and to pay the damages sustained by the petitioner by reason of the wrongfulacts of the respondent.

It is well-established in our jurisprudence that only specific legal rights are enforceable bymandamus, that the right sought to be enforced must be certain and clear, and that the writwill not issue in cases where the right is doubtful. Just as fundamental is the principlegoverning the issuance of mandamus that the duties to be performed must be such as areclearly and peremptorily enjoined by law or by reason of official station.18

A rule long familiar is that mandamus never issues in doubtful cases. It requires a showingof a complete and clear legal right in the petitioner to the performance of ministerial acts. Invarying language, the principle echoed and reechoed is that legal rights may be enforced bymandamus only if those rights are well-defined, clear and certain. Otherwise, the mandamuspetition must be dismissed.19

The right that AEDC is seeking to enforce is supposedly enjoined by Section 4-A of RepublicAct No. 6957,20 as amended by Republic Act No. 7718, on unsolicited proposals, whichprovides –

SEC. 4-A. Unsolicited proposals. – Unsolicited proposals for projects may be accepted by anygovernment agency or local government unit on a negotiated basis: Provided, That, all thefollowing conditions are met: (1) such projects involve a new concept or technology and/or

are not part of the list of priority projects, (2) no direct government guarantee, subsidy or




equity is required, and (3) the government agency or local government unit has invited bypublication, for three (3) consecutive weeks, in a newspaper of general circulation,comparative or competitive proposals and no other proposal is received for a period of sixty(60) working days: Provided, further, That in the event another proponent submits a lowerprice proposal, the original proponent shall have the right to match the price within thirty(30) working days.

In furtherance of the afore-quoted provision, the Implementing Rules and Regulations (IRR)of Republic Act No. 6957, as amended by Republic Act No. 7718, devoted the entire Rule 10to Unsolicited Proposals, pertinent portions of which are reproduced below –

Sec. 10.1. Requisites for Unsolicited Proposals. – Any Agency/LGU may accept unsolicitedproposals on a negotiated basis provided that all the following conditions are met:

a. the project involves a new concept or technology and/or is not part of the list of priorityprojects;

b. no direct government guarantee, subsidy or equity is required; and

c. the Agency/LGU concerned has invited by publication, for three (3) consecutive weeks, ina newspaper of general circulation, comparative or competitive proposals and no otherproposal is received for a period of sixty (60) working days. In the event that another projectproponent submits a price proposal lower than that submitted by the original proponent, thelatter shall have the right to match said price proposal within thirty (30) working days.Should the original proponent fail to match the lower price proposal submitted within thespecified period, the contract shall be awarded to the tenderer of the lowest price. On theother hand, if the original project proponent matches the submitted lowest price within thespecified period, he shall be immediately be awarded the project.

x x x x

Sec. 10.6. Evaluation of Unsolicited Proposals. – The Agency/LGU is tasked with the initialevaluation of the proposal. The Agency/LGU shall: 1) appraise the merits of the project; 2)evaluate the qualification of the proponent; and 3) assess the appropriateness of thecontractual arrangement and reasonableness of the risk allocation. The Agency/LGU is givensixty (60) days to evaluate the proposal from the date of submission of the completeproposal. Within this 60-day period, the Agency/LGU, shall advise the proponent in writingwhether it accepts or rejects the proposal. Acceptance means commitment of theAgency/LGU to pursue the project and recognition of the proponent as the"original proponent." At this point, the Agency/LGU will no longer entertain othersimilar proposals until the solicitation of comparative proposals. Theimplementation of the project, however, is still contingent primarily on the approval of theappropriate approving authorities consistent with Section 2.7 of these IRR, the agreementbetween the original proponent and the Agency/LGU of the contract terms, and the approvalof the contract by the [Investment Coordination Committee (ICC)] or Local Sanggunian.

x x x x

Sec. 10.9. Negotiation With the Original Proponent. – Immediately after ICC/LocalSanggunian's clearance of the project, the Agency/LGU shall proceed with the in-depth negotiation of the project scope, implementation arrangements andconcession agreement, all of which will be used in the Terms of Reference for thesolicitation of comparative proposals. The Agency/LGU and the proponent are givenninety (90) days upon receipt of ICC's approval of the project to conclude negotiations. TheAgency/LGU and the original proponent shall negotiate in good faith. However, shouldthere be unresolvable differences during the negotiations, the Agency/LGU shallhave the option to reject the proposal and bid out the project. On the other hand,if the negotiation is successfully concluded, the original proponent shall then berequired to reformat and resubmit its proposal in accordance with therequirements of the Terms of Reference to facilitate comparison with thecomparative proposals. The Agency/LGU shall validate the reformatted proposal if it meets the requirements of the TOR prior to the issuance of the invitation forcomparative proposals.

x x x x

Sec. 10.11. Invitation for Comparative Proposals. The Agency/LGU shall publish the invitationfor comparative or competitive proposals only after ICC/Local Sanggunian issues a noobjection clearance of the draft contract. The invitation for comparative or competitiveproposals should be published at least once every week for three (3) weeks in at least one(1) newspaper of general circulation. It shall indicate the time, which should not be earlierthan the last date of publication, and place where tender/bidding documents could beobtained. It shall likewise explicitly specify a time of sixty (60) working days reckoned fromthe date of issuance of the tender/bidding documents upon which proposals shall bereceived. Beyond said deadline, no proposals shall be accepted. A pre-bid conference shallbe conducted ten (10) working days after the issuance of the tender/bidding documents.

Sec. 10.12. Posting of Bid Bond by Original Proponent. – The original proponent shall berequired at the date of the first date of the publication of the invitation for comparativeproposals to submit a bid bond equal to the amount and in the form required of thechallengers.

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

x x x x

Sec. 10.16. Disclosure of the Price Proposal. – The disclosure of the price proposal of theoriginal proponent in the Tender Documents will be left to the discretion of the Agency/LGU.However, if it was not disclosed in the Tender Documents, the original proponent's priceproposal should be revealed upon the opening of the financial proposals of the challengers.The right of the original proponent to match the best proposal within thirty (30)working days starts upon official notification by the Agency/LGU of the mostadvantageous financial proposal. (Emphasis ours.)

In her sponsorship speech on Senate Bill No. 1586 (the precursor of Republic Act No. 7718),then Senator (now President of the Republic of the Philippines) Gloria Macapagal-Arroyoexplained the reason behind the proposed amendment that would later become Section 4-Aof Republic Act No. 6957, as amended by Republic Act No. 7718:

The object of the amendment is to protect proponents which have already incurred costs inthe conceptual design and in the preparation of the proposal, and which may have adoptedan imaginative method of construction or innovative concept for the proposal. Theamendment also aims to harness the ingenuity of the private sector to come up withsolutions to the country's infrastructure problems.21

It is irrefragable that Section 4-A of Republic Act No. 6957, as amended by Republic Act No.7718, and Section 10 of its IRR, accord certain rights or privileges to the original proponentof an unsolicited proposal for an infrastructure project. They are meant to encourage privatesector initiative in conceptualizing infrastructure projects that would benefit the public.Nevertheless, none of these rights or privileges would justify the automatic award of theNAIA IPT III Project to AEDC after its previous award to PIATCO was declared null and void bythis Court in Agan.

The rights or privileges of an original proponent of an unsolicited proposal for aninfrastructure project are never meant to be absolute. Otherwise, the original proponent canhold the Government hostage and secure the award of the infrastructure project basedsolely on the fact that it was the first to submit a proposal. The absurdity of such a situationbecomes even more apparent when considering that the proposal is unsolicited by theGovernment. The rights or privileges of an original proponent depends on compliance withthe procedure and conditions explicitly provided by the statutes and their IRR.

An unsolicited proposal is subject to evaluation, after which, the government agency or localgovernment unit (LGU) concerned may accept or reject the proposal outright.

Under Section 10.6 of the IRR, the "acceptance" of the unsolicited proposal by theagency/LGU is limited to the "commitment of the [a]gency/LGU to pursue the project and

recognition of the proponent as the 'original proponent.'" Upon acceptance then of the




unexecuted components of the NAIA IPT III Project. Whoever shall assume the obligation tooperate and maintain NAIA IPT III and to subsequently transfer the same to the Government(in case the operation is not assumed by the Government itself) shall have to do so on termsand conditions that would necessarily be different from the original proposal of AEDC. It willno longer include any undertaking to build or construct the structures. An amendment of theproposal of AEDC to address the present circumstances is out of the question since such anamendment would be substantive and tantamount to an entirely new proposal, which mustagain be subjected to competitive bidding.

AEDC's offer to reimburse the Government the amount it shall pay to PIATCO for the NAIAIPT III Project facilities, as shall be determined in the ongoing expropriation proceedings

before the RTC of Pasay City, cannot restore AEDC to its status and rights as the projectproponent. It must be stressed that the law requires the project proponent to undertake theconstruction of the project, including financing; financing, thus, is but a component of theconstruction of the structures and not the entirety thereof.

Moreover, this "reimbursement arrangement" may even result in the unjust enrichment of AEDC. In its original proposal, AEDC offered to construct the NAIA IPT III facilities for $350million or P9 billion at that time. In exchange, AEDC would share a certain percentage of thegross revenues with, and pay a guaranteed annual income to the Government uponoperation of the NAIA IPT III. In Gingoyon, the proferred value of the NAIA IPT III facilities wasalready determined to be P3 billion. It seems improbable at this point that the balance of thevalue of said facilities for which the Government is still obligated to pay PIATCO shall reachor exceed P6 billion. There is thus the possibility that the Government shall be required topay PIATCO an amount less than P9 billion. If AEDC is to reimburse the Government only forthe said amount, then it shall acquire the NAIA IPT III facilities for a price less than itsoriginal proposal of P9 billion. Yet, per the other terms of its original proposal, it may stillrecoup a capital investment of P9 billion plus a reasonable rate of return of investment. A

change in the agreed value of the NAIA IPT III facilities already built cannot be done withouta corresponding amendment in the other terms of the original proposal as regards profitsharing and length of operation; otherwise, AEDC will be unjustly enriched at the expense of the Government.

Again, as aptly stated by former Chief Justice Panganiban, in his separate opinion in Agan:

If the PIATCO contracts are junked altogether as I think they should be, should not AEDCautomatically be considered the winning bidder and therefore allowed to operate thefacility? My answer is a stone-cold 'No.' AEDC never won the bidding, never signed anycontract, and never built any facility. Why should it be allowed to automatically step in andbenefit from the greed of another?33

The claim of AEDC to the award of the NAIA IPT III Project, after the award thereof to PIATCOwas set aside for being null and void, grounded solely on its being the original proponent of the project, is specious and an apparent stretch in the interpretation of Section 4-A of Republic Act No. 6957, as amended by Republic Act No. 7718, and Rule 10 of the IRR.

In all, just as AEDC has no legal right to the NAIA IPT III Project, corollarily, it has no legalright over the NAIA IPT III facility. AEDC does not own the NAIA IPT III facility, which thisCourt already recognized in Gingoyon as owned by PIATCO; nor does AEDC own the land onwhich NAIA IPT III stands, which is undisputedly owned by the Republic through the BasesConversion Development Authority (BCDA). AEDC did not fund any portion of theconstruction of NAIA IPT III, which was entirely funded by PIATCO. AEDC also does not haveany kind of lien over NAIA IPT III or any kind of legal entitlement to occupy the facility or theland on which it stands. Therefore, nothing that the Government has done or will do inrelation to the project could possibly prejudice or injure AEDC. AEDC then does not possessany legal personality to interfere with or restrain the activities of the Government as regardsNAIA IPT III. Neither does it have the legal personality to demand that the Governmentdeliver or sell to it the NAIA IPT III facility despite the express willingness of AEDC toreimburse the Government the proferred amount it had paid PIATCO and complete NAIA IPTIII facility at its own cost.

AEDC invokes the Memorandum of Agreement, purportedly executed between the DOTCand AEDC on 26 February 1996, following the approval of the NAIA IPT III Project by theNational Economic Development Authority Board in a Resolution dated 13 February 1996,

which provided for the following commitments by the parties:

a. commitment of Respondent DOTC to target mid 1996 as the time frame for the formalaward of the project and commencement of site preparation and construction activities withthe view of a partial opening of the Terminal by the first quarter of 1998;

b. commitment of Respondent DOTC to pursue the project envisioned in the unsolicitedproposal and commence and conclude as soon as possible negotiations with Petitioner AEDCon the BOT contract;

c. commitment of Respondent DOTC to make appropriate arrangements through which the

formal award of the project can be affected[;]d. commitment of Petitioner AEDC to a fast track approach to project implementation and tocommence negotiations with its financial partners, investors and creditors;

e. commitment of Respondent DOTC and Petitioner AEDC to fast track evaluation of competitive proposals, screening and eliminating nuisance comparative bids;34

It is important to note, however, that the document attached as Annex "E" to the Petition of AEDC is a "certified photocopy of records on file." This Court cannot give much weight tosaid document considering that its existence and due execution have not been established.It is not notarized, so it does not enjoy the presumption of regularity of a public document. Itis not even witnessed by anyone. It is not certified true by its supposed signatories,Secretary Jesus B. Garcia, Jr. for DOTC and Chairman Henry Sy, Sr. for AEDC, or by anygovernment agency having its custody. It is certified as a photocopy of records on file by anAtty. Cecilia L. Pesayco, the Corporate Secretary, of an unidentified corporation.

Even assuming for the sake of argument, that the said Memorandum of Agreement, is inexistence and duly executed, it does little to support the claim of AEDC to the award of theNAIA IPT III Project. The commitments undertaken by the DOTC and AEDC in theMemorandum of Agreement may be simply summarized as a commitment to comply withthe procedure and requirements provided in Rules 10 and 11 of the IRR. It bears nocommitment on the part of the DOTC to award the NAIA IPT III Project to AEDC. On thecontrary, the document includes express stipulations that negate any such governmentobligation. Thus, in the first clause,35 the DOTC affirmed its commitment to pursue,implement and complete the NAIA IPT III Project on or before 1998, noticeably withoutmentioning that such commitment was to pursue the project specifically with AEDC.Likewise, in the second clause,36 it was emphasized that the DOTC shall pursue the projectunder Rules 10 and 11 of the IRR of Republic Act No. 6957, as amended by Republic Act No.7718. And most significantly, the tenth clause of the same document provided:

10. Nothing in this Memorandum of Understanding shall be understood, interpreted orconstrued as permitting, allowing or authorizing the circumvention of, or non-compliancewith, or as waiving, the provisions of, and requirements and procedures under, existinglaws, rules and regulations.37

AEDC further decries that:

24. In carrying out its commitments under the DOTC-AEDC MOU, Petitioner AEDC undertookthe following activities, incurring in the process tremendous costs and expenses.

a. pre-qualified 46 design and contractor firms to assist in the NAIA-IPT III Project;

b. appointed a consortium of six (6) local banks as its financial advisor in June 1996;

c. hired the services of GAIA South, Inc. to prepare the Project Description Report and toobtain the Environmental Clearance Certificate (ECC) for the NAIA-IPT III Project;

d. coordinated with the Airline Operators Association, Bases Conversion DevelopmentAuthority, Philippine Air Force, Bureau of Customs, Bureau of Immigration, relative to theirparticular requirements regarding the NAIA-IPT III [P]roject; and

e. negotiated and entered into firm commitments with Ital Thai, Marubeni Corporation andMitsui Corporation as equity partners.38




was for the declaration of nullity of proceedings, mandamus and injunction. The RTC of PasigCity likewise had jurisdiction over the parties, with the voluntary submission by AEDC andproper service of summons on the DOTC Secretary and the PBAC Chairman and members.

Lastly, there is, between Civil Case No. 66213 before the RTC of Pasig City and the Petitionnow pending before this Court, an identity of parties, of subject matter, and of causes of action.

There is an identity of parties. In both petitions, the AEDC is the petitioner. The respondentsin Civil Case No. 66213 are the DOTC Secretary and the PBAC Chairman and members. Therespondents in the instant Petition are the DOTC, the DOTC Secretary, and the Manila

International Airport Authority (MIAA). While it may be conceded that MIAA was not arespondent and did not participate in Civil Case No. 66213, it may be considered asuccessor-in-interest of the PBAC. When Civil Case No. 66213 was initiated, PBAC was thenin charge of the NAIA IPT III Project, and had the authority to evaluate the bids and awardthe project to the one offering the lowest or most advantageous bid. Since the bidding isalready over, and the structures comprising NAIA IPT III are now built, then MIAA has takencharge thereof. Furthermore, it is clear that it has been the intention of the AEDC to nameas respondents in their two Petitions the government agency/ies and official/s who, at themoment each Petition was filed, had authority over the NAIA IPT III Project.

There is an identity of subject matter because the two Petitions involve none other than theaward and implementation of the NAIA IPT III Project.

There is an identity of cause of action because, in both Petitions, AEDC is asserting theviolation of its right to the award of the NAIA IPT III Project as the original proponent in theabsence of any other qualified bidders. As early as in Civil Case No. 66213, AEDC alreadysought a declaration by the court of the absence of any other qualified proponent submittinga competitive bid for the NAIA IPT III Project, which, ultimately, would result in the award of

the said project to it.

AEDC attempts to evade the effects of its compromise agreement by alleging that it wascompelled to enter into such an agreement when former President Joseph E. Estradaasserted his influence and intervened in Civil Case No. 66213. This allegation deserves scantconsideration. Without any proof that such events did take place, such statements remainmere allegations that cannot be given weight. One who alleges any defect or the lack of avalid consent to a contract must establish the same by full, clear and convincing evidence,not merely by preponderance thereof.52 And, even assuming arguendo, that the consent of AEDC to the compromise agreement was indeed vitiated, then President Estrada wasremoved from office in January 2001. AEDC filed the present Petition only on 20 October2005. The four-year prescriptive period, within which an action to annul a voidable contractmay be brought, had already expired.53

The AEDC further claims that the DOTC committed fraud when, without AEDC's knowledge,the DOTC entered into an Amended and Restated Concession Agreement (ARCA) withPIATCO. The fraud on the part of the DOTC purportedly also vitiated AEDC's consent to the

compromise agreement. It is true that a judicial compromise may be set aside if fraudvitiated the consent of a party thereof; and that the extrinsic fraud, which nullifies acompromise, likewise invalidates the decision approving it.54 However, once again, AEDC'sallegations of fraud are unsubstantiated. There is no proof that the DOTC and PIATCOwillfully and deliberately suppressed and kept the information on the execution of the ARCAfrom AEDC. The burden of proving that there indeed was fraud lies with the party makingsuch allegation. Each party must prove his own affirmative allegations. The burden of proof lies on the party who would be defeated if no evidence were given on either side. In this

jurisdiction, fraud is never presumed.55

Moreover, a judicial compromise may be rescinded or set aside on the ground of fraud inaccordance with Rule 38 of the Rules on Civil Procedure on petition for relief from judgment.Section 3 thereof prescribes the periods within which the petition for relief must be filed:

SEC. 3. Time for filing petition; contents and verification.– A petition provided for in either of the preceding sections of this Rule must be verified, filed within sixty (60) days after thepetitioner learns of the judgment, final order or other proceeding to be set aside, and notmore than six (6) months after such judgment or final order was entered, or such

proceeding was taken, and must be accompanied with affidavits showing the fraud,accident, mistake or excusable negligence relied upon, and the facts constituting thepetitioner's good and substantial cause of action or defense, as the case may be.

According to this Court's ruling in Argana v. Republic,56 as applied to a judgment based oncompromise, both the 60-day and six-month reglementary periods within which to file apetition for relief should be reckoned from the date when the decision approving thecompromise agreement was rendered because such judgment is considered immediatelyexecutory and entered on the date that it was approved by the court. In the present case,the Order of the RTC of Pasig City granting the Joint Motion to Dismiss filed by the parties inCivil Case No. 66213 was issued on 30 April 1999, yet AEDC only spoke of the alleged fraud

which vitiated its consent thereto in its Petition before this Court filed on 20 October 2005,more than six years later.

It is obvious that the assertion by AEDC of its vitiated consent to the Joint Motion to DismissCivil Case No. 66213 is nothing more than an after-thought and a desperate attempt toescape the legal implications thereof, including the barring of its present Petition on theground of res judicata.

It is also irrelevant to the legal position of AEDC that the Government asserted in Agan thatthe award of the NAIA IPT III Project to PIATCO was void. That the Government eventuallytook such a position, which this Court subsequently upheld, does not affect AEDC'scommitments and obligations under its judicially-approved compromise agreement in CivilCase No. 66213, which AEDC signed willingly, knowingly, and ably assisted by legal counsel.

In addition, it cannot be said that there has been a fundamental change in the Government'sposition since Civil Case No. 66213, contrary to the allegation of AEDC. The Governmentthen espoused that AEDC is not entitled to the award of the NAIA IPT III Project. TheGovernment still maintains the exact same position presently. That the Government

eventually reversed its position on the validity of its award of the project to PIATCO is notinconsistent with its position that neither should AEDC be awarded the project.

For the foregoing substantive and procedural reasons, the instant Petition of AEDC should bedismissed.

Republic of the Philippines v. Court of Appeals and Baterina (G.R. No. 174166)

As mentioned in Gingoyon, expropriation proceedings for the NAIA IPT III was instituted bythe Government with the RTC of Pasay City, docketed as Case No. 04-0876CFM.Congressman Baterina, together with other members of the House of Representatives,sought intervention in Case No. 04-0876CFM by filing a Petition for Prohibition inIntervention (with Application for Temporary Restraining Order and Writ of PreliminaryInjunction). Baterina, et al. believe that the Government need not file expropriationproceedings to gain possession of NAIA IPT III and that PIATCO is not entitled to payment of

just compensation, arguing thus –

A) Respondent PIATCO does not own Terminal III because BOT Contracts do not vest

ownership in PIATCO. As such, neither PIATCO nor FRAPORT are entitled to compensation.

B) Articles 448, ET SEQ., of the New Civil Code, as regards builders in good faith/bad faith,do not apply to PIATCO's Construction of Terminal III.

C) Article 1412(2) of the New Civil Code allows the Government to demand the return of what it has given without any obligation to comply with its promise.

D) The payment of compensation to PIATCO is unconstitutional, violative of the Build-Operate-Transfer Law, and violates the Civil Code and other laws. 57

On 27 October 2005, the RTC of Pasay City issued an Order admitting the Petition inIntervention of Baterina, et al., as well as the Complaint in Intervention of Manuel L. Fortes,

Jr. and the Answer in Intervention of Gina B. Alnas, et al. The Republic soughtreconsideration of the 27 October 2005 Order of the RTC of Pasay City, which, in anOmnibus Order dated 13 December 2005, was denied by the RTC of Pasay City as regardsthe intervention of Baterina, et al. and Fortes, but granted as to the intervention of Alnas, et al. On 22 March 2006, Baterina, et al. filed with the RTC of Pasay City a Motion to Declare in




In view of the pronouncement of the Supreme Court in the Gingoyon case upholding theright of PIATCO to be paid the proferred value in the amount of P3,002,125,000.00 prior tothe implementation of the writ of possession issued by the trial court on December 21, 2004over the NAIA Passenger Terminal III, and directing the determination of just compensation,there is no practical and logical reason to maintain the effects of the Temporary RestrainingOrder contained in our Resolution dated August 24, 2006. Thus, We cannot continuerestraining what has been mandated in a final and executory decision of the Supreme Court.

WHEREFORE, Our Resolution dated 24 August 2006 be SET ASIDE. Consequently, the Motionto Withdraw the Motion to Lift the Temporary Restraining Order is rendered moot andacademic.61

There being no more legal impediment, the Republic tendered on 11 September 2006 LandBank check in the amount of P3,002,125,000.00 representing the proferred value of NAIAIPT III, which was received by a duly authorized representative of PIATCO.

On 27 December 2006, the Court of Appeals rendered a Decision in CA G.R. No. 95539dismissing Baterina's Petition.

The latest developments before the Court of Appeals and the RTC of Pasay City render thepresent Petition of the Republic moot.

Nonetheless, Baterina, as the private respondent in the instant Petition, presented his ownprayer that a judgment be rendered as follows:

A. For this Honorable Court, in the exercise of its judicial discretion to relax procedural rulesconsistent with Metropolitan Traffic Command v. Gonong and deem that justice would bebetter served if all legal issues involved in the expropriation case and in Baterina areresolved in this case once and for all, to DECLARE that:

i. TERMINAL 3, as a matter of law, is public property and thus not a proper object of eminentdomain proceedings; and

ii. PIATCO, as a matter of law, is merely the builder of TERMINAL 3 and, as such, it may file aclaim for recovery on quantum meruit with the Commission on Audi[t] for determination of the amount thereof, if any.

B. To DIRECT the Regional Trial Court of Pasay City, Branch 117 to dismiss the expropriationcase;

C. To DISMISS the instant Petition and DENY The Republic's application for TRO and/or writof preliminary injunction for lack of merit;

D. To DECLARE that the P3 Billion (representing the proferred value of TERMINAL 3) paid toPIATCO on 11 September 2006 as funds held in trust by PIATCO for the benefit of theRepublic and subject to the outcome of the proceedings for the determination of recoveryon quantum meruit due to PIATCO, if any.

E. To DIRECT the Solicitor General to disclose the evidence it has gathered on corruption,bribery, fraud, bad faith, etc., to this Honorable Court and the Commission on Audit, and toDECLARE such evidence to be admissible in any proceeding for the determination of anycompensation due to PIATCO, if any.

[F]. In the alternative, to:

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

ii. Should this Honorable Court lend credence to the argument of the Solicitor General in itsComment dated 20 April 2006 that "there are issues as to material fact that requirepresentation of evidence", to REMAND the resolution of the legal issues raised by PrivateRespondent to the trial court consistent with this Honorable Court's holding in the GingoyonResolution that "the interests of the movants-in-intervention [meaning Takenaka,

Asahikosan, and herein Private Respondent] may be duly litigated in proceedingswhich are extant before the lower courts ."62

In essence, Baterina is opposing the expropriation proceedings on the ground that NAIA IPTIII is already public property. Hence, PIATCO is not entitled to just compensation for NAIA IPTIII. He is asking the Court to make a definitive ruling on this matter considering that it wasnot settled in either Agan or Gingoyon.

We disagree. Contrary to Baterina's stance, PIATCO's entitlement to just and equitableconsideration for its construction of NAIA IPT III and the propriety of the Republic's resort toexpropriation proceedings were already recognized and upheld by this Court in Agan andGingoyon.

The Court's Decisions in both Agan and Gingoyon had attained finality, the former on 17

February 2004 and the latter on 17 March 2006. This Court already made an unequivocal pronouncement in its Resolution dated 21 January2004 in Agan that for the Government of the Republic to take over the NAIA IPT III facility, ithas to compensate PIATCO as a builder of the structures; and that "[t]he compensation mustbe just and in accordance with law and equity for the government cannot unjustly enrichitself at the expense of PIATCO and its investors." 63 As between the Republic and PIATCO,the judgment on the need to compensate PIATCO before the Government may take overNAIA IPT III is already conclusive and beyond question.

Hence, in Gingoyon, this Court declared that:

This pronouncement contains the fundamental premises which permeate this decision of theCourt. Indeed, Agan, final and executory as it is, stands as governing law in this case, andany disposition of the present petition must conform to the conditions laid down by theCourt in its 2004 Resolution .

x x x x

The pronouncement in the 2004 Resolution is especially significant to this case intwo aspects, namely: (i) that PIATCO must receive payment of just compensationdetermined in accordance with law and equity; and (ii) that the government isbarred from taking over NAIA 3 until such just compensation is paid . The partiescannot be allowed to evade the directives laid down by this Court through any mode of

judicial action, such as the complaint for eminent domain.

It cannot be denied though that the Court in the 2004 Resolution prescribed mandatoryguidelines which the Government must observe before it could acquire the NAIA 3 facilities.

Thus, the actions of respondent judge under review, as well as the arguments of the partiesmust, to merit affirmation, pass the threshold test of whether such propositions are inaccord with the 2004 Resolution.64

The Court then, in Gingoyon, directly addressed the issue on the appropriateness of theRepublic's resort to expropriation proceedings:

The Government has chosen to resort to expropriation, a remedy available underthe law, which has the added benefit of an integrated process for thedetermination of just compensation and the payment thereof to PIATCO. Weappreciate that the case at bar is a highly unusual case, whereby the Government seeksto expropriate a building complex constructed on land which the State already owns. Thereis an inherent illogic in the resort to eminent domain on property already owned by theState. At first blush, since the State already owns the property on which NAIA 3 stands, theproper remedy should be akin to an action for ejectment.

However, the reason for the resort by the Government to expropriationproceedings is understandable in this case. The 2004 Resolution, in requiring thepayment of just compensation prior to the takeover by the Government of NAIA 3,effectively precluded it from acquiring possession or ownership of the NAIA 3 through theunilateral exercise of its rights as the owner of the ground on which the facilities stood.

Thus, as things stood after the 2004 Resolution, the right of the Government to take overthe NAIA 3 terminal was preconditioned by lawful order on the payment of justcompensation to PIATCO as builder of the structures.

x x x x




considered as having settled that matter as to all future actions between the parties and if a judgment necessarily presupposes certain premises, they are as conclusive as the judgment itself . Reasons for the rule are that a judgment is an adjudication on all thematters which are essential to support it, and that every proposition assumed or decided bythe court leading up to the final conclusion and upon which such conclusion is based is aseffectually passed upon as the ultimate question which is finally solved.71

Since the issues Baterina wishes to raise as an intervenor in Case No. 04-0876CFM werealready settled with finality in both Agan and Gingoyon, then there is no point in stillallowing his intervention. His Petition-in-Intervention would only be a relitigation of mattersthat had been previously adjudicated by no less than the Highest Court of the land. And, in

no manner can the RTC of Pasay City in Case No. 04-0876CFM grant the reliefs he prayed forwithout departing from or running afoul of the final and executory Decisions of this Court in

Agan and Gingoyon.

While it is true that when this Court, in a Resolution dated 1 February 2006, dismissed theMotions for Intervention in Gingoyon, including that of Baterina, it also observed that theinterests of the movants-in-intervention may be duly litigated in proceedings which areextant before the lower courts. This does not mean, however, that the said movants-in-interest were assured of being allowed as intervenors or that the reliefs they sought as suchshall be granted by the trial courts. The fate of their intervention still rests on their interestor legal standing in the case and the merits of their arguments.

WHEREFORE, in view of the foregoing:

a. The Petition in G.R. No. 169914 is hereby DISMISSED for lack of merit; and

b. The Petition in G.R. No. 174166 is hereby likewise DISMISSED for being moot andacademic.

No costs.

SO ORDERED.

G.R. No. 155001 January 21, 2004

DEMOSTHENES P. AGAN, JR., JOSEPH B. CATAHAN, JOSE MARI B. REUNILLA,MANUEL ANTONIO B. BOÑE, MAMERTO S. CLARA, REUEL E. DIMALANTA, MORY V.DOMALAON, CONRADO G. DIMAANO, LOLITA R. HIZON, REMEDIOS P. ADOLFO,BIENVENIDO C. HILARIO, MIASCOR WORKERS UNION-NATIONAL LABOR UNION(MWU-NLU), and PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION (PALEA),petitioners, vs.PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., MANILAINTERNATIONAL AIRPORT AUTHORITY, DEPARTMENT OF TRANSPORTATION ANDCOMMUNICATIONS and SECRETARY LEANDRO M. MENDOZA, in his capacity asHead of the Department of Transportation and Communications, respondents,

MIASCOR GROUNDHANDLING CORPORATION, DNATA-WINGS AVIATION SYSTEMSCORPORATION, MACROASIA-EUREST SERVICES, INC., MACROASIA-MENZIESAIRPORT SERVICES CORPORATION, MIASCOR CATERING SERVICES CORPORATION,MIASCOR AIRCRAFT MAINTENANCE CORPORATION, and MIASCOR LOGISTICSCORPORATION, Petitioners-in-Intervention,

FLORESTE ALCONIS, GINA ALNAS, REY AMPOLOQUIO, ROSEMARIE ANG, EUGENEARADA, NENETTE BARREIRO, NOEL BARTOLOME, ALDRIN BASTADOR, ROLETTEDIVINE BERNARDO, MINETTE BRAVO, KAREN BRECILLA, NIDA CAILAO, ERWINCALAR, MARIFEL CONSTANTINO, JANETTE CORDERO, ARNOLD FELICITAS, MARISSAGAYAGOY, ALEX GENERILLO, ELIZABETH GRAY, ZOILO HERICO, JACQUELINEIGNACIO, THELMA INFANTE, JOEL JUMAO-AS, MARIETTA LINCHOCO, ROLLY LORICO,FRANCIS AUGUSTO MACATOL, MICHAEL MALIGAT, DENNIS MANALO, RAULMANGALIMAN, JOEL MANLANGIT, CHARLIE MENDOZA, HAZNAH MENDOZA,NICHOLS MORALES, ALLEN OLAÑO, CESAR ORTAL, MICHAEL ORTEGA, WAYNEPLAZA, JOSELITO REYES, ROLANDO REYES, AILEEN SAPINA, RAMIL TAMAYO,PHILLIPS TAN, ANDREW UY, WILLIAM VELASCO, EMILIO VELEZ, NOEMI YUPANO,MARY JANE ONG, RICHARD RAMIREZ, CHERYLE MARIE ALFONSO, LYNDONBAUTISTA, MANUEL CABOCAN AND NEDY LAZO, Respondents-in-Intervention,

NAGKAISANG MARALITA NG TAÑONG ASSOCIATION, INC., Respondents-in-Intervention,

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

G.R. No. 155547 January 21, 2004

SALACNIB F. BATERINA, CLAVEL A. MARTINEZ and CONSTANTINO G. JARAULA,petitioners, vs.PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., MANILAINTERNATIONAL AIRPORT AUTHORITY, DEPARTMENT OF TRANSPORTATION ANDCOMMUNICATIONS, 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,

FLORESTE ALCONIS, GINA ALNAS, REY AMPOLOQUIO, ROSEMARIE ANG, EUGENEARADA, NENETTE BARREIRO, NOEL BARTOLOME, ALDRIN BASTADOR, ROLETTEDIVINE BERNARDO, MINETTE BRAVO, KAREN BRECILLA, NIDA CAILAO, ERWINCALAR, MARIFEL CONSTANTINO, JANETTE CORDERO, ARNOLD FELICITAS, MARISSAGAYAGOY, ALEX GENERILLO, ELIZABETH GRAY, ZOILO HERICO, JACQUELINEIGNACIO, THELMA INFANTE, JOEL JUMAO-AS, MARIETTA LINCHOCO, ROLLY LORICO,FRANCIS AUGUSTO MACATOL, MICHAEL MALIGAT, DENNIS MANALO, RAULMANGALIMAN, JOEL MANLANGIT, CHARLIE MENDOZA, HAZNAH MENDOZA,NICHOLS MORALES, ALLEN OLAÑO, CESAR ORTAL, MICHAEL ORTEGA, WAYNEPLAZA, JOSELITO REYES, ROLANDO REYES, AILEEN SAPINA, RAMIL TAMAYO,PHILLIPS TAN, ANDREW UY, WILLIAM VELASCO, EMILIO VELEZ, NOEMI YUPANO,MARY JANE ONG, RICHARD RAMIREZ, CHERYLE MARIE ALFONSO, LYNDONBAUTISTA, MANUEL CABOCAN AND NEDY LAZO, Respondents-in-Intervention,




Respondents’ corollary contention that this Court violated the hierarchy of courts when itentertained the cases at bar must also fail. The rule on hierarchy of courts in cases fallingwithin the concurrent jurisdiction of the trial courts and appellate courts generally applies tocases involving warring factual allegations. For this reason, litigants are required to repair tothe trial courts at the first instance to determine the truth or falsity of these contendingallegations on the basis of the evidence of the parties. Cases which depend on disputedfacts for decision cannot be brought immediately before appellate courts as they are nottriers of facts.

It goes without saying that when cases brought before the appellate courts do not involvefactual but legal questions, a strict application of the rule of hierarchy of courts is not

necessary. As the cases at bar merely concern the construction of the Constitution, theinterpretation of the BOT Law and its Implementing Rules and Regulations on undisputedcontractual provisions and government actions, and as the cases concern public interest,this Court resolved to take primary jurisdiction over them. This choice of action follows theconsistent stance of this Court to settle any controversy with a high public interestcomponent in a single proceeding and to leave no root or branch that could bear the seedsof future litigation. The suggested remand of the cases at bar to the trial court will strayaway from this policy.7

b. Legal Standing

Respondent PIATCO stands pat with its argument that petitioners lack legal personality tofile the cases at bar as they are not real parties in interest who are bound principally orsubsidiarily to the PIATCO Contracts. Further, respondent PIATCO contends that petitionersfailed to show any legally demandable or enforceable right to justify their standing to file thecases at bar.

These arguments are not difficult to deflect. The determination of whether a person may

institute an action or become a party to a suit brings to fore the concepts of real party ininterest, capacity to sue and standing to sue. To the legally discerning, these three conceptsare different although commonly directed towards ensuring that only certain parties canmaintain an action.8 As defined in the Rules of Court, a real party in interest is the party whostands to be benefited or injured by the judgment in the suit or the party entitled to theavails of the suit.9 Capacity to sue deals with a situation where a person who may have acause of action is disqualified from bringing a suit under applicable law or is incompetent tobring a suit or is under some legal disability that would prevent him from maintaining anaction unless represented by a guardian ad litem. Legal standing is relevant in the realm of public law. In certain instances, courts have allowed private parties to institute actionschallenging the validity of governmental action for violation of private rights orconstitutional principles.10 In these cases, courts apply the doctrine of legal standing bydetermining whether the party has a direct and personal interest in the controversyand whether such party has sustained or is in imminent danger of sustaining aninjury as a result of the act complained of, a standard which is distinct from theconcept of real party in interest.11 Measured by this yardstick, the application of the doctrineon legal standing necessarily involves a preliminary consideration of the merits of the case

and is not purely a procedural issue.12

Considering the nature of the controversy and the issues raised in the cases at bar, thisCourt affirms its ruling that the petitioners have the requisite legal standing. The petitionersin G.R. Nos. 155001 and 155661 are employees of service providers operating at theexisting international airports and employees of MIAA while petitioners-intervenors areservice providers with existing contracts with MIAA and they will all sustain direct injuryupon the implementation of the PIATCO Contracts. The 1997 Concession Agreement and theARCA both provide that upon the commencement of operations at the NAIA IPT III, NAIAPassenger Terminals I and II will cease to be used as international passenger terminals. 13

Further, the ARCA provides:

(d) For the purpose of an orderly transition, MIAA shall not renew any expired concessionagreement relative to any service or operation currently being undertaken at the NinoyAquino International Airport Passenger Terminal I, or extend any concession agreementwhich may expire subsequent hereto, except to the extent that the continuation of theexisting services and operations shall lapse on or before the In-Service Date.14

Beyond iota of doubt, the implementation of the PIATCO Contracts, which the petitionersand petitioners-intervenors denounce as unconstitutional and illegal, would deprive them of their sources of livelihood. Under settled jurisprudence, one's employment, profession,trade, or calling is a property right and is protected from wrongful interference. 15 It is alsoself evident that the petitioning service providers stand in imminent danger of losinglegitimate business investments in the event the PIATCO Contracts are upheld.

Over and above all these, constitutional and other legal issues with far-reaching economicand social implications are embedded in the cases at bar, hence, this Court liberally grantedlegal standing to the petitioning members of the House of Representatives. First, at stake isthe build-operate-and–transfer contract of the country’s premier international airport with a

projected capacity of 10 million passengers a year. Second, the huge amount of investmentto complete the project is estimated to be P13,000,000,000.00. Third, the primary issuesposed in the cases at bar demand a discussion and interpretation of the Constitution, theBOT Law and its implementing rules which have not been passed upon by this Court inprevious cases. They can chart the future inflow of investment under the BOT Law.

Before writing finis to the issue of legal standing, the Court notes the bid of new parties toparticipate in the cases at bar as respondents-intervenors, namely, (1) the PIATCOEmployees and (2) NMTAI (collectively, the New Respondents-Intervenors). After the Court’sDecision, the New Respondents-Intervenors filed separate Motions for Reconsideration-In-Intervention alleging prejudice and direct injury. PIATCO employees claim that "they have adirect and personal interest [in the controversy]... since they stand to lose their jobs shouldthe government’s contract with PIATCO be declared null and void."16 NMTAI, on the otherhand, represents itself as a corporation composed of responsible tax-paying Filipino citizenswith the objective of "protecting and sustaining the rights of its members to civil liberties,decent livelihood, opportunities for social advancement, and to a good, conscientious andhonest government."17

The Rules of Court govern the time of filing a Motion to Intervene. Section 2, Rule 19provides that a Motion to Intervene should be filed "before rendition of judgment...." TheNew Respondents-Intervenors filed their separate motions after a decision has beenpromulgated in the present cases. They have not offered any worthy explanation to justifytheir late intervention. Consequently, their Motions for Reconsideration-In-Intervention aredenied for the rules cannot be relaxed to await litigants who sleep on their rights. In anyevent, a sideglance at these late motions will show that they hoist no novel arguments.

c. Failure to Implead an Indispensable Party

PIATCO next contends that petitioners should have impleaded the Republic of the Philippinesas an indispensable party. It alleges that petitioners sued the DOTC, MIAA and the DPWH intheir own capacities or as implementors of the PIATCO Contracts and not as a contract partyor as representatives of the Government of the Republic of the Philippines. It then leapfrogsto the conclusion that the "absence of an indispensable party renders ineffectual all theproceedings subsequent to the filing of the complaint including the judgment."18

PIATCO’s allegations are inaccurate. The petitions clearly bear out that public respondentsDOTC and MIAA were impleaded as parties to the PIATCO Contracts and not merely astheir implementors. The separate petitions filed by the MIAA employees19 and members of the House of Representatives20 alleged that "public respondents are impleaded hereinbecause they either executed the PIATCO Contracts or are undertaking acts which arerelated to the PIATCO Contracts. They are interested and indispensable parties to thisPetition."21 Thus, public respondents DOTC and MIAA were impleaded as parties to the casefor having executed the contracts.

More importantly, it is also too late in the day for PIATCO to raise this issue. If PIATCOseriously views the non-inclusion of the Republic of the Philippines as an indispensable partyas fatal to the petitions at bar, it should have raised the issue at the onset of theproceedings as a ground to dismiss. PIATCO cannot litigate issues on a piecemeal basis,otherwise, litigations shall be like a shore that knows no end. In any event, the SolicitorGeneral, the legal counsel of the Republic, appeared in the cases at bar in representation of the interest of the government.

IIPre-qualification of PIATCO




The Implementing Rules provide for the unyielding standards the PBAC should apply todetermine the financial capability of a bidder for pre-qualification purposes: (i) proof of theability 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 theproject proponent and/or members of the consortium are banking with them, thatthey are in good financial standing, and that they have adequate resources .22 Theevident intent of these standards is to protect the integrity and insure the viability of theproject by seeing to it that the proponent has the financial capability to carry it out. As afurther measure to achieve this intent, it maintains a certain debt-to-equity ratio forthe project.

At the pre-qualification stage, it is most important for a bidder to show that it has thefinancial capacity to undertake the project by proving that it can fulfill the requirement onminimum amount of equity. For this purpose, the Bid Documents require in no uncertainterms:

The minimum amount of equity to which the proponent’s financial capability will be basedshall be thirty percent (30%) of the project cost instead of the twenty percent(20%) specified in Section 3.6.4 of the Bid Documents . This is to correlate with therequired debt-to-equity ratio of 70:30 in Section 2.01a of the draft concession agreement.

The debt portion of the project financing should not exceed 70% of the actual project cost.23

In relation thereto, section 2.01 (a) of the ARCA provides:

Section 2.01 Project Scope.

The scope of the project shall include:

(a) Financing the project at an actual Project cost of not less than Three Hundred Fifty Million

United States Dollars (US$350,000,000.00) while maintaining a debt-to-equity ratio of 70:30,provided that if the actual Project costs should exceed the aforesaid amount, Concessionaireshall ensure that the debt-to-equity ratio is maintained;24

Under the debt-to-equity restriction, a bidder may only seek financing of the NAIA IPT IIIProject up to 70% of the project cost. Thirty percent (30%) of the cost must come in theform of equity or investment by the bidder itself. It cannot be overly emphasized that therules require a minimum amount of equity to ensure that a bidder is not merely an operatoror implementor of the project but an investor with a substantial interest in itssuccess. The minimum equity requirement also guarantees the Philippine government andthe general public, who are the ultimate beneficiaries of the project, that a bidder will not beindifferent to the completion of the project. The discontinuance of the project will irreparablydamage public interest more than private interest.

In the cases at bar, after applying the investment ceilings provided under the GeneralBanking Act and considering the maximum amounts that each member of the consortiummay validly invest in the project, it is daylight clear that the Paircargo Consortium, at thetime of pre-qualification, had a net worth equivalent to only 6.08% of the total estimated

project cost.25

By any reckoning, a showing by a bidder that at the time of pre-qualificationits maximum funds available for investment amount to only 6.08% of the project cost isinsufficient to satisfy the requirement prescribed by the Implementing Rules that the projectproponent must have the ability to provide at least 30% of the total estimated project cost.In peso and centavo terms, at the time of pre-qualification, the Paircargo Consortium hadmaximum funds available for investment to the NAIA IPT III Project only in the amount of P558,384,871.55, when it had to show that it had the ability to provide at leastP2,755,095,000.00. The huge disparity cannot be dismissed as of de minimis importanceconsidering the high public interest at stake in the project.

PIATCO nimbly tries to sidestep its failure by alleging that it submitted not only auditedfinancial statements but also testimonial letters from reputable banks attesting to the goodfinancial standing of the Paircargo Consortium. It contends that in adjudging whether thePaircargo Consortium is a pre-qualified bidder, the PBAC should have considered not only itsfinancial statements but other factors showing its financial capability.

Anent this argument, the guidelines provided in the Bid Documents are instructive:

3.3.4 FINANCING AND FINANCIAL PREQUALIFICATIONS REQUIREMENTS

· Minimum Amount of Equity

Each member of the proponent entity is to provide evidence of networth in cash andassets representing the proportionate share in the proponent entity. Audited financialstatements for the past five (5) years as a company for each member are to be provided.

· Project Loan Financing

Testimonial letters from reputable banks attesting that each of the members of theownership entity are banking with them, in good financial standing and having adequate

resources are to be provided.26

It is beyond refutation that Paircargo Consortium failed to prove its ability to provide theamount of at least P2,755,095,000.00, or 30% of the estimated project cost . Itssubmission of testimonial letters attesting to its good financial standing will not cure thisfailure. At best, the said letters merely establish its credit worthiness or its ability to obtainloans to finance the project. They do not, however, prove compliance with the aforesaidrequirement of minimum amount of equity in relation to the prescribed debt-to-equity ratio.

This equity cannot be satisfied through possible loans.

In sum, we again hold that given the glaring gap between the net worth of Paircargo andPAGS combined with the amount of maximum funds that Security Bank may invest by equityin a non-allied undertaking, Paircargo Consortium, at the time of pre-qualification, failed toshow that it had the ability to provide 30% of the project cost and necessarily, its financialcapability for the project cannot pass muster.

IIIConcession Agreement

Again, we brightline the principle that in public bidding, bids are submitted in accord withthe prescribed terms, conditions and parameters laid down by government and pursuant tothe requirements of the project bidded upon. In light of these parameters, bidders formulatecompeting proposals which are evaluated to determine the bid most favorable to thegovernment. Once the contract based on the bid most favorable to the government isawarded, all that is left to be done by the parties is to execute the necessary agreementsand implement them. There can be no substantial or material change to the parameters of the project, including the essential terms and conditions of the contract bidded upon, afterthe contract award. If there were changes and the contracts end up unfavorable togovernment, the public bidding becomes a mockery and the modified contracts must bestruck down.

Respondents insist that there were no substantial or material amendments in the 1997Concession Agreement as to the technical aspects of the project, i.e., engineering design,technical soundness, operational and maintenance methods and procedures of the projector the technical proposal of PIATCO. Further, they maintain that there was no modificationof the financial features of the project, i.e., minimum project cost, debt-to-equity ratio, the

operations and maintenance budget, the schedule and amount of annual guaranteedpayments, or the financial proposal of PIATCO. A discussion of some of these changes todetermine whether they altered the terms and conditions upon which the bids were made isagain in order.

a. Modification on Fees and Charges to be collected by PIATCO

PIATCO clings to the contention that the removal of the groundhandling fees, airline officerentals and porterage fees from the category of fees subject to MIAA regulation in the 1997Concession Agreement does not constitute a substantial amendment as these fees are notreally public utility fees. In other words, PIATCO justifies the re-classification under the 1997Concession Agreement on the ground that these fees are non-public utilityrevenues.

We disagree. The removal of groundhandling fees, airline office rentals and porterage feesfrom the category of "Public Utility Revenues" under the draft Concession Agreement and itsre-classification to "Non-Public Utility Revenues" under the 1997 Concession Agreement issignificant and has far reaching consequence. The 1997 Concession Agreement provides




agreement, law, presidential decree, proclamation, order, instruction, ordinance, orregulation is in question. (Italics supplied).

As such, this petition must necessary fail, as this Court does not have original jurisdictionover 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 importantreason or exceptional and compelling circumstance has been adduced by the petitioner orthe intervenor why direct recourse to this Court should be allowed.

We have held that this Court’s original jurisdiction to issue a writ of certiorari (as well as of

prohibition, mandamus, quo warranto, habeas corpus and injunction) is not exclusive, but isconcurrent with the Regional Trial Courts and the Court of Appeals in certain cases. As aptlystated in People v. Cuaresma:16

This concurrence of jurisdiction is not, however, to be taken as according to parties seekingany of the writs an absolute, unrestrained freedom of choice of the court to whichapplication therefor0 will be directed. There is after all a hierarchy of courts. That hierarchyis determinative of the venue of appeals, and also serves as a general determinant of theappropriate forum for petitions for the extraordinary writs. A becoming regard of that judicialhierarchy most certainly indicates that petitions for the issuance of extraordinary writsagainst first level ("inferior") courts should be filed with the Regional Trial Court, and thoseagainst the latter, with the Court of Appeals. A direct invocation of the Supreme Court’soriginal jurisdiction to issue these writs should be allowed only when there are special andimportant reasons therefor, clearly and specifically set out in the petition. This is [an]established policy. It is a policy necessary to prevent inordinate demands upon the Court’stime and attention which are better devoted to those matters within its exclusive

jurisdiction, and to prevent further over-crowding of the Court’s docket.

As we have said in Santiago v. Vasquez,17 the propensity of litigants and lawyers todisregard the hierarchy of courts in our judicial system by seeking relief directly from thisCourt must be put to a halt for two reasons: (1) it would be an imposition upon the precioustime of this Court; and (2) it would cause an inevitable and resultant delay, intended orotherwise, in the adjudication of cases, which in some instances had to be remanded orreferred to the lower court as the proper forum under the rules of procedure, or as betterequipped 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 itunless the redress desired cannot be obtained in the appropriate courts, and exceptionaland compelling circumstances justify the availment of the extraordinary remedy of writ of certiorari, calling for the exercise of its primary jurisdiction.18

Petitioner’s reliance on Pimentel v. Aguirre19 is misplaced because the non-observance of the hierarchy-of-courts rule was not an issue therein. Besides, what was sought to benullified 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 infringedthe Constitution, settling the controversy becomes the duty of this Court. The same is truewhen what is seriously alleged to be unconstitutional is an act of the President, who in ourconstitutional 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, thefollowing requisites must be present: (1) identity of parties, or at least such parties as arerepresenting the same interests in both actions; (2) identity of rights asserted and reliefsprayed for, the reliefs being founded on the same facts; and (3) identity with respect to thetwo preceding particulars in the two cases, such that any judgment that may be rendered inthe pending case, regardless of which party is successful, would amount to res judicata inthe other case.20

In the instant petition, and as admitted by the respondents, the parties in this case and inthe 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 indeedpending 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 tofurnish this Court with copies of the said petitions.

WHEREFORE, the petition is DISMISSED.

SO ORDERED.




Section 4. Prohibition on private individuals. – (a) It shall be unlawful for any person havingfamily or close personal relation with any public official to capitalize or exploit or takeadvantage of such family or close personal relation by directly or indirectly requesting orreceiving any present, gift or material or pecuniary advantage from any other person havingsome business, transaction, application, request or contract with the government, in whichsuch public official has to intervene. Family relation shall include the spouse or relatives byconsanguinity or affinity in the third civil degree. The word "close personal relation" shallinclude close personal friendship, social and fraternal connections, and professionalemployment all giving rise to intimacy which assures free access to such public officer.

(b) It shall be unlawful for any person knowingly to induce or cause any public official to

commit any of the offenses defined in Section 3 hereof.In fine, the two statutes differ in that P.D. No. 1606, as amended, defines the jurisdiction of the Sandiganbayan while R.A. No. 3019, as amended, defines graft and corrupt practicesand provides for their penalties.

Sandiganbayan has jurisdiction overthe offense of estafa.

Relying on Section 4 of P.D. No. 1606, petitioner contends that estafa is not among thosecrimes cognizable by the Sandiganbayan. We note that in hoisting this argument, petitionerisolated the first paragraph of Section 4 of P.D. No. 1606, without regard to the succeedingparagraphs of the said provision.

The rule is well-established in this jurisdiction that statutes should receive a sensibleconstruction so as to avoid an unjust or an absurd conclusion.33 Interpretatio talis inambiguis semper fienda est, ut evitetur inconveniens et absurdum. Where there isambiguity, 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 eachother in order to arrive at the effect contemplated by the legislature. 34 The intention of thelegislator must be ascertained from the whole text of the law and every part of the act is tobe taken into view.35 In other words, petitioner’s interpretation lies in direct opposition to therule that a statute must be interpreted as a whole under the principle that the bestinterpreter of a statute is the statute itself.36 Optima statuti interpretatrix est ipsumstatutum. Ang isang batas ay marapat na bigyan ng kahulugan sa kanyangkabuuan sa ilalim ng prinsipyo na ang pinakamainam na interpretasyon ay angmismong batas.

Section 4(B) of P.D. No. 1606 reads:

B. Other offenses or felonies whether simple or complexed with other crimes committed bythe public officials and employees mentioned in subsection a of this section in relation totheir office.

Evidently, the Sandiganbayan has jurisdiction over other felonies committed by publicofficials in relation to their office. We see no plausible or sensible reason to exclude estafaas 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) theoffense 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 ParksDevelopment Committee, a government instrumentality. The Court held then:

The National Parks Development Committee was created originally as an ExecutiveCommittee on January 14, 1963, for the development of the Quezon Memorial, Luneta andother national parks (Executive Order No. 30). It was later designated as the National ParksDevelopment Committee (NPDC) on February 7, 1974 (E.O. No. 69). On January 9, 1966,Mrs. Imelda R. Marcos and Teodoro F. Valencia were designated Chairman and Vice-Chairman respectively (E.O. No. 3). Despite an attempt to transfer it to the Bureau of ForestDevelopment, Department of Natural Resources, on December 1, 1975 (Letter of

Implementation No. 39, issued pursuant to PD No. 830, dated November 27, 1975), theNPDC has remained under the Office of the President (E.O. No. 709, dated July 27, 1981).

Since 1977 to 1981, the annual appropriations decrees listed NPDC as a regular governmentagency under the Office of the President and allotments for its maintenance and operatingexpenses were issued direct to NPDC (Exh. 10-A, Perlas, Item Nos. 2, 3).

The Sandiganbayan’s jurisdiction over estafa was reiterated with greater firmness in Bondocv. Sandiganbayan.38 Pertinent parts of the Court’s ruling in Bondoc read:

Furthermore, it is not legally possible to transfer Bondoc’s cases to the Regional Trial Court,for the simple reason that the latter would not have jurisdiction over the offenses. As

already above intimated, the inability of the Sandiganbayan to hold a joint trial of Bondoc’scases and those of the government employees separately charged for the same crimes, hasnot altered the nature of the offenses charged, as estafa thru falsification punishable bypenalties higher than prision correccional or imprisonment of six years, or a fine of P6,000.00, committed by government employees in conspiracy with private persons,including Bondoc. These crimes are within the exclusive, original jurisdiction of theSandiganbayan. They simply cannot be taken cognizance of by the regular courts, apartfrom the fact that even if the cases could be so transferred, a joint trial would nonethelessnot be possible.

Petitioner UP student regentis a public officer.

Petitioner also contends that she is not a public officer. She does not receive any salary orremuneration as a UP student regent. This is not the first or likely the last time that We willbe called upon to define a public officer. In Khan, Jr. v. Office of the Ombudsman, We ruledthat it is difficult to pin down the definition of a public officer. 39 The 1987 Constitution doesnot define who are public officers. Rather, the varied definitions and concepts are found in

different statutes and jurisprudence.In Aparri v. Court of Appeals,40 the Court held that:

A public office is the right, authority, and duty created and conferred by law, by which for agiven period, either fixed by law or enduring at the pleasure of the creating power, anindividual is invested with some portion of the sovereign functions of the government, to beexercise by him for the benefit of the public ( [Mechem Public Offices and Officers,] Sec. 1).

The right to hold a public office under our political system is therefore not a natural right. Itexists, when it exists at all only because and by virtue of some law expressly or impliedlycreating and conferring it (Mechem Ibid., Sec. 64). There is no such thing as a vestedinterest or an estate in an office, or even an absolute right to hold office. Exceptingconstitutional offices which provide for special immunity as regards salary and tenure, noone 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 agiven period, either fixed by law or enduring at the pleasure of the creating power, anindividual is invested with some portion of the sovereign functions of the government, to beexercised 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, aregular tuition fee-paying student. This is likewise bereft of merit. It is not only the salarygrade that determines the jurisdiction of the Sandiganbayan. The Sandiganbayan also has

jurisdiction over other officers enumerated in P.D. No. 1606. In Geduspan v. People,43 Weheld that while the first part of Section 4(A) covers only officials with Salary Grade 27 andhigher, its second part specifically includes other executive officials whose positions may notbe 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 asshe 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 overPresidents, directors or trustees, or managers of government-owned or controlledcorporations, state universities or educational institutions or foundations. Petitioner fallsunder this category. As the Sandiganbayan pointed out, the BOR performs functions similar




SEC. 4. Jurisdiction.— The Sandiganbayan shall exercise exclusive original jurisdiction in allcases involving:

a. Violations of Republic Act No. 3019, as amended, otherwise known as the Anti-Graft andCorrupt 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 thefollowing positions in the government, whether in a permanent, acting or interim capacity,at the time of the commission of the offense:

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

(a) Provincial governors, vice-governors, members of the sangguniang panlalawigan andprovincial treasurers, assessors, engineers and other provincial department heads[;]

x x x x

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 officersmentioned above, exclusive original jurisdiction thereof shall be vested in the properregional trial court, metropolitan trial court, municipal trial court, and municipal circuit trialcourt, as the case may be, pursuant to their respective jurisdiction as provided in BatasPambansa Blg. 129, as amended.

x x x x

Thus, the jurisdiction of the Sandiganbayan over petitioner Ambil, Jr. is beyond question. Thesame is true as regards petitioner Apelado, Sr. As to him, a Certification29 from the ProvincialGovernment Department Head of the HRMO shows that his position as Provincial Warden is

classified as Salary Grade 22. Nonetheless, it is only when none of the accused areoccupying positions corresponding to salary grade ‘27’ or higher shall exclusive jurisdictionbe vested in the lower courts. Here, petitioner Apelado, Sr. was charged as a co-principalwith Governor Ambil, Jr., over whose position the Sandiganbayan has jurisdiction.Accordingly, he was correctly tried jointly with said public officer in the proper court whichhad exclusive original jurisdiction over them – the Sandiganbayan.

The second element, for its part, describes the three ways by which a violation of Section3(e) of R.A. No. 3019 may be committed, that is, through manifest partiality, evident badfaith or gross inexcusable negligence.

In Sison v. People,30 we defined "partiality," "bad faith" and "gross negligence" as follows:

"Partiality" is synonymous with "bias" which "excites a disposition to see and report mattersas they are wished for rather than as they are." "Bad faith does not simply connote bad

judgment or negligence; it imputes a dishonest purpose or some moral obliquity andconscious doing of a wrong; a breach of sworn duty through some motive or intent or ill will;it partakes of the nature of fraud." "Gross negligence has been so defined as negligence

characterized by the want of even slight care, acting or omitting to act in a situation wherethere is a duty to act, not inadvertently but wilfully and intentionally with a consciousindifference to consequences in so far as other persons may be affected. It is the omissionof that care which even inattentive and thoughtless men never fail to take on their ownproperty." x x x31

In this case, we find that petitioners displayed manifest partiality and evident bad faith intransferring the detention of Mayor Adalim to petitioner Ambil, Jr.’s house. There is no meritto petitioner Ambil, Jr.’s contention that he is authorized to transfer the detention of prisoners by virtue of his power as the "Provincial Jailer" of Eastern Samar.

Section 28 of the Local Government Code draws the extent of the power of local chief executives over the units of the Philippine National Police within their jurisdiction:

SEC. 28. Powers of Local Chief Executives over the Units of the Philippine National Police.— The extent of operational supervision and control of local chief executives over the policeforce, fire protection unit, and jail management personnel assigned in their respective

jurisdictions shall be governed by the provisions of Republic Act Numbered Sixty-ninehundred seventy-five (R.A. No. 6975), otherwise known as "The Department of the Interior and Local Government Act of 1990," and the rules and regulations issued pursuant thereto.

In particular, Section 61, Chapter 5 of R.A. No. 697532 on the Bureau of Jail Management andPenology provides:

Sec. 61. Powers and Functions. - The Jail Bureau shall exercise supervision and control overall city and municipal jails. The provincial jails shall be supervised and controlled bythe provincial government within its jurisdiction, whose expenses shall be subsidized bythe National Government for not more than three (3) years after the effectivity of this Act.

The power of control is the power of an officer to alter or modify or set aside what asubordinate officer had done in the performance of his duties and to substitute the judgmentof the former for that of the latter.33 An officer in control lays down the rules in the doing of an act. If they are not followed, he may, in his discretion, order the act undone or re-done byhis subordinate or he may even decide to do it himself.34

On the other hand, the power of supervision means "overseeing or the authority of an officerto see to it that the subordinate officers perform their duties." 35 If the subordinate officersfail or neglect to fulfill their duties, the official may take such action or step as prescribed bylaw to make them perform their duties. Essentially, the power of supervision means no morethan the power of ensuring that laws are faithfully executed, or that subordinate officers actwithin the law.36 The supervisor or superintendent merely sees to it that the rules arefollowed, but he does not lay down the rules, nor does he have discretion to modify orreplace them.37

Significantly, it is the provincial government and not the governor alone which has authorityto exercise control and supervision over provincial jails. In any case, neither of said powersauthorizes the doing of acts beyond the parameters set by law. On the contrary,subordinates must be enjoined to act within the bounds of law. In the event that thesubordinate performs an act ultra vires, rules may be laid down on how the act should bedone, but always in conformity with the law.

In a desperate attempt to stretch the scope of his powers, petitioner Ambil, Jr. cites Section1731, Article III of the Administrative Code of 1917 on Provincial jails in support. Section1731 provides:

SEC. 1731. Provincial governor as keeper of jail.—The governor of the province shall becharged with the keeping of the provincial jail, and it shall be his duty toadminister the same in accordance with law and the regulations prescribed forthe government of provincial prisons. The immediate custody and supervision of the jailmay be committed to the care of a jailer to be appointed by the provincial governor. Theposition of jailer shall be regarded as within the unclassified civil service but may be filled inthe manner in which classified positions are filled, and if so filled, the appointee shall beentitled to all the benefits and privileges of classified employees, except that he shall holdoffice only during the term of office of the appointing governor and until a successor in the

office of the jailer is appointed and qualified, unless sooner separated. The provincialgovernor shall, under the direction of the provincial board and at the expense of the province, supply proper food and clothing for the prisoners; though theprovincial board may, in its discretion, let the contract for the feeding of the prisoners tosome other person. (Emphasis supplied.)

This provision survived the advent of the Administrative Code of 1987. But again, nowheredid said provision designate the provincial governor as the "provincial jailer," or even slightlysuggest that he is empowered to take personal custody of prisoners. What is clear from thecited provision is that the provincial governor’s duty as a jail keeper is confined to theadministration of the jail and the procurement of food and clothing for the prisoners. Afterall, administrative acts pertain only to those acts which are necessary to be done to carryout legislative policies and purposes already declared by the legislative body or such as aredevolved upon it38 by the Constitution. Therefore, in the exercise of his administrativepowers, the governor can only enforce the law but not supplant it.

Besides, the only reference to a transfer of prisoners in said article is found in Section 1737 39




G.R. No. 155206 October 28, 2003

GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner, vs.EDUARDO M. SANTIAGO,substituted by his widow ROSARIO ENRIQUEZ VDA. DE SANTIAGO, respondent.

D E C I S I O N

CALLEJO, SR., J.:

Before the Court is the petition for review on certiorari filed by the Government ServiceInsurance System (GSIS), seeking to reverse and set aside the Decision1 dated February 22,2002 of the Court of Appeals (CA) in CA-G.R. CV No. 62309 and its Resolution dated

September 5, 2002 denying its motion for reconsideration. The antecedent facts of the case, as culled from the assailed CA decision and that of thetrial court, are as follows:

Deceased spouses Jose C. Zulueta and Soledad Ramos obtained various loans fromdefendant GSIS for (the) period September, 1956 to October, 1957 in the total amount of P3,117,000.00 secured by real estate mortgages over parcels of land covered by TCT Nos.26105, 37177 and 50365. The Zuluetas failed to pay their loans to defendant GSIS and thelatter foreclosed the real estate mortgages dated September 25, 1956, March 6, 1957, April4, 1957 and October 15, 1957.

On August 14, 1974, the mortgaged properties were sold at public auction by defendantGSIS submitting a bid price of P5,229,927.84. Not all lots covered by the mortgaged titles,however, were sold. Ninety-one (91) lots were expressly excluded from the auction since thelots were sufficient to pay for all the mortgage debts. A Certificate of Sale (Annex "F,"Records, Vol. I, pp. 23-28) was issued by then Provincial Sheriff Nicanor D. Salaysay.

The Certificate of Sale dated August 14, 1974 had been annotated and inscribed in TCT Nos.26105, 37177 and 50356, with the following notations: "(T)he following lots which form partof this title (TCT No. 26105) are not covered by the mortgage contract due to sale to thirdparties and donation to the government: 50-H-5-C-9-J-65-H-8, 50-H-5-C-9J-M-7; 50-H-5-C-9-J-65-H-5; 1 lots Nos. 1 to 13, Block No. 1 –-6,138 sq.m. 2. Lots Nos. 1 to 11, Block No. 2 –4,660sq.m. 3. Lot No. 15, Block No. 3 –487 sq.m. 4. Lot No. 17, Block No. 4 –263 sq.m. 5. Lot No.1, Block No. 7 – 402 sq.m. 6. Road Lots Nos. 1, 2, 3, & 4 – 2,747 sq.m."

In another "NOTE: The following lots in the Antonio Subdivision were already released by theGSIS and therefore are not included in this sale, namely: LOT NO. 1, 6, 7, 8, 9, 10, and 13(Old Plan) Block I; 1, 3, 4, 5, 7, 8 and 10 (Old Plan) Block II; 3, 10, 12 and 13 (New Plan)Block I (Old Plan) Block III; 7, 14 and 20 (New Plan) Block III (Old Plan) Block V; 13 and 20(New Plan) Block IV (Old Plan) Block VI; 1, 2, 3 and 10 (New Plan) Block V (Old Plan) BlockVII; 1, 5, 8, 15, 26 and 27 (New Plan) Block VI (Old Plan) Block VIII; 7, 12 and 20 (New Plan)Block VII (Old Plan) Block II; 1, 4 and 6 (New Plan) Block VIII (Old Plan) Block X; 5 (New Plan)Block X (Old Plan) Block ZXII; 6 (New Plan) Block XI (Old Plan) Block XII; 1, Block 9; 12 Block1; 11 Block 2; 19 Block 1; 10 Block 6; 23 Block 3."

And the lots on "ADDITIONAL EXCLUSION FROM PUBLIC SALE" are "LOTS NO. 6 Block 4; 2Block 2; 5 Block 5; 1, 2 and 3 Block 11, 1, 2, 3 and 4 Block 10; 5 Block 11 (New); 1 Block 3; 5Block 1; 15 Block 7; 11 Block 9; 13 Block 5; 12 Block 5; 3 Block 10; 6."

On November 25, 1975, an Affidavit of Consolidation of Ownership (Annex "G," Records, Vol.I, pp. 29-31) was executed by defendant GSIS over Zulueta’s lots, including the lots, whichas earlier stated, were already excluded from the foreclosure.

On March 6, 1980, defendant GSIS sold the foreclosed properties to Yorkstown DevelopmentCorporation which sale was disapproved by the Office of the President of the Philippines. Thesold properties were returned to defendant GSIS.

The Register of Deeds of Rizal cancelled the land titles issued to Yorkstown DevelopmentCorporation. On July 2, 1980, TCT No. 23552 was issued cancelling TCT No. 21926; TCT No.23553 cancelled TCT No. 21925; and TCT No. 23554 cancelling TCT No. 21924, all in thename of defendant GSIS.1awphi1.nét

After defendant GSIS had re-acquired the properties sold to Yorkstown Development

Corporation, it began disposing the foreclosed lots including the excluded ones.

On April 7, 1990, representative Eduardo Santiago and then plaintiff Antonio Vic Zuluetaexecuted an agreement whereby Zulueta transferred all his rights and interests over theexcluded lots. Plaintiff Eduardo Santiago’s lawyer, Atty. Wenceslao B. Trinidad, wrote ademand letter dated May 11, 1989 (Annex "H," Records, Vol. I, pp. 32-33) to defendant GSISasking for the return of the eighty-one (81) excluded lots. 2

On May 7, 1990, Antonio Vic Zulueta, represented by Eduardo M. Santiago, filed with theRegional Trial Court (RTC) of Pasig City, Branch 71, a complaint for reconveyance of realestate against the GSIS. Spouses Alfeo and Nenita Escasa, Manuel III and Sylvia G. Urbano,and Marciana P. Gonzales and the heirs of Mamerto Gonzales moved to be included as

intervenors and filed their respective answers in intervention. Subsequently, the petitioner,as defendant therein, filed its answer alleging inter alia that the action was barred by thestatute of limitations and/or laches and that the complaint stated no cause of action.Subsequently, Zulueta was substituted by Santiago as the plaintiff in the complaint a quo.Upon the death of Santiago on March 6, 1996, he was substituted by his widow, RosarioEnriquez Vda. de Santiago, as the plaintiff.

After due trial, the RTC rendered judgment against the petitioner ordering it to reconvey tothe respondent, Rosario Enriquez Vda. de Santiago, in substitution of her deceased husbandEduardo, the seventy-eight lots excluded from the foreclosure sale.1awphi1.nét Thedispositive portion of the RTC decision reads:

WHEREFORE, judgment is hereby rendered in favor of plaintiff and against the defendant:

1. Ordering defendant to reconvey to plaintiff the seventy-eight (78) lots released andexcluded from the foreclosure sale including the additional exclusion from the public sale,namely:

a. Lot Nos. 1, 6, 7, 8, 0, 10, 13, Block I (Old Plan).b. Lot Nos. 1, 3, 4, 5, 7, 8 and 10, Block II (Old Plan).c. Lot Nos. 3, 10, 12, and 13, Block I (New Plan), Block III (Old Plan),d. Lot Nos. 7, 14 and 20, Block III (New Plan), Block V (Old Plan).e. Lot Nos. 13 and 20, Block IV (New Plan), Block VI (Old Plan).f. Lot Nos. 1, 2, 3 and 10, Block V (New Plan), Block VII (Old Plan).g. Lot Nos. 1, 5, 8, 15, 26 and 27, Block VI (New Plan), Block VIII (Old Plan).h. Lot Nos. 7 and 12, Block VII (New Plan), Block II (Old Plan).i. Lot Nos. 1, 4 and 6, Block VIII (New Plan), Block X (Old Plan).

j. Lot 5, Block X (New Plan), Block XII (Old Plan).k. Lot 6, Block XI (New Plan), Block XII (Old Plan).l. Lots 2, 5, 12 and 15, Block I.m. Lots 6, 9 and 11, Block 2.n. Lots 1, 5, 6, 7, 16 and 23, Block 3.o. Lot 6, Block 4.p. Lots 5, 12, 13 and 24, Block 5.q. Lots 10 and 16, Block 6.

r. Lots 6 and 15, Block 7.s. Lots 13, 24, 28 and 29, Block 8.t. Lots 1, 11, 17 and 22, Block 9.u. Lots 1, 2, 3 and 4, Block 10.v. Lots 1, 2, 3 and 5 (New), Block 11.

2. Ordering defendant to pay plaintiff, if the seventy-eight (78) excluded lots could not bereconveyed, the fair market value of each of said lots.

3. Ordering the Registry of Deeds of Pasig City to cancel the land titles covering theexcluded lots in the name of defendant or any of its successors-in-interest including allderivative titles therefrom and to issue new land titles in plaintiff’s name.

4. Ordering the Registry of Deeds of Pasig City to cancel the Notices of Lis Pendens inscribedin TCT No. PT-80342 under Entry No. PT-12267/T-23554; TCT No. 81812 under Entry No. PT-12267/T-23554; and TCT No. PT-84913 under Entry No. PT-12267/T-23554.



Remedial Law Review 1 || I Jurisdiction




Resolution, as follows:

"Upon another review of the case, the Court concedes that it may indeed have lost its wayand been waylaid by the variety, complexity and seeming importance of the interests andissues involved in the case below, the apparent reluctance of the judges, five in all, to hearthe case, and the volume of the conflicting, often confusing, submissions bearing onincidental matters. We stand corrected."9

That explanation should have been enough to settle the issue. The CA’s Resolution on thispoint has rendered petitioner’s issue moot. Hence, there is no need to discuss it further.Suffice it to say that the appellate court indeed acted ultra jurisdictio in ruling on the meritsof the case when the only issue that could have been, and was in fact, raised was the

alleged grave abuse of discretion committed by the trial court in denying petitioner’s Motionfor Reconsideration. Settled is the doctrine that the sole office of a writ of certiorari is thecorrection of errors of jurisdiction. Such writ does not include a review of the evidence, 10

more so when no determination of the merits has yet been made by the trial court, as in thiscase.

Second Issue:

Dismissal for Prescription and Lack of Jurisdiction

Petitioner next submits that the CA erroneously invoked its "residual prerogatives" underSection 1 of Rule 9 of the Rules of Court when it motu proprio dismissed the Petition for lackof jurisdiction and prescription. According to him, residual prerogative refers to the powerthat the trial court, in the exercise of its original jurisdiction, may still validly exercise evenafter perfection of an appeal. It follows that such powers are not possessed by an appellatecourt.

Petitioner has confused what the CA adverted to as its "residual prerogatives" under Section

1 of Rule 9 of the Rules of Court with the "residual jurisdiction" of trial courts over casesappealed to the CA.

Under Section 1 of Rule 9 of the Rules of Court, defenses and objections not pleaded eitherin 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) prescriptionare evident from the pleadings or the evidence on record. In the four excepted instances,the court shall motu proprio dismiss the claim or action. In Gumabon v. Larin 11 we explainedthus:

"x x x [T]he motu proprio dismissal of a case was traditionally limited to instances when thecourt clearly had no jurisdiction over the subject matter and when the plaintiff did notappear during trial, failed to prosecute his action for an unreasonable length of time orneglected to comply with the rules or with any order of the court. Outside of theseinstances, 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 aboutno radical change. Under the new rules, a court may motu proprio dismiss a claim when itappears from the pleadings or evidence on record that it has no jurisdiction over the subjectmatter; when there is another cause of action pending between the same parties for thesame cause, or where the action is barred by a prior judgment or by statute of limitations. xx 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 party’s appeal by notice of appeal isdeemed perfected as to him upon the filing of the notice of appeal in due time.

"A party’s appeal by record on appeal is deemed perfected as to him with respect to thesubject 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 perfectionof 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 matterthereof 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, thecourt may issue orders for the protection and preservation of the rights of the parties whichdo 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 normallydeemed 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 approvalof the records on appeal, but prior to the transmittal of the original records or the records onappeal.13 In either instance, the trial court still retains its so-called residual jurisdiction toissue protective orders, approve compromises, permit appeals of indigent litigants, orderexecution pending appeal, and allow the withdrawal of the appeal.

The CA’s motu proprio dismissal of petitioner’s Complaint could not have been based,therefore, on residual jurisdiction under Rule 41. Undeniably, such order of dismissal was notone for the protection and preservation of the rights of the parties, pending the dispositionof the case on appeal. What the CA referred to as residual prerogatives were the generalresidual powers of the courts to dismiss an action motu proprio upon the grounds mentionedin Section 1 of Rule 9 of the Rules of Court and under authority of Section 2 of Rule 1 14 of thesame rules.

To be sure, the CA had the excepted instances in mind when it dismissed the Complaintmotu proprio "on more fundamental grounds directly bearing on the lower court’s lack of

jurisdiction"15 and for prescription of the action. Indeed, when a court has no jurisdictionover the subject matter, the only power it has is to dismiss the action.16

Jurisdiction over the subject matter is conferred by law and is determined by the allegationsin the complaint and the character of the relief sought.17 In his Complaint for "Nullification of Applications for Homestead and Original Certificate of Title No. G-7089 and forReconveyance of Title,"18 petitioner averred:

"2. That on November 10, 1965, without the knowledge of [petitioner, Respondent] ManuelPalanca Jr., [petitioner’s] cousin, in connivance with his co-[respondent], Lorenzo Agustin, xx x fraudulently and in bad faith:

2.1. x x x made the request for authority to survey as a pre-requisite to the filing of anapplication for homestead patent in his name and that of his Co-[Respondent] Agustin,[despite being] fully aware that [Petitioner] KATON had previously applied or requested forre-classification and certification of the same land from forest land to agricultural land whichrequest was favorably acted upon and approved as mentioned earlier; a clear case of intrinsic fraud and misrepresentation;

x x x x x x x x x

2.3. In stating in his application for homestead patent that he was applying for the VACANTPORTION of Sombrero Island where there was none, the same constituted another clear caseof 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 thenames of [respondents], Lorenzo Agustin, Jesus Gapilango and Juan Fresnillo[,] having beendone fraudulently and in bad faith, are ipso facto null and void and of no effectwhatsoever." 19

x x x x x x x x x

"x x x. By a wrongful act or a willful omission and intending the effects with naturalnecessity arise knowing from such act or omission, [Respondent Palanca] on account of hisblood relation, first degree cousins, trust, interdependence and intimacy is guilty of intrinsicfraud [sic]. x x x."20





Thereupon, petitioner prayed, among others, for a judgment (1) nullifying the homesteadpatent applications of Respondents Agustin, Fresnillo and Gapilango as well as HomesteadPatent 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 topetitioner.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 pleadmerely for reversion?

The Complaint did not sufficiently make a case for any of such actions, over which the trialcourt could have exercised jurisdiction.

In an action for nullification of title or declaration of its nullity, the complaint must containthe 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 thedefendant perpetuated a fraud or committed a mistake in obtaining a document of title overthe parcel of land claimed by the plaintiff.22 In these cases, the nullity arises not from fraudor 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 asincontrovertible, but the transfer of the property or title thereto is sought to be nullified onthe ground that it was wrongfully or erroneously registered in the defendant’s name. 24 Aswith an annulment of title, a complaint must allege two facts that, if admitted, would entitlethe plaintiff to recover title to the disputed land: (1) that the plaintiff was the owner of theland, 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 tohold 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 previouslyheld title to the land in question. On the contrary, he acknowledged that the disputed islandwas public land,27 that it had never been privately titled in his name, and that he had notapplied for a homestead under the provisions of the Public Land Act. 28 This Court has heldthat a complaint by a private party who alleges that a homestead patent was obtained byfraudulent means, and who consequently prays for its annulment, does not state a cause of action; hence, such complaint must be dismissed.29

Neither can petitioner’s case be one for reversion. Section 101 of the Public Land Actcategorically declares that only the solicitor general or the officer in his stead may institutesuch an action.30 A private person may not bring an action for reversion or any other actionthat would have the effect of canceling a free patent and its derivative title, with the resultthat the land thereby covered would again form part of the public domain.31

Thus, when the plaintiff admits in the complaint that the disputed land will revert to thepublic domain even if the title is canceled or amended, the action is for reversion; and theproper party who may bring action is the government, to which the property will revert.32 A

mere homestead applicant, not being the real party in interest, has no cause of action in asuit for reconveyance.33 As it is, vested rights over the land applied for under a homesteadmay be validly claimed only by the applicant, after approval by the director of the LandManagement Bureau of the former’s final proof of homestead patent. 34

Consequently, the dismissal of the Complaint is proper not only because of lack of jurisdiction, but also because of the utter absence of a cause of action,35 a defense raised byrespondents in their Answer.36 Section 2 of Rule 3 of the Rules of Court 37 ordains that everyaction must be prosecuted or defended in the name of the real party in interest, who standsto be benefited or injured by the judgment in the suit. Indeed, one who has no right orinterest to protect has no cause of action by which to invoke, as a party-plaintiff, the

jurisdiction of the court.38

Finally, assuming that petitioner is the proper party to bring the action for annulment of titleor its reconveyance, the case should still be dismissed for being time-barred.39 It is notdisputed that a homestead patent and an Original Certificate of Title was issued to Palancaon 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, theprescriptive period for reconveyance of fraudulently registered real property.41

It must likewise be stressed that Palanca’s title -- which attained the status of indefeasibilityone year from the issuance of the patent and the Certificate of Title in February 1977 -- is nolonger open to review on the ground of actual fraud. Ybanez v. Intermediate AppellateCourt42 ruled that a certificate of title, issued under an administrative proceeding pursuantto a homestead patent, is as indefeasible as one issued under a judicial registrationproceeding one year from its issuance; provided, however, that the land covered by it isdisposable public land, as in this case.

In Aldovino v. Alunan,43 the Court has held that when the plaintiff’s 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 alsoexplained 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 amotion to dismiss (Sec. 1,f, Rule 16, Rules of Court), or an answer which sets up such groundas an affirmative defense (Sec. 5, Rule 16), or even if the ground is alleged after judgmenton 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 thepleadings (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 indefault (PNB v. Perez, 16 SCRA 270). What is essential only, to repeat, is that the factsdemonstrating the lapse of the prescriptive period be otherwise sufficiently and

satisfactorily apparent on the record; either in the averments of the plaintiff's complaint, orotherwise established by the evidence."45 (Italics supplied)

Clearly then, the CA did not err in dismissing the present case. After all, if and when they areable to do so, courts must endeavor to settle entire controversies before them to preventfuture litigations.46

WHEREFORE, the Petition is hereby DENIED, and the assailed Resolution AFFIRMED. Thedismissal of the Complaint in Civil Case No. 3231 is SUSTAINED on the grounds of lack of

jurisdiction, failure to state a cause of action and prescription. Costs against petitioner.

SO ORDERED.





G.R. No. 182865 December 24, 2008

ROMULO F. PECSON, petitioner, vs.COMMISSION ON ELECTIONS, DEPARTMENT OFINTERIOR AND LOCAL GOVERNMENT and LYNDON A. CUNANAN, respondents.

D E C I S I O N

BRION, J.:

This petition for certiorari - filed by Romulo F. Pecson (Pecson) under Rule 64, in relationwith Rule 65 of the Revised Rules of Court - seeks to set aside and annul the Resolutiondated May 21, 2008 of the Commission on Elections en banc (COMELEC) in SPR 60-2007.1

The assailed Resolution nullified the grant (via a Special Order) by the Regional Trial Court(RTC), Branch 56, Angeles City, of the execution pending appeal of its Decision in theelection contest between Pecson and the private respondent Lyndon A. Cunanan ( Cunanan),the proclaimed winner in the 2007 mayoralty election in Magalang, Pampanga.

THE ANTECEDENTS

Pecson and Cunanan were candidates for the mayoralty position in the Municipality of Magalang, Province of Pampanga in the May 2007 elections. On May 17, 2007, Cunanan wasproclaimed the winning candidate, garnering a total of 12,592 votes as against Pecson's12,531, or a margin of 61 votes. Cunanan took his oath and assumed the position of Mayorof Magalang. Soon thereafter, Pecson filed an election protest, docketed as EPE No. 07-51,with the RTC.

On November 23, 2007, the RTC rendered a Decision in Pecson's favor. The RTC ruled thatPecson received a total of 14,897 votes as against Cunanan's 13,758 - a vote margin of 1,139.

Cunanan received a copy of the Decision on November 26, 2007 and filed a Notice of Appealthe day after. The RTC issued on November 27, 2008 an Order noting the filing of the noticeof appeal and the payment of appeal fee and directing the transmittal of the records of thecase to the Electoral Contests Adjudication Department (ECAD) of the COMELEC. Pecson, onthe other hand, filed on November 28, 2007 an Urgent Motion for Immediate ExecutionPending Appeal, claiming that Section 11, Rule 14 of the Rules of Procedure in ElectionContests before the Courts Involving Elective Municipal and Barangay Officials 2 (Rules)allows this remedy.

The RTC granted Pecson's motion for execution pending appeal via a Special Order datedDecember 3, 2007 (Special Order ) but suspended, pursuant to the Rules, the actual issuanceof the writ of execution for twenty (20) days. The Special Order states the following reasons:

1. The result of the judicial revision show[s] that the protestant garnered 14,897 votes asagainst protestee's 13,758 votes or a plurality of 1,139 votes. The victory of the protestantis clearly and manifestly established by the rulings and tabulation of results made by theCourt x x x;

2. It is settled jurisprudence that execution pending appeal in election cases should begranted "to give as much recognition to the worth of a trial judge's decision as that which isinitially ascribed by the law to the proclamation by the board of canvassers." The Courtholds that this wisp of judicial wisdom of the Supreme Court enunciated in the Gahol caseand subsequent cases citing it is borne by the recognition that the decision of the trial courtin an election case is nothing but the court upholding the mandate of the voter, which hasas its source no other than the exercise of the constitutional right to vote. While it is truethat the protestee can avail of the remedy of appeal before the COMELEC, the Court is moreconvinced that between upholding the mandate of the electorate of Magalang, Pampangawhich is the fruit of the exercise of the constitutional right to vote and a procedural remedy,the Court is more inclined to uphold and give effect to and actualize the mandate of theelectorate of Magalang. To the mind of the Court, in granting execution pending appeal theCourt is being true to its bounden duty to uphold the exercise of constitutional rights andgives flesh to the mandate of the people. The foregoing is, as far as the Court is concerned,considered far superior circumstance that convinces the Court to grant protestant's motion;

3. Public interest and the will of the electorate must be respected and given meaning;

4. In the case of Navarosa v. Comelec, the Supreme Court held that "In the Gahol case, theCourt gave an additional justification for allowing execution pending appeal of decisions of trial courts, thus: Public policy underlies it, x x x [S]omething had to be done to strike thedeath blow at the pernicious grab-the-proclamation-prolong-the-protest technique often, if not invariably, resorted to by unscrupulous politicians who would render nugatory thepeople's verdict against them and persist in continuing in an office they very well know theyhave no legitimate right to hold. x x x." A primordial public interest is served by the grant of the protestant's motion, i.e., to obviate a hollow victory for the duly elected candidate. Inthe words of Chief Justice Cesar Bengzon, "The well known delay in the adjudication of election protests often gave the successful contestant a mere pyrrhic victory, i.e., avindication when the term of office is about to expire or has expired."

Expectedly, Cunanan moved to reconsider the Order, arguing that the RTC gravely abusedits discretion: (1) in ruling that there were good reasons to issue a writ of execution pendingappeal; and (2) in entertaining and subsequently granting the motion for execution pendingappeal despite the issuance of an order transmitting the records of the case.

Thereupon, Cunanan filed with the COMELEC a Petition for Application of PreliminaryInjunction with Prayer for Status Quo Ante Order/Temporary Restraining Order ( TRO) withPrayer for Immediate Raffle. He argued in his petition that: (1) the RTC Decision did notclearly establish Pecson's victory or his (Cunanan's) defeat - a requirement of Section 11,Rule 14 of the Rules; among other reasons, the number of votes the RTC tallied andtabulated exceeded the number of those who actually voted and the votes cast for theposition of Mayor, and (2) the RTC had constructively relinquished its jurisdiction by theissuance of the Order dated November 27, 2007 directing the transmittal of the records of the case.

The Second Division of the COMELEC issued on January 4, 2008 a 60-day TRO directing: (1)the RTC to cease and desist from issuing or causing the issuance of a writ of execution or

implementing the Special Order; and (2) Cunanan to continue performing the functions of Mayor of Magalang.

In his Answer and/or Opposition, with Prayer for Immediate Lifting of TRO, Pecson arguedthat: (1) preliminary injunction cannot exist except as part or incident of an independentaction, being a mere ancillary remedy that exists only as an incident of the mainproceeding; (2) the "petition for application of preliminary injunction," as an original action,should be dismissed outright; and (3) Cunanan is guilty of forum shopping, as he filed amotion for reconsideration of the Special Order simultaneously with the petition filed withthe COMELEC.

The COMELEC's Second Division denied Cunanan's petition in a Resolution dated March 6,2008. It ruled that: (1) the resolution of the motion for execution pending appeal is part of the residual jurisdiction of the RTC to settle pending incidents; the motion was filed prior tothe expiration of the period to appeal and while the RTC was still in possession of theoriginal record; and (2) there is good reason to justify the execution of the Decision pendingappeal, as Pecson's victory was clearly and manifestly established. Ruling on the allegeddefect in the RTC count, the Second Division ruled:

[A]fter a careful scrutiny of the Decision, We found that the error lies in the trial court'scomputation of the results. In its Decision, the trial court, to the votes obtained by the party(as per proclamation of the MBOC), deducted the votes per physical count after revision anddeducted further the invalid/nullified ballots per the trial court's appreciation and thereafteradded the valid claimed ballots per the trial court's appreciation, thus:

Votes obtained per proclamation of the MBOC (-) Votes per physical count (-) Invalid or nullified ballots (+) Valid claimed ballots = Total Votes Obtained

The formula used by the trial court is erroneous as it used as its reference the votesobtained by the parties as per the proclamation of the MBOC. It complicated an otherwisesimple and straightforward computation, thus leading to the error. The correct formulashould have been as follows:

Total Number of Uncontested Ballots ( + ) Valid Contested Ballots ( + ) Valid Claimed Ballots =Total Votes Obtained





Using this formula and applying the figures in pages 744 and 745 of the trial court'sDecision, the results will be as follows:

For the Petitioner Cunanan

Total Number of Uncontested Ballots 9,656

Add: Valid Contested Ballots 2,058

Add: Valid Claimed Ballots 36

Total Votes of Petitioner 11,750

For the Private Respondent (Pecson)

Total Number of Uncontested Ballots 9,271

Add: Valid Contested Ballots 2,827

Add: Valid Claimed Ballots 39

Total Votes of Petitioner 12,134

Using the correct formula, private respondent still obtained a plurality of the votes cast andenjoys a margin of 384 votes over the petitioner. Although not as wide as the margin foundby the trial court, We are nevertheless convinced that the victory of private respondent hasbeen clearly established in the trial court's decision for the following reasons:

First, the error lies merely in the computation and does not put in issue theappreciation and tabulation of votes. The error is purely mathematical which willnot involve the opening of ballot boxes or an examination and appreciation of ballots. It is a matter of arithmetic which calls for the mere clerical act of reflecting the true and correct votes of the candidates .

Second, the error did not affect the final outcome of the election protest as to

which candidate obtained the plurality of the votes cast.We are likewise convinced that the assailed order states good or special reasons justifyingthe execution pending appeal, to wit:

(1) The victory of the protestant was clearly and manifestly established;

(2) Execution pending appeal in election cases should be granted to give as muchrecognition to the worth of a trial judge's decision as that which is initially ascribed by thelaw to the proclamation by the board of canvassers;

(3) Public interest and the will of the electorate must be respected and given meaning; and

(4) Public policy underlies it, as something had to be done to strike the death blow at thepernicious grab-the-proclamation-prolong-the-protest technique often, if not invariablyresorted to by unscrupulous politicians.

Such reasons to Our mind constitute superior circumstances as to warrant the execution of

the trial court's decision pending appeal.

Pecson thus asked for the issuance of a writ of execution via an Ex-Parte Motion. DespiteCunanan's opposition, the RTC granted Pecson's motion and issued the writ of execution onMarch 11, 2008. Pecson thereafter assumed the duties and functions of Mayor of Magalang.

The Assailed Resolution

On Cunanan's motion, the COMELEC en banc issued its Resolution dated May 21, 2008reversing the ruling of the Second Division insofar as it affirmed the RTC's findings of goodreasons to execute the decision pending appeal. It affirmed the authority of the RTC to orderexecution pending appeal; it however nullified the March 11, 2008 writ of execution on the

ground that the RTC could no longer issue the writ because it had lost jurisdiction over thecase after transmittal of the records and the perfection of the appeals of both Cunanan andPecson (to be accurate, the lapse of Pecson's period to appeal).

On the propriety of executing the RTC Decision pending appeal, the COMELEC en banc ruledthat it was not convinced of the good reasons stated by the RTC in its Special Order. It ruledthat recognition of the worth of a trial judge's decision, on the one hand, and the right toappeal, including the Commission's authority to review the decision of the trial court, on theother, requires a balancing act; and not every invocation of public interest will suffice to

justify an execution pending appeal. It added that at a stage when the decision of the trialcourt has yet to attain finality, both the protestee and the protestant are to be considered"presumptive winners." It noted too that the Second Division already cast a doubt on thecorrectness of the number of votes obtained by the parties after the trial court's revision;thus, the resolution of the pending appeal becomes all the more important. Between two

presumptive winners, considering the pending appeal of the election protest to theCommission and public service being the prime consideration, the balance should tilt infavor of non-disruption of government service. The execution of the RTC Decisionpending appeal would necessarily entail the unseating of the protestee, resulting not only inthe disruption of public service, but also in confusion in running the affairs of thegovernment; a subsequent reversal too of the RTC Decision also results in the unseating of the protestant. This situation (i.e., the series of turn-over of the seat of power from onepresumptive winner to another) cannot but cause irreparable damage to the people of Magalang, and overweighs the reasons asserted by the RTC in its Special Order. In the end,according to the COMELEC, public interest is best served when he who was really voted forthe position is proclaimed and adjudged as winner with finality.

The Petition and the Prayer for the issuance of a Status Quo Order

In imputing grave abuse of discretion to the COMELEC en banc, Pecson argues that: (1) theRTC Decision clearly showed Pecson's victory; (2) the reasons for the reversal of the RTCDecision practically render impossible a grant of an execution pending appeal; and (3) theRTC correctly found the presence of the requisites for execution pending appeal.

Threatened to be unseated, Pecson asked, as interim relief, for the issuance of a Status QuoOrder. He claimed that: (1) the Department of Interior and Local Government already

recognized (based on the issuance of the assailed Resolution) Cunanan's assumption of office even if the assailed Resolution had not attained finality; and (2) in order to preventgrave and irreparable injury to Pecson and the perpetuation of a travesty of justice, a StatusQuo Order must immediately issue.

THE COURT'S RULING

We find the petition meritorious.

The remedy of executing court decisions pending appeal in election contests is providedunder the Rules as follows:

SEC. 11. Execution pending appeal. - On motion of the prevailing party with notice to theadverse party, the court, while still in possession of the original records, may, at itsdiscretion, order the execution of the decision in an election contest before the expiration of the period to appeal, subject to the following rules:

(a) There must be a motion by the prevailing party with three-day notice to the adverse



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votes for Pecson and Cunanan, if totally summed up, exceeded the total number of validvotes for mayor.

Duly alerted, the Second Division looked into the purported error, analyzed it, and found theerror to be merely mathematical; the RTC formula would necessarily exceed the totalnumber of votes cast for mayor because it counted some votes twice. In making this finding,the Second Division was guided by the rule that one of the requisites for an executionpending appeal is a clear showing in the decision of the protestant's victory and theprotestee's defeat. Its examination of the RTC Decision was only for this limited purpose andthis was what it did, no more no less. Specifically, it did not review the RTC's appreciation of the ballots on revision; it did not review the intrinsic merits of the RTC Decision - issues thatproperly belong to the appeal that is currently pending. It merely found that the defect

Cunanan noted was actually inconsequential with respect to the results, thus showingPecson's clear victory under the RTC Decision. In other words, the Second Division'scorrected view of the RTC count confirmed, rather than contradicted or placed in doubt, theconclusion that Pecson won.

Other than the clarity of Pecson's victory under the RTC Decision, the Special Order citedgood and special reasons that justified an execution pending appeal, specifically: (1) theneed to give as much recognition to the worth of a trial judge's decision as that which isinitially given by the law to the proclamation by the board of canvassers; (2) public interestand/or respect for and giving meaning to the will of the electorate; and (3) public policy -something had to be done to deal a death blow to the pernicious grab-the-proclamation-prolong-the-protest technique often, if not invariably, resorted to by unscrupulous politicianswho would render nugatory the people's verdict against them.

Unfortunately, the COMELEC en banc simply glossed over the RTC's cited reasons and didnot fully discuss why these reasons were not sufficient to justify execution pending appeal.A combination, however, of the reasons the RTC cited, to our mind, justifies execution of the

RTC Decision pending appeal.A striking feature of the present case is the time element involved. We have time and againnoted the well known delay in the adjudication of election contests that, more often thannot, gives the protestant an empty or hollow victory in a long drawn-out legal battle.9 Somepetitions before us involving election contests have been in fact dismissed for being moot,the term for the contested position having long expired before the final ruling on the meritscame.10 In the present case, the term for mayor consists of only three (3) years. One yearand six months has lapsed since the May 2007 election; thus, less than two years are left of the elected mayor's term. The election protest, while already decided at the RTC level, isstill at the execution-pending-appeal stage and is still far from the finality of any decision onthe merits, given the available appellate remedies and the recourses available throughspecial civil actions. To be sure, there is nothing definite in the horizon on who will finally bedeclared the lawfully elected mayor.

Also, we reiterate here our consistent ruling that decisions of the courts in election protestcases, resulting as they do from a judicial evaluation of the ballots and after full-blownadversarial proceedings, should at least be given similar worth and recognition as decisions

of the board of canvassers.11 This is especially true when attended by other equally weightycircumstances of the case, such as the shortness of the term of the contested electiveoffice, of the case.

In light of all these considerations, we conclude that the COMELEC erred in nullifying theRTC's Special Order in a manner sufficiently gross to affect its exercise of jurisdiction.Specifically, it committed grave abuse of discretion when it looked at wrong considerationsand when it acted outside of the contemplation of the law in nullifying the Special Order.

WHEREFORE, premises considered, we GRANT the petition and accordingly ANNUL theassailed COMELEC Resolution.

SO ORDERED.