G.R. No.

139672

March 4, 2009

GREGORIO ARANETA UNIVERSITY FOUNDATION, Petitioner,

vs.
THE REGIONAL TRIAL COURT OF KALOOKAN CITY, BRANCH 120, REGISTER
OF DEEDS OF KALOOKAN CITY, NATIONAL HOUSING AUTHORITY, HEIRS OF
GREGORIO BAJAMONDE AND SATURNINA MENDOZA, AND THE REMINGTON
REALTY DEVELOPMENT, INC., Respondents.
DECISION
LEONARDO-DE CASTRO, J.:
In this petition for review under Rule 45 of the Rules of Court, herein petitioner Gregorio
Araneta University Foundation (GAUF) assails and seeks to set aside the Decision1 dated March
31, 1999 of the Court of Appeals (CA) in CA-G.R. SP No. 23872 and its Resolution2 of August
16, 1999, denying petitioner's motion for reconsideration.
The assailed decision upheld the Joint Order3 dated August 29, 1986 and the Order4 dated
December 23, 1988 of the Regional Trial Court (RTC) of Caloocan City, Branch 120, in Civil
Case No. C-760 which, among others, directed the cancellation of GAUFs Transfer Certificate
of Title (TCT) No. C-24153 and the issuance in lieu thereof of new titles in the name of the
respondent Heirs of Gregorio Bajamonde over Lots 54 and 75 of the Gonzales Estate.
The factual antecedents as found by the CA are quoted hereunder:
By virtue of a decision rendered on March 29, 1950 by the then Court of First Instance of Rizal
in Civil Case No. 131 and affirmed by the Supreme Court on May 14, 1954, in G.R. No. L-4918,
the Gonzales or Maysilo estate in Malabon, Rizal, with an area of 871,982 square meters and
covered by TCT No. 35487, was expropriated by the Republic of the Philippines, with the
understanding that the Government would resell the property to its occupants.
In view of the failure of the Government and its instrumentality, then Rural Progress
Administration and later the Peoples Homesite and Housing Corporation (PHHC), to implement
the decision in Civil Case No. 131, the occupants and tenants of the estate filed on October 20,
1960, a complaint in Civil Case No. 6376 (now Civil Case No. C-760) with the then Court of
First Instance of Rizal (Pasig Branch) to compel PHHC to sell to the tenants their respective
occupied portions of the Gonzales estate.
On April 29, 1961, the then Araneta Institute of Agriculture, now Gregorio Araneta University
Foundation (GAUF) sought to intervene in Civil Case No. 6376 (Civil Case No. C-760) on the
ground that 52 tenants of the property and Araneta Institute of Agriculture entered into an
1

agreement or "Kasunduan" whereby the former conveyed to the latter their priority rights to
purchase portion of the estate with an area of 507,376 square meters.
On the basis of this "Kasunduan," a compromise agreement dated November 28, 1961 was
submitted in Civil Case No. 6376 (Civil Case No. C-760) which was duly approved by the court.
Included in this compromise agreement are Lots 75 and 54 awarded to Gregorio Bajamonde.
xxx xxx xxx
Incidentally, it appears that on the basis of the "Kasunduan" and the forged compromise, Araneta
University was able to register in its name with the Register of Deeds of Caloocan City Transfer
Certificate of Title No. C-24153 for Lots 75 and 54 which as adverted to above, had been
awarded to Gregorio Bajamonde.
However, in Civil Cases Nos. 17347 and 17364, both of the then Court of First Instance of Rizal,
the compromise agreement entered into by and between Araneta University and the tenants on
November 28, 1961 was declared null and void for being a forgery, and the partial decision
rendered in accordance therewith was likewise declared null and void and of no force and effect.
On appeal to the Court of Appeals in CA-G.R. No. 45330-R the appellate court sustained the
nullity of the "Kasunduan" and the compromise agreement in accordance thereto. xxx.
Thus, on motion by the heirs of Gregorio Bajamonde, the lower court in Civil Case No. C-760
issued the order dated August 29, 1986:
(1) Declaring that any transfer or conveyance of Lots 75 and 54 or any purpose thereof
from Gregorio Bajamonde to Araneta Institute of Agriculture or Gregorio Araneta
University Foundation, or their assignee or successors-in-interest as rescinded, and to
restore said lots 75 and 54 to the real owners, Gregorio Bajamonde and/or heirs;
(2) Ordering the Register of Deeds of Caloocan City to cancel TCT No. C-24153 issued
in the name of Gregorio Araneta University Foundation and to issue a new Transfer
Certificate of Title over lots 75 and 54 in the name of Gregorio Bajamonde or heirs;
(3) Ordering the Clerk of Court to issue writ of possession in favor of Gregorio
Bajamonde or heirs.
And then on May 27, 1988 the lower court issued the order for issuance of a writ of execution for
the enforcement of the joint order dated August 29, 1986, with a restraining order against
Nonong Ridad, Graciano Napbua, Sergio Yeban, Gavino Miguel, Angel Cabrera and nine other
persons, and their agents or representatives from squatting, occupying, staying and taking

possession of Lots 75 and 54, or any portions thereof, including all the improvements and
structures existing thereon.
GAUF Personnel Homeowners Association, Inc., et al. assailed the said order via a petition for
certiorari, injunction and restraining order in this Court, docketed as CA-G.R. SP No. 14839,
which was however dismissed for lack of merit in a decision promulgated by this Court on June
29, 1989. A petition for review filed with the Supreme Court, docketed as G.R. No. 89969 was
likewise denied with finality on February 19, 1990.
Meanwhile, on December 23, 1988, respondent Judge Arturo Romero issued in Civil Case No.
6376 (now Civil Case No. C-760) an order for the execution of the aforesaid joint order dated
August 29, 1986.
Eventually, (in compliance with the joint order dated December 23, 1988), TCT No. C-24153 for
Lots 75 and 54 in the name of Araneta University was cancelled and TCT No. 174672 for lot 75
and TCT No. 174671 for lot 54 were issued by the Register of Deeds of Caloocan City on
December 27, 1988 to the rightful owner thereof, Gregorio Bajamonde.
On June 29, 1989, the heirs of Bajamonde sold a portion of lot 54 consisting of 7,685 square
meters to the herein other respondent, Remington Realty Development, Inc.5
On January 14, 1991, GAUF filed with the CA a petition for annulment6 of the aforementioned
Joint Order dated August 29, 1986 and the Order dated December 23, 1988. In its petition,
docketed as CA-G.R. SP No. 23872, GAUF essentially alleged that the twin orders in question
were issued by the trial court without jurisdiction as the same constituted a collateral attack on its
certificate of title (TCT No. C-24153) in violation of Section 48 of Presidential Decree No. 1529
(P.D. 1529),7 otherwise known as the Property Registration Decree.
In the herein challenged decision dated March 31, 1999, the appellate court denied the petition
for annulment. In explanation of the denial, the CA ruled as follows:
It may not be remiss to state that by virtue of the "Kasunduan" which was submitted in Civil
Case No. 6376 (now Civil Case No. C-760), GAUF was able to register in its name with the
Register of Deeds of Caloocan City TCT No. C-24153 for Lots 75 and 54 which had been
awarded to Gregorio Bajamonde. However, in Civil Cases Nos. 17347 and 17364, the said
"Kasunduan" or compromise agreement was declared null and void for being a forgery. Such
ruling was appealed to the Court of Appeals, CA-G.R. No. 45330-R which affirmed the decision
rendered in Civil Cases Nos. 17347 and 17634. Correspondingly, xxx, the finality of the orders
impugned in the present petition cannot be therefore disturbed without impugning likewise the
finality of the orders rendered in Civil Cases Nos. 17347 and 17364 rendered by the then Court

of First Instance of Rizal and affirmed likewise by this Court in CA-G.R. No. 45330-R in a
decision promulgated on February 7, 1973.
It clearly appears that the basis of respondent judge in issuing the questioned order is the
declared nullity of the "Kasunduan." It was in Civil Case No. 6376 (now Civil Case No. C-760)
where the nullified "Kasunduan" was submitted by the petitioner and the private respondents
herein; it was in the same case where, by virtue of the said "Kasunduan,"petitioner GAUF was
able to register in its name with the Register of Deeds of Caloocan City TCT No. C-24153 for
Lots 54 and 75 which had been awarded to Gregorio Bajamonde. Accordingly, it is also in the
same case and court where the cancellation should be sought as a result of the nullity of the
"Kasunduan."
With its motion for reconsideration having been denied by the CA in its resolution of August 16,
1999, petitioner GAUF is now before this Court via the instant recourse submitting for our
consideration the following arguments:
1. THE JOINT ORDER OF AUGUST 29, 1986 AND THE DECEMBER 23, 1988 ORDER OF
THE RESPONDENT REGIONAL TRIAL COURT ARE NULL AND VOID AB INITIO FOR
LACK OF JURISDICTION BECAUSE IT (SIC) AMENDED THE ALREADY FINAL AND
EXECUTORY ORDER OF JULY 19, 1978 DISMISSING AND GRANTING THE
WITHDRAWAL OF THE COMPLAINT IN CIVIL CASE NO. C-474 OF THE THEN CFI OF
RIZAL FILED BY THE DECEASED GREGORIO BAJAMONDE;
2. THE RESPONDENT REGIONAL TRIAL COURT HAS NO JURISDICTION TO CANCEL
PETITIONER GAUF'S TCT NO. C-24153 IN THE HEARING OF THE OMNIBUS MOTION
DATED MAY 12, 1986 AND MANIFESTATION AND MOTION DATED JULY 1, 1986 OF THE
HEIRS OF GREGORIO BAJAMONDE. THE SAID PROCEEDINGS CONSTITUTE A
COLLATERAL ATTACK ON PETITIONER'S TCT NO. C-24153 WHICH IS PROHIBITED
BY SECTION 48 OF P.D. NO. 1529, OTHERWISE KNOWN AS THE PROPERTY
REGISTRATION DECREE;
3. "A VOID JUDGMENT MAY BE ASSAILED OR IMPUGNED AT ANY TIME" [ZAIDE, JR.
VS. COURT OF APPEALS, 184 SCRA 531];
4. THE RULING OF THE COURT OF APPEALS THAT THE ISSUES RAISED IN THE
PETITION TO ANNUL JUDGMENT ARE ALLEGEDLY BARRED BY THE RULE OF RES
JUDICATA IS CONTRARY TO LAW. THE SUPPOSED RULINGS IN CIVIL CASE NOS.
17347 AND 17364, AS WELL AS THE RULING IN CA-G.R. NO. 45330-R DO NOT BAR
THE PETITION TO ANNUL JUDGMENT.8

Fundamentally, petitioners arguments center on the question of whether or not the trial court has
jurisdiction to issue the Joint Order dated August 29, 1986 and December 23, 1988 Order, which
directed the cancellation of the petitioner's title over Lots 54 and 75 of the former Gonzales
/Maysilo Estate and ordered the issuance of new titles over the same lots in the name of the Heirs
of Gregorio Bajamonde.
It is the petitioners thesis that the orders in question directing the cancellation of its TCT No.
24153 constituted a collateral attack on its title, a course of action prohibited by Section 48 of P.
D. No. 1529 because said orders were issued in connection with Civil Case No. C-760, a suit for
specific performance and damages and not a direct proceeding for the cancellation of its title. On
this premise, petitioner argues that the trial court is bereft of jurisdiction to issue the disputed
orders.
We find the present petition unmeritorious.
An action or proceeding is deemed an attack on a title when the object of the action is to nullify
the title, and thus challenge the judgment pursuant to which the title was decreed. The attack is
direct when the object of the action is to annul or set aside such judgment, or enjoin its
enforcement. On the other hand, it is indirect or collateral when, in an action or proceeding to
obtain a different relief, an attack on the judgment is nevertheless made as an incident thereof.9
Here, while it may be true that Civil Case No. C-760 was originally an action for specific
performance and damages, nonetheless the case cannot constitute a collateral attack on the
petitioner's title which, to begin with, was irregularly and illegally issued. It bears stressing that
the source of GAUF's title was the Compromise Agreement purportedly executed by Gregorio
Bajamonde, et al. on November 28, 1961. This Compromise Agreement was approved by the
trial court in Civil Case No. C-760 in its Partial Decision dated December 23, 1961. As
petitioners own evidence shows, the subject property was conveyed to it in compliance with and
in satisfaction of the said Partial Decision in Civil Case No. C-760 and the writ of execution
issued in connection therewith.10 The same Compromise Agreement and Partial Decision,
however, were declared null and void in Civil Cases Nos. 17347 and 17364 and likewise
effectively invalidated in CA-G.R. No. 45330-R.11 The rule that a title issued under the Torrens
System is presumed valid and, hence, is the best proof of ownership does not apply where the
very certificate itself is faulty as to its purported origin,12 as in the present case.
With the reality that the presumption of authenticity and regularity enjoyed by the petitioners
title has been overcome and overturned by the aforementioned decisions nullifying the aforesaid
Compromise Agreement from whence the petitioner's title sprung, that title can never be
indefeasible as its issuance was replete with badges of fraud and irregularities that rendered the
same nugatory. Well-settled is the rule that the indefeasibility of a title does not attach to titles
secured by fraud and misrepresentation.13 In view of these circumstances, it was as if no title at
5

all was ever issued in this case to the petitioner and therefore this is hardly the occasion to talk of
collateral attack against a title.
We agree with the CA that the trial court in Civil Case No. C-760 had jurisdiction to annul
petitioners title. It must be emphasized that, notwithstanding the original denomination of the
said action as one for specific performance and damages, it was petitioner GAUF no less which
sought to intervene in Civil Case No. C-760 and claimed that it has rights or interests in the
subject matter being litigated therein. GAUF voluntarily submitted in Civil Case No. C-760 the
purported "Kasunduan" which, in turn, became the basis of the Compromise Agreement and the
Partial Decision dated December 23, 1961. It is undeniable that petitioners TCT No. C-24153
was issued in enforcement or execution of a partial decision in Civil Case No. C-760. As it were,
the validity of petitioners title was an issue litigated in Civil Case No. C-760 on account of the
presentation therein of the Compromise Agreement which, to stress, was the springboard of
petitioners title. Hence, when that same Compromise Agreement and the Partial Decision in
connection therewith were eventually nullified, the trial court acted very much within its
jurisdiction in ordering the cancellation of petitioner's title in the same Civil Case No. C-760.
Lest it be forgotten, it was likewise petitioner itself and/or its privies or assignees which
instituted numerous petitions relative to the validity/enforceability of the Compromise
Agreement and the Partial Decision and the validity of petitioners certificate of title. In fact, in
one of those petitions, the appellate court ordered the trial court to hear and pass upon all
unresolved incidents in Civil Case No. C-760, including motions assailing the Compromise
Agreement and the Partial Decision upon which petitioners title was based.14 Clearly then, when
the trial court granted respondent heirs Omnibus Motion and Motion to Vest Title in its assailed
Joint Order of August 29, 1986 and Order dated December 23, 1988, respectively, that court was
unquestionably exercising its jurisdiction to hear and resolve those incidents pursuant to the
appellate courts directive.
With the above, petitioners challenge with respect to the jurisdictional competence of the trial
court to order the cancellation of its certificate of title in Civil Case No. C-760 must simply
collapse. Quite the contrary, the trial court having acquired jurisdiction not only over the subject
matter of the case but also over the parties thereto, it was unnecessary to institute a separate
action to nullify petitioners title. Having voluntarily submitted itself to the jurisdiction of the
trial court through the process of intervention, it is rather too late in the day for the petitioner to
now turn its back and disclaim that jurisdiction, more so where, as here, an adverse judgment has
already been rendered against it. Case law teaches that if the court has jurisdiction over the
subject matter and the person of the parties, its ruling upon all questions involved are mere errors
of judgment reviewable by appeal.15 Any error in the judgment of the trial court should have been
raised by petitioner through appeal by way of a petition for review with the CA. Having failed to
file such an appeal, petitioner cannot anymore question the final and executory order, in a
petition for annulment with the CA, as petitioner did in this case.1avvphi1.zw+
6

Interestingly, in its present petition for review, GAUF concede the various decisions which have
declared the Compromise Agreement and the Partial Decision void but argues that the annulment
of the Compromise Agreement will not affect the validity of petitioners TCT No. C-24153 on
the ground that GAUFs title was allegedly not issued by virtue of the Compromise Agreement
but rather the purported withdrawal by Gregorio Bajamonde of his complaint in Civil Case No.
C-474 which was an action for annulment of the Compromise Agreement dated November 28,
1961. We cannot agree with petitioners opinion on this point. The fact still remains that the
ultimate source of petitioners right to Lots 54 and 75 is the voided Compromise Agreement.
In any event, the purported withdrawal of Civil Case No. C-474 and the authenticity of the
amicable settlement attached to the present petition are factual issues improperly and belatedly
raised in this appeal. It is elementary that in a petition for review under Rule 45 only legal, not
factual, issues may be raised before this Court unless exceptional circumstances exist to warrant
a review of the facts.16 A perusal of the GAUFs petition filed with the CA would also show that
the alleged valid amicable settlement of Civil Case No. C-474 was not raised therein as a ground
for the annulment of the Joint Order dated August 29, 1986 and December 23, 1988 Order.
Petitioner is, therefore, precluded from raising this argument for the first time on appeal. All in
all, we find no reason to disturb the trial courts finding that:
Even on the assumptions that the void "Compromise Agreement" dated November 28, 1961 and
the subsequent Amicable Settlement dated July 13, 1978 between the intervenor and Gregorio
Bajamonde or heirs were both valid, the tenants, particularly Gregorio Bajamonde or heirs, have
all the rights (sic) to regard as rescinded the said two (2) agreements by reason of the consistent
refusals or failures of the intervenor to fully comply with or to abide with its obligations or
commitments to the affected tenants.
xxx xxx xxx
On the part of the Intervenor, it cannot insist on the enforcement of the terms and conditions of
the Amicable Settlement dated July 13, 1978 against the tenant Gregorio Bajamonde or heir over
Lots 75 and 54 of the Gonzales Estate because it was not judicially approved by this Court nor
by other competent courts and that it was also regarded as rescinded by the heirs of Gregorio
Bajamonde.17
In light of the foregoing, this Court is inclined to believe that the instant petition was a last-ditch
effort on the part of petitioner GAUF to secure a reversal of the final and executory orders of the
trial court in Civil Case No. C-760. However, and as correctly pointed out by the CA in the
decision under review, Rule 47 of the Revised Rules of Civil Procedure18 permits annulment of
judgment only on two (2) grounds, to wit: (a) that the judgment sought to be annulled is void for
want of jurisdiction or lack of due process of law; or (b) that it has been obtained by fraud,
neither of which obtain herein.
7

In closing, let it be mentioned that a writ of execution for the enforcement of the assailed August
29, 1986 Joint Order had already been issued by the trial court in its Order of May 27, 1988,
which Order was upheld by the CA in CA-G.R. SP No. 1483919 and ultimately by this Court no
less in G.R. No. 89969.20 Petitioner, its privies, assignees and/or successors in interest are bound
by these final and executory decisions and orders. For this Court now to annul the Joint Order is
for it to vacate its Resolution in G.R. No. 89969. The policy of judicial stability, not to mention
the confusion such course of action would entail in the speedy administration of justice simply
dictates the rejection of petitioners legal maneuverings to avoid the consequences of adverse
decisions and orders that have long become final and executory.
IN VIEW WHEREOF, the instant petition is DENIED and the assailed decision dated March 31,
1999 of the Court of Appeals and its resolution dated August 16, 1999 in CA-G.R. SP No. 23872
are hereby AFFIRMED.
Costs against the petitioner.
SO ORDERED.

G.R. No. 171624

December 6, 2010

BF HOMES, INC. and the PHILIPPINE WATERWORKS AND CONSTRUCTION

CORP., Petitioners,
vs.
MANILA ELECTRIC COMPANY, Respondent.
DECISION
LEONARDO-DE CASTRO, J.:
8

This Petition for Review on Certiorari under Rule 45 of the Rules of Court assails the Decision1
dated October 27, 2005 of the Court of Appeals in CA-G.R. SP No. 82826, nullifying and setting
aside (1) the Order2 dated November 21, 2003 of the Regional Trial Court (RTC), Branch 202 of
Las Pias City, in Civil Case No. 03-0151, thereby dissolving the writ of injunction against
respondent Manila Electric Company (MERALCO); and (2) the Resolution3 dated February 7,
2006 of the Court of Appeals denying the Motion for Reconsideration of petitioners BF Homes,
Inc. (BF Homes) and Philippine Waterworks and Construction Corporation (PWCC).
MERALCO is a corporation duly organized and existing under Philippine laws engaged in the
distribution and sale of electric power in Metro Manila. On the other hand, BF Homes and
PWCC are owners and operators of waterworks systems delivering water to over 12,000
households and commercial buildings in BF Homes subdivisions in Paraaque City, Las Pias
City, Caloocan City, and Quezon City. The water distributed in the waterworks systems owned
and operated by BF Homes and PWCC is drawn from deep wells using pumps run by electricity
supplied by MERALCO.
On June 23, 2003, BF Homes and PWCC filed a Petition [With Prayer for the Issuance of Writ of
Preliminary Injunction and for the Immediate Issuance of Restraining Order] against MERALCO
before the RTC, docketed as Civil Case No. 03-0151.
In their Petition before the RTC, BF Homes and PWCC invoked their right to refund based on
the ruling of this Court in Republic v. Manila Electric Company4:
7. It is of judicial notice that on November 15, 2002, in G.R. No. 141314, entitled
Republic of the Philippines vs. Manila Electric Company, and G.R. No. 141369, entitled
Lawyers Against Monopoly and Poverty (LAMP) et al. vs. Manila Electric Compnay
(MERALCO), (both cases shall hereafter be referred to as "MERALCO Refund cases,"
for brevity), the Supreme Court ordered MERALCO to refund its customers, which shall
be credited against the customers future consumption, the excess average amount of
P0.167 per kilowatt hour starting with the customers billing cycles beginning February
1998. The dispositive portion of the Supreme Court Decision in the MERALCO Refund
cases reads:
WHEREFORE, in view of the foregoing, the instant petitions are GRANTED and the
decision of the Court of Appeals in C.A. G.R. SP No. 46888 is REVERSED. Respondent
MERALCO is authorized to adopt a rate adjustment in the amount of P0.017
kilowatthour, effective with respect to MERALCOs billing cycles beginning February
1994. Further, in accordance with the decision of the ERB dated February 16, 1998, the
excess average amount of P0.167 per kilowatt hour starting with the applicants billing
cycles beginning February 1998 is ordered to be refunded to MERALCOs customers or
correspondingly credited in their favor for future consumption.
9

x x x x.
8. The Motion for Reconsideration filed by MERALCO in the MERALCO Refund cases
was DENIED WITH FINALITY (the uppercase letters were used by the Supreme Court)
in the Resolution of the Supreme Court dated April 9, 2003.
9. The amount that MERALCO was mandated to refund to [BF Homes and PWCC]
pursuant to the MERALCO Refund cases is in the amount of P11,834,570.91.5
BF Homes and PWCC then alleged in their RTC Petition that:
10. On May 20, 2003, without giving any notice whatsoever, MERALCO disconnected
electric supply to [BF Homes and PWCCs] sixteen (16) water pumps located in BF
Homes in Paraaque, Caloocan, and Quezon City, which thus disrupted water supply in
those areas.
11. On June 4, 2003, [BF Homes and PWCC] received by facsimile transmission a letter
from MERALCO, x x x, in which MERALCO demanded to [BF Homes and PWCC] the
payment of electric bills amounting to P4,717,768.15.
12. [MERALCO] replied in a letter dated June 11, 2003, x x x, requesting MERALCO to
apply the P4,717,768.15 electric bill against the P11,834,570.91 that MERALCO was
ordered to refund to [BF Homes and PWCC] pursuant to the MERALCO Refund cases. x
xx
13. Displaying the arrogance that has become its distinction, MERALCO, in its letter
dated June 16, 2003, x x x, denied [BF Homes and PWCCs] request alleging that it has
not yet come up with the schedule for the refund of large amounts, such as those of [BF
Homes and PWCC].
14. Even while MERALCO was serving its reply-letter to [BF Homes and PWCC],
MERALCO, again, without giving any notice, cut off power supply to [BF Homes and
PWCCs] five (5) water pumps located in BF Homes Paraaque and BF Resort Village, in
Pamplona, Las Pias City.
15. In its letter dated June 4, 2003 (Annex A), MERALCO threatened to cut off electric
power connections to all of [BF Homes and PWCCs] water pumps if [BF Homes and
PWCC] failed to pay their bills demanded by MERALCO by June 20, 2003.6
BF Homes and PWCC thus cited the following causes of action for their RTC Petition:

10

16. In refusing to apply [MERALCOs] electric bills against the amounts that it was
ordered to refund to [BF Homes and PWCC] pursuant to the MERALCO Refund cases
and in making the implementation of the refund ordered by the Supreme Court dependent
upon its own will and caprice, MERALCO acted with utmost bad faith.
17. [BF Homes and PWCC] are clearly entitled to the remedies under the law to compel
MERALCO to consider [BF Homes and PWCCs] electric bills fully paid by the amounts
which MERALCO was ordered to refund to [BF Homes and PWCC] pursuant to the
MERALCO Refund cases, to enjoin MERALCO to reconnect electric power to all of [BF
Homes and PWCCs] water pumps, and to order MERALCO to desist from further
cutting off power connection to [BF Homes and PWCCs] water pumps.
18. MERALCOs unjust and oppressive acts have cast dishonor upon [BF Homes and
PWCCs] good name and besmirched their reputation for which [BF Homes and PWCC]
should be indemnified by way of moral damages in the amount of not less than
P1,000,000.00.
19. As an example for the public good, to dissuade others from emulating MERALCOs
unjust, oppressive and mercenary conduct, MERALCO should be directed to pay [BF
Homes and PWCC] exemplary damages of at least P1,000,000.00.
20. MERALCOs oppressive and inequitable conduct forced [BF Homes and PWCC] to
engage the services of counsel to defend their rights and thereby incur litigation expenses
in the amount of at least P500,000.00 for which [BF Homes and PWCC] should be
indemnified.7
BF Homes and PWCC additionally prayed that the RTC issue a writ of preliminary
injunction and restraining order considering that:
21. As indicated in its letter dated June 4, 2003 (Annex A), unless seasonably restrained,
MERALCO will cut off electric power connections to all of [BF Homes and PWCCs]
water pumps on June 20, 2003.
22. Part of the reliefs herein prayed for is to restrain MERALCO from cutting off electric
power connections to [BF Homes and PWCCs] water pumps.
23. Unless MERALCOS announced intention to cut off electric power connections to
[BF Homes and PWCCs] water pumps is restrained, [BF Homes and PWCC] will suffer
great and irreparable injury because they would not [be] able to supply water to their
customers.

11

24. [BF Homes and PWCC] therefore pray that a writ for preliminary injunction be
issued upon posting of a bond in an amount as will be determined by this Honorable
Court.
25. [BF Homes and PWCC] further pray that, in the meantime and immediately upon the
filing of the above captioned Petition, a restraining order be issued before the matter of
preliminary injunction can be heard.8
On August 15, 2003, MERALCO filed before the RTC its Answer with Counterclaims and
Opposition to the Application for Writ of Preliminary Injunction9 of BF Homes and PWCC.
According to MERALCO:
2.2. Both petitioners BF Homes, Incorporated and Philippine Waterworks Corporation are
admittedly the registered customers of [MERALCO] by virtue of the service contracts
executed between them under which the latter undertook to supply electric energy to the
former for a fee. The following twenty-three (23) Service Identification Nos. (SINs) are
registered under the name of BF Homes, Incorporated: x x x. While the following twentyone (21) Service Identification Nos. (SINs) are registered under the name of Philippine
Waterworks Construction Corporation: x x x
xxxx
2.4. The service contracts as well as the terms and conditions of [MERALCOs] service
as approved by BOE [Board of Energy], now ERC [Energy Regulatory Commission],
provide in relevant parts, that [BF Homes and PWCC] agree as follows:
DISCONTINUANCE OF SERVICE:
The Company reserves the right to discontinue service in case the customer is in arrears in the
payment of bills or for failure to pay the adjusted bills in those cases where the meter stopped or
failed to register the correct amount of energy consumed, or for failure to comply with any of
these terms and conditions, or in case of or to prevent fraud upon the Company. Before
disconnection is made in the case of, or to prevent fraud, the Company may adjust the bill of said
customer accordingly and if the adjusted bill is not paid, the Company may disconnect the
same." (Emphasis supplied)
2.5. This contractual right of [MERALCO] to discontinue electric service for default in
the payment of its regular bills is sanctioned and approved by the rules and regulations of
ERB (now the ERC). This right is necessary and reasonable means to properly protect
and enable [MERALCO] to perform and discharge its legal and contractual obligation
under its legislative franchise and the law. Cutting off service for non-payment by the
12

customers of the regular monthly electric bills is the only practical way a public utility,
such as [MERALCO], can ensure and maintain efficient service in accordance with the
terms and conditions of its legislative franchise and the law.
xxxx
2.14. Instead of paying their unpaid electric bills and before [MERALCO] could effect its
legal and contractual right to disconnect [BF Homes and PWCCs] electric services, [BF
Homes and PWCC] filed the instant petition to avoid payment of [MERALCOs] valid
and legal claim for regular monthly electric bills.
2.15. [BF Homes and PWCCs] unpaid regular bills totaled P6,551,969.55 covering the
May and June 2003 electric bills. x x x
xxxx
2.17. [BF Homes and PWCC] knew that [MERALCO] is already in the process of
implementing the decision of the Supreme Court as to the refund case. But this refund has
to be implemented in accordance with the guidelines and schedule to be approved by the
ERC. Thus [BF Homes and PWCCs] filing of the instant petition is merely to evade
payment of their unpaid electric bills to [MERALCO].10
Hence, MERALCO sought the dismissal of the RTC Petition of BF Homes and PWCC on the
following grounds:
3.1 The Honorable Court has no jurisdiction to award the relief prayed for by [BF Homes and
PWCC] because:
a) The petition is in effect preempting or defeating the power of the ERC to implement
the decision of the Supreme Court.
b) [MERALCO] is a utility company whose business activity is wholly regulated by the
ERC. The latter, being the regulatory agency of the government having the authority over
the respondent, is the one tasked to approve the guidelines, schedules and details of the
refund.
c) The decision of the Supreme Court, dated November 15, 2002, clearly states that
respondent is directed to make the refund to its customers in accordance with the decision
of the ERC (formerly ERB) dated February 16, 1998. Hence, [MERALCO] has to wait
for the schedule and details of the refund to be approved by the ERC before it can comply
with the Supreme Court decision.

13

3.2. [MERALCO] has the right to disconnect the electric service to [BF Homes and PWCC] in
that:
a) The service contracts between [MERALCO] and [BF Homes and PWCC] expressly
authorize the former to discontinue and disconnect electric services of the latter for their
failure to pay the regular electric bills rendered.
b) It is [MERALCOs] legal duty as a public utility to furnish its service to the general
public without arbitrary discrimination and, consequently, [MERALCO] is obligated to
discontinue and disconnect electric services to [BF Homes and PWCC] for their refusal
or failure to pay the electric energy actually used by them.11
For its compulsory counterclaims, MERALCO prayed that the RTC orders BF Homes and
PWCC to pay MERALCO P6,551,969.55 as actual damages (representing the unpaid electric
bills of BF Homes and PWCC for May and June 2003), P1,500,000.00 as exemplary damages,
P1,500,000.00 as moral damages, and P1,000,000.00 as attorneys fees.
Lastly, MERALCO opposed the application for writ of preliminary injunction of BF Homes and
PWCC because:
I
[MERALCO] HAS THE LEGAL AND CONTRACTUAL RIGHT TO DEMAND
PAYMENT OF THE ELECTRIC BILLS AND, IN CASE OF NON-PAYMENT, TO
DISCONTINUE THE ELECTRIC SERVICES OF [BF HOMES and PWCC]
II
[BF HOMES and PWCC] HAVE NO CLEAR RIGHT WHICH WARRANTS
PROTECTION BY INJUNCTIVE PROCESS
After hearing,12 the RTC issued an Order on November 21, 2003 granting the application of BF
Homes and PWCC for the issuance of a writ of preliminary injunction. The RTC found that the
records showed that all requisites for the issuance of said writ were sufficiently satisfied by BF
Homes and PWCC. The RTC stated in its Order:
Albeit, this Court respects the right of a public utility company like MERALCO, being a grantee
of a legislative franchise under Republic Act No. 9029, to collect overdue payments from its
subscribers or customers for their respective consumption of electric energy, such right must,
however, succumb to the paramount substantial and constitutional rights of the public to the
usage and enjoyment of waters in their community. Thus, there is an urgent need for the issuance
of a writ of preliminary injunction in order to prevent social unrest in the community for having
14

been deprived of the use and enjoyment of waters flowing through [BF Homes and PWCCs]
water pumps.13
The RTC decreed in the end:
WHEREFORE, in the light of the foregoing, [BF Homes and PWCCs] prayer for the issuance of
a writ of preliminary injunction is hereby GRANTED. Respondent Manila Electric Company is
permanently restrained from proceeding with its announced intention to cut-off electric power
connection to [BF Homes and PWCCs] water pumps unless otherwise ordered by this Court.
Further, [BF Homes and PWCC] are hereby ordered to post a bond in the amount of P500,000 to
answer for whatever injury or damage that may be caused by reason of the preliminary
injunction.14
The Motion for Reconsideration of MERALCO of the aforementioned Order was denied by the
RTC in another Order issued on January 9, 2004.15 The RTC reiterated its earlier finding that all
the requisites for the proper issuance of an injunction had been fully complied with by BF
Homes and PWCC, thus:
Records indubitably show that all the requisites for the proper issuance of an injunction have
been fully complied with in the instant case.
It should be noted that a disconnection of power supply would obviously cause irreparable injury
because the pumps that supply water to the BF community will be without electricity, thereby
rendering said community without water. Water is a basic and endemic necessity of life. This is
why its enjoyment and use has been constitutionally safeguarded and protected. Likewise, a
community without water might create social unrest, which situation this Court has the mandate
to prevent. There is an urgent and paramount necessity for the issuance of the injunctive writ to
prevent serious damage to the guaranteed rights of [BF Homes and PWCC] and the residents of
the community to use and enjoy water.16
The RTC resolved the issue on jurisdiction raised by MERALCO, as follows:
As to the jurisdictional issue raised by respondent MERALCO, it can be gleaned from a reevaluation and re-assessment of the records that this Court has jurisdiction to delve into the case.
This Court gave both parties the opportunity to be heard as they introduced evidence on the
propriety of the issuance of the injunctive writ. It is well-settled that no grave abuse of discretion
could be attributed to its issuance where a party was not deprived of its day in court as it was
heard and had exhaustively presented all its arguments and defenses. (National Mines and Allied
Workers Union vs. Valero, 132 SCRA 578, 1984.)17

15

Aggrieved, MERALCO filed with the Court of Appeals a Petition for Certiorari under Rule 65 of
the Rules of Court, docketed as CA-G.R. SP No. 82826. MERALCO sought the reversal of the
RTC Orders dated November 21, 2003 and January 9, 2004 granting a writ of preliminary
injunction in favor of BF Homes and PWCC. MERALCO asserted that the RTC had no
jurisdiction over the application of BF Homes and PWCC for issuance of such a writ.
In its Decision dated October 27, 2005, the Court of Appeals agreed with MERALCO that the
RTC had no jurisdiction to issue a writ of preliminary injunction in Civil Case No. 03-0151, as
said trial court had no jurisdiction over the subject matter of the case to begin with. It
ratiocinated in this wise:
For one, it cannot be gainsaid that the ERC has original and exclusive jurisdiction over the case.
Explicitly, Section 43(u) of Republic Act No. 9136, otherwise known as the "Electric Power
Industry Reform Act," (RA 9136), states that the ERC shall have the original and exclusive
jurisdiction over all cases contesting rates, fees, fines and penalties imposed by the ERC in the
exercise of its powers, functions and responsibilities and over all cases involving disputes
between and among participants or players in the energy sector. Section 4(o) of Rule 3 of the
Implementing Rules and Regulations of RA 9136 likewise provides that the ERC shall also be
empowered to issue such other rules that are essential in the discharge of its functions as an
independent quasi-judicial body.
For another, the respondent judge, instead of presiding over the case, should have dismissed the
same and yielded jurisdiction to the ERC pursuant to the doctrine of primary jurisdiction. It is
plain error on the part of the respondent judge to determine, preliminary or otherwise, a
controversy involving a question which is within the jurisdiction of an administrative tribunal,
especially so where the question demands the exercise of sound administrative discretion.
Needless to state, the doctrine of primary jurisdiction applies where the administrative agency, as
in the case of ERC, exercises its quasi-judicial and adjudicatory function. Thus, in cases
involving specialized disputes, the practice has been to refer the same to an administrative
agency of special competence pursuant to the doctrine of primary jurisdiction. The courts will
not determine a controversy involving a question which is within the jurisdiction of the
administrative tribunal prior to the resolution of that question by the administrative tribunal,
where the question demands the exercise of sound administrative discretion requiring the special
knowledge, experience and services of the administrative tribunal to determine technical and
intricate matters of fact, and a uniformity of ruling is essential to comply with the premises of the
regulatory statute administered.
Verily, the cause of action of [BF Homes and PWCC] against [MERALCO] originates from the
Meralco Refund Decision as it involves the perceived right of the former to compel the latter to
set-off or apply their refund to their present electric bill. The issue delves into the right of the
16

private respondents to collect their refund without submitting to the approved schedule of the
ERC, and in effect give unto themselves preferential right over other equally situated consumers
of [MERALCO]. Perforce, the ERC, as can be gleaned from the afore-stated legal provisions,
has primary, original and exclusive jurisdiction over the said controversy.
Indeed, the respondent judge glaringly erred in enjoining the right of [MERALCO] to disconnect
its services to [BF Homes and PWCC] on the premise that the court has jurisdiction to apply the
provisions on compensation or set-off in this case. Although [MERALCO] recognizes the right
of [BF Homes and PWCC] to the refund as provided in the Meralco Refund Decision, it is the
ERC which has the authority to implement the same according to its approved schedule, it being
a dispute arising from the exercise of its jurisdiction.
Moreover, it bears to stress that the Meralco Refund Decision was brought into fore by the
Decision dated 16 February 1998 of the ERC (then Energy Regulatory Board) granting refund to
[MERALCOs] consumers. Being the agency of origin, the ERC has the jurisdiction to execute
the same. Besides, as stated, it is empowered to promulgate rules that are essential in the
discharge of its functions as an independent quasi-judicial body.18
The dispositive portion of the judgment of the appellate court reads:
WHEREFORE, the foregoing considered, the instant petition is hereby GRANTED and the
assailed Orders REVERSED and SET ASIDE. Accordingly, the writ of injunction against
[MERALCO] is hereby DISSOLVED. No costs.19
In a Resolution dated February 7, 2006, the Court of Appeals denied the Motion for
Reconsideration of BF Homes and PWCC for failing to raise new and persuasive and meritorious
arguments.
Now, BF Homes and PWCC come before this Court via the instant Petition, raising the following
assignment of errors:
1. The Court of Appeals ERRED in saying that the respondent judge committed grave
abuse of discretion by issuing the disputed writ of injunction pending the merits of the
case including the issue of subject matter jurisdiction.
2. The Court of Appeals ERRED in saying that the ERC under the doctrine of primary
jurisdiction has the original and EXCLUSIVE jurisdiction to take cognizance of a
petition for injunction to prevent electrical disconnection to a customer entitled to a
refund.

17

3. The Court of Appeals ERRED in NOT SAYING that the ERC as a quasi-judicial body
under RA 9136 has no power to issue any injunctive relief or remedy to prevent
disconnection.
4. The Court of Appeals ERRED in not resolving the issue as to the violation of
MERALCO of a standing injunction order while the case remains undecided.20
At the core of the Petition is the issue of whether jurisdiction over the subject matter of Civil
Case No. 03-0151 lies with the RTC or the Energy Regulatory Commission (ERC). If it is with
the RTC, then the said trial court also has jurisdiction to issue the writ of preliminary injunction
against MERALCO. If it is with the ERC, then the RTC also has no jurisdiction to act on any
incidents in Civil Case No. 03-0151, including the application for issuance of a writ of
preliminary injunction of BF Homes and PWCC therein.
BF Homes and PWCC argued that due to the threat of MERALCO to disconnect electric
services, BF Homes and PWCC had no other recourse but to seek an injunctive remedy from the
RTC under its general jurisdiction. The merits of Civil Case No. 03-0151 was not yet in issue,
only the propriety of issuing a writ of preliminary injunction to prevent an irreparable injury.
Even granting that the RTC has no jurisdiction over the subject matter of Civil Case No. 030151, the ERC by enabling law has no injunctive power to prevent the disconnection by
MERALCO of electric services to BF Homes and PWCC.
The Petition has no merit.
Settled is the rule that jurisdiction is conferred only by the Constitution or the law.21 Republic v.
Court of Appeals22 also enunciated that only a statute can confer jurisdiction on courts and
administrative agencies.
Related to the foregoing and equally well-settled is the rule that the nature of an action and the
subject matter thereof, as well as which court or agency of the government has jurisdiction over
the same, are determined by the material allegations of the complaint in relation to the law
involved and the character of the reliefs prayed for, whether or not the complainant/plaintiff is
entitled to any or all of such reliefs. A prayer or demand for relief is not part of the petition of the
cause of action; nor does it enlarge the cause of action stated or change the legal effect of what is
alleged. In determining which body has jurisdiction over a case, the better policy is to consider
not only the status or relationship of the parties but also the nature of the action that is the subject
of their controversy.23
In Manila Electric Company v. Energy Regulatory Board,24 the Court traced the legislative
history of the regulatory agencies which preceded the ERC, presenting a summary of these

18

agencies, the statutes or issuances that created them, and the extent of the jurisdiction conferred
upon them, viz:
1. The first regulatory body, the Board of Rate Regulation (BRR), was created by virtue
of Act No. 1779. Its regulatory mandate under Section 5 of the law was limited to fixing
or regulating rates of every public service corporation.
2. In 1913, Act No. 2307 created the Board of Public Utility Commissioners (BPUC) to
take over the functions of the BRR. By express provision of Act No. 2307, the BPUC was
vested with jurisdiction, supervision and control over all public utilities and their
properties and franchises.
3. On November 7, 1936, Commonwealth Act (C.A.) No. 146, or the Public Service Act
(PSA), was passed creating the Public Service Commission (PSC) to replace the BPUC.
Like the BPUC, the PSC was expressly granted jurisdiction, supervision and control over
public services, with the concomitant authority of calling on the public force to exercise
its power, to wit:
"SEC. 13. Except as otherwise provided herein, the Commission shall have general supervision
and regulation of, jurisdiction and control over, all public utilities, and also over their property,
property rights, equipment, facilities and franchises so far as may be necessary for the purpose of
carrying out the provisions of this Act, and in the exercise of its authority it shall have the
necessary powers and the aid of the public force x x x."
Section 14 of C.A. No. 146 defines the term "public service" or "public utility" as including
"every individual, copartnership, association, corporation or joint-stock company, . . . that now or
hereafter may own, operate, manage or control within the Philippines, for hire or compensation,
any common carrier, x x x, electric light, heat, power, x x x, when owned, operated and managed
for public use or service within the Philippines x x x." Under the succeeding Section 17(a), the
PSC has the power even without prior hearing
(a) To investigate, upon its own initiative, or upon complaint in writing, any matter concerning
any public service as regards matters under its jurisdiction; to require any public service to
furnish safe, adequate and proper service as the public interest may require and warrant, to
enforce compliance with any standard, rule, regulation, order or other requirement of this Act or
of the Commission, x x x.
4. Then came Presidential Decree (P.D.) No. 1, reorganizing the national government and
implementing the Integrated Reorganization Plan. Under the reorganization plan, jurisdiction,
supervision and control over public services related to electric light, and power heretofore vested
in the PSC were transferred to the Board of Power and Waterworks (BOPW).
19

Later, P.D. No. 1206 abolished the BOPW. Its powers and function relative to power utilities,
including its authority to grant provisional relief, were transferred to the newly-created Board of
Energy (BOE).
5. On May 8, 1987, then President Corazon C. Aquino issued E.O. No. 172 reconstituting the
BOE into the ERB, transferring the formers functions and powers under P.D. No. 1206 to the
latter and consolidating in and entrusting on the ERB "all the regulatory and adjudicatory
functions covering the energy sector." Section 14 of E.O. No. 172 states that "(T)he applicable
provisions of [C.A.] No. 146, as amended, otherwise known as the Public Service Act; x x x
and [P.D.] No. 1206, as amended, creating the Department of Energy, shall continue to have full
force and effect, except insofar as inconsistent with this Order."25
Thereafter, on June 8, 2001, Republic Act No. 9136, known as the Electric Power Industry
Reform Act of 2001 (EPIRA), was enacted, providing a framework for restructuring the electric
power industry. One of the avowed purposes of the EPIRA is to establish a strong and purely
independent regulatory body. The Energy Regulatory Board (ERB) was abolished and its powers
and functions not inconsistent with the provision of the EPIRA were expressly transferred to the
ERC.26
The powers and functions of the ERB not inconsistent with the EPIRA were transferred to the
ERC by virtue of Sections 44 and 80 of the EPIRA, which read:
Sec. 44. Transfer of Powers and Functions. The powers and functions of the Energy Regulatory
Board not inconsistent with the provisions of this Act are hereby transferred to the ERC. The
foregoing transfer of powers and functions shall include all applicable funds and appropriations,
records, equipment, property and personnel as may be necessary.
Sec. 80. Applicability and Repealing Clause. The applicability provisions of Commonwealth
Act No. 146, as amended, otherwise known as the "Public Service Act." Republic Act 6395, as
amended, revising the charter of NPC; Presidential Decree 269, as amended, referred to as the
National Electrification Decree; Republic Act 7638, otherwise known as the "Department of
Energy Act of 1992"; Executive Order 172, as amended, creating the ERB; Republic Act 7832
otherwise known as the "Anti-Electricity and Electric Transmission Lines/Materials Pilferage
Act of 1994"; shall continue to have full force and effect except insofar as they are inconsistent
with this Act.
The provisions with respect to electric power of Section 11(c) of Republic Act 7916, as amended,
and Section 5(f) of Republic Act 7227, are hereby repealed or modified accordingly.
Presidential Decree No. 40 and all laws, decrees, rules and regulations, or portions thereof,
inconsistent with this Act are hereby repealed or modified accordingly.
20

In addition to the foregoing, the EPIRA also conferred new powers upon the ERC under Section
43, among which are:
SEC. 43. Functions of the ERC. The ERC shall promote competition, encourage market
development, ensure customer choice and penalize abuse of market power in the restructured
electricity industry. In appropriate cases, the ERC is authorized to issue cease and desist order
after due notice and hearing. Towards this end, it shall be responsible for the following key
functions in the restructured industry:
xxxx
(f) In the public interest, establish and enforce a methodology for setting transmission and
distribution wheeling rates and retail rates for the captive market of a distribution utility, taking
into account all relevant considerations, including the efficiency or inefficiency of the regulated
entities. The rates must be such as to allow the recovery of just and reasonable costs and a
reasonable return on rate base (RORB) to enable the entity to operate viably. The ERC may
adopt alternative forms of internationally-accepted rate-setting methodology as it may deem
appropriate. The rate-setting methodology so adopted and applied must ensure a reasonable price
of electricity. The rates prescribed shall be non-discriminatory. To achieve this objective and to
ensure the complete removal of cross subsidies, the cap on the recoverable rate of system losses
prescribed in Section 10 of Republic Act No. 7832, is hereby amended and shall be replaced by
caps which shall be determined by the ERC based on load density, sales mix, cost of service,
delivery voltage and other technical considerations it may promulgate. The ERC shall determine
such form of rate-setting methodology, which shall promote efficiency. x x x.
xxxx
(u) The ERC shall have the original and exclusive jurisdiction over all cases contesting rates,
fees, fines and penalties imposed by the ERC in the exercise of the abovementioned powers,
functions and responsibilities and over all cases involving disputes between and among
participants or players in the energy sector.
All notices of hearings to be conducted by the ERC for the purpose of fixing rates or fees shall
be published at least twice for two successive weeks in two (2) newspapers of nationwide
circulation.
A careful review of the material allegations of BF Homes and PWCC in their Petition before the
RTC reveals that the very subject matter thereof is the off-setting of the amount of refund they
are supposed to receive from MERALCO against the electric bills they are to pay to the same
company. This is squarely within the primary jurisdiction of the ERC.

21

The right of BF Homes and PWCC to refund, on which their claim for off-setting depends,
originated from the MERALCO Refund cases. In said cases, the Court (1) authorized
MERALCO to adopt a rate adjustment in the amount of P0.017 per kilowatthour, effective with
respect to its billing cycles beginning February 1994; and (2) ordered MERALCO to refund to its
customers or credit in said customers favor for future consumption P0.167 per kilowatthour,
starting with the customers billing cycles that begin February 1998, in accordance with the ERB
Decision dated February 16, 1998.
It bears to stress that in the MERALCO Refund cases, this Court only affirmed the February 16,
1998 Decision of the ERB (predecessor of the ERC) fixing the just and reasonable rate for the
electric services of MERALCO and granting refund to MERALCO consumers of the amount
they overpaid. Said Decision was rendered by the ERB in the exercise of its jurisdiction to
determine and fix the just and reasonable rate of power utilities such as MERALCO.
Presently, the ERC has original and exclusive jurisdiction under Rule 43(u) of the EPIRA over
all cases contesting rates, fees, fines, and penalties imposed by the ERC in the exercise of its
powers, functions and responsibilities, and over all cases involving disputes between and among
participants or players in the energy sector. Section 4(o) of the EPIRA Implementing Rules and
Regulation provides that the ERC "shall also be empowered to issue such other rules that are
essential in the discharge of its functions as in independent quasi-judicial body."
Indubitably, the ERC is the regulatory agency of the government having the authority and
supervision over MERALCO. Thus, the task to approve the guidelines, schedules, and details of
the refund by MERALCO to its consumers, to implement the judgment of this Court in the
MERALCO Refund cases, also falls upon the ERC. By filing their Petition before the RTC, BF
Homes and PWCC intend to collect their refund without submitting to the approved schedule of
the ERC, and in effect, enjoy preferential right over the other equally situated MERALCO
consumers.
Administrative agencies, like the ERC, are tribunals of limited jurisdiction and, as such, could
wield only such as are specifically granted to them by the enabling statutes. In relation thereto is
the doctrine of primary jurisdiction involving matters that demand the special competence of
administrative agencies even if the question involved is also judicial in nature. Courts cannot and
will not resolve a controversy involving a question within the jurisdiction of an administrative
tribunal, especially when the question demands the sound exercise of administrative discretion
requiring special knowledge, experience and services of the administrative tribunal to determine
technical and intricate matters of fact. The court cannot arrogate into itself the authority to
resolve a controversy, the jurisdiction of which is initially lodged with the administrative body of
special competence.27

22

Since the RTC had no jurisdiction over the Petition of BF Homes and PWCC in Civil Case No.
03-0151, then it was also devoid of any authority to act on the application of BF Homes and
PWCC for the issuance of a writ of preliminary injunction contained in the same Petition. The
ancillary and provisional remedy of preliminary injunction cannot exist except only as an
incident of an independent action or proceeding.28
Incidentally, BF Homes and PWCC seemed to have lost sight of Section 8 of Executive Order
No. 172 which explicitly vested on the ERB, as an incident of its principal function, the authority
to grant provisional relief, thus:
Section 8. Authority to Grant Provisional Relief. The Board may, upon the filing of an
application, petition or complaint or at any stage thereafter and without prior hearing, on the
basis of supporting papers duly verified or authenticated, grant provisional relief on motion of a
party in the case or on its own initiative, without prejudice to a final decision after hearing,
should the Board find that the pleadings, together with such affidavits, documents and other
evidence which may be submitted in support of the motion, substantially support the provisional
order: Provided, That the Board shall immediately schedule and conduct a hearing thereon within
thirty (30) days thereafter, upon publication and notice to all affected parties.
The aforequoted provision is still applicable to the ERC as it succeeded the ERB, by virtue of
Section 80 of the EPIRA. A writ of preliminary injunction is one such provisional relief which a
party in a case before the ERC may move for.
Lastly, the Court herein already declared that the RTC not only lacked the jurisdiction to issue
the writ of preliminary injunction against MERALCO, but that the RTC actually had no
jurisdiction at all over the subject matter of the Petition of BF Homes and PWCC in Civil Case
No. 03-0151. Therefore, in addition to the dissolution of the writ of preliminary injunction issued
by the RTC, the Court also deems it appropriate to already order the dismissal of the Petition of
BF Homes and PWCC in Civil Case No. 03-0151 for lack of jurisdiction of the RTC over the
subject matter of the same. Although only the matter of the writ of preliminary injunction was
brought before this Court in the instant Petition, the Court is already taking cognizance of the
issue on the jurisdiction of the RTC over the subject matter of the Petition. The Court may motu
proprio consider the issue of jurisdiction. The Court has discretion to determine whether the RTC
validly acquired jurisdiction over Civil Case No. 03-0151 since, to reiterate, jurisdiction over the
subject matter is conferred only by law. Jurisdiction over the subject matter cannot be acquired
through, or waived by, any act or omission of the parties. Neither would the active participation
of the parties nor estoppel operate to confer jurisdiction on the RTC where the latter has none
over a cause of action.29 Indeed, when a court has no jurisdiction over the subject matter, the only
power it has is to dismiss the action.30

23

WHEREFORE, the instant Petition for Review is DENIED. The Decision dated October 27,
2005 of the Court of Appeals in CA-G.R. SP No. 82826 is AFFIRMED with the
MODIFICATION that the Regional Trial Court, Branch 202 of Las Pias City, is ORDERED to
dismiss the Petition [With Prayer for the Issuance of Writ of Preliminary Injunction and for the
Immediate Issuance of Restraining Order] of BF Homes, Inc. and Philippine Waterworks and
Construction Corporation in Civil Case No. 03-0151. Costs against BF Homes, Inc. and
Philippine Waterworks and Construction Corporation.
SO ORDERED.

G.R. No. 147778

July 23, 2008

PHILIPPINE STOCK EXCHANGE, INC. and the MEMBERS OF ITS BOARD OF

GOVERNORS, Petitioners,
vs.
THE MANILA BANKING CORPORATION and the SECURITIES INVESTIGATION
CLEARING DEPARTMENT HEARING PANEL consisting of the Hon. Hearing Officers
ENRIQUE L. FLORES, JR., ALBERTO P. ATAS, and YSOBEL S. YASAY-MURILLO,
Respondents.
DECISION
LEONARDO-DE CASTRO, J.:
By this petition for review on certiorari, petitioners seek the reversal of the November 20, 2000
Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 58111, as reiterated in its Resolution2
of April 4, 2001, upholding the March 7, 2000 order of the Securities and Exchange Commission
(SEC) en banc in SEC Case No. 08-98-6075, which in turn sustained the order issued by its
Securities Investigation and Clearing Department (SICD) Hearing Panel in SEC Case No. 08-986075 denying petitioners motion to dismiss the Petition for Mandamus with Claim for Damages
lodged thereat by respondent The Manila Banking Corporation (TMBC).
The facts:
On October 1, 1980, TMBC acquired Manila Stock Exchange (MSE) Seat No. 97, registered in
the name of Roberto K. Recio (Recio) , through an execution sale which arose from a levy on
24

execution to satisfy a loan obligation of Recio to TMBC. Thereafter, TMBC requested MSE to
record its ownership of MSE Seat No. 97 in MSEs membership books. Initially, MSE refused to
register TMBC in its membership books and contested the latters ownership of said seat.
According to MSE, its by-laws allow only individuals or corporations engaged primarily in the
business of stocks and bonds brokers and dealers in securities to be a member or to hold a seat in
the MSE. In the end, TMBC settled for a mere acknowledgment from MSE of its legal or naked
ownership of, or proprietary right over, MSE Seat No. 97 which was done by MSE through its
Acknowledgment Letter dated August 19, 1996.
Before the aforementioned acknowledgment of MSEs title, particularly on July 17, 1992, the
Philippine Stock Exchange, Inc. (PSEI) was incorporated unifying the MSE and the Makati
Stock Exchange (MKSE) into one exchange. On April 16, 1994, the PSEI issued a certificate of
membership to Recio as Member No. 29.
Believing that MSE Seat No. 97 became PSE Seat No. 29 of the unified exchanges and that the
certificate of membership to PSEI was issued to Recio on the basis of his previous ownership of
MSE Seat No. 97, TMBC sought to rectify the PSEIs listing of Recio as a member without any
reservation or annotation therein that TMBC owns proprietary rights over PSE Seat No. 29.
Armed with MSEs acknowledgment of its legal ownership or naked title over MSE Seat No. 97,
TMBC sought PSEIs recognition of its legal ownership of PSE Seat No. 29. However, TMBCs
efforts were met with PSEIs repeated refusal.
This was the state of things when TMBC lodged a Petition for Mandamus with Claim for
Damages, at the SEC SICD, against herein petitioners PSEI and its Board of Governors. The
case was docketed as SEC Case No. 08-98-6075. The petition prayed that the SEC order the
PSEI to acknowledge TMBCs proprietary interest or legal or naked ownership of PSE Seat No.
29 to enable TMBC to register said seat to a qualified nominee or otherwise sell the same to a
qualified vendee.
Petitioners filed a motion to dismiss the aforesaid action on the following grounds: the SEC had
no jurisdiction to try and hear the same; the petition failed to state TMBCs cause of action
against petitioners; and the remedy of mandamus was improper.
In the order dated June 14, 1999, the SEC through its SICD Hearing Panel denied said motion to
dismiss. The subsequent motion for reconsideration of the said order was also denied in the order
dated September 16, 1999.
Thereafter, petitioners elevated the case to the SEC en banc by way of a petition for certiorari.
Armed with the same arguments, petitioners sought to annul and set aside the twin orders of the
SICD Hearing Panel.

25

On March 7, 2000, the SEC en banc issued an Order3 denying the petition, thus:
WHEREFORE, PREMISES CONSIDERED, the instant Petition for Certiorari, with a prayer for
the issuance of a Temporary Restraining Order and/or preliminary injunction is hereby DENIED.
SO ORDERED.
In time, petitioners filed with the CA a petition for review with prayer for the issuance of a
temporary restraining order and writ of preliminary injunction maintaining the same grounds and
urging the CA to annul and set aside the en banc order of the SEC and ultimately, order the
dismissal of TMBCs mandamus petition against them.
As stated at the threshold hereof, the CA, in the herein challenged decision dated November 20,
2000, dismissed the petition for lack of merit, to wit:
All told, the SEC committed no reversible errors in issuing the assailed orders.
WHEREFORE, the petition for review is DISMISSED for lack of merit.
SO ORDERED.4
Their motion for reconsideration having been denied by the CA in its resolution of April 4,
2000,5 petitioners are now before the Court praying for the nullification of the CA decision dated
November 20, 2000 and for the dismissal of the petition filed by TMBC docketed as SEC Case
No. 08-98-6075 reiterating the same arguments.
At the outset, the Court notes that upon the denial of their motion to dismiss by the SICD
Hearing Panel, petitioners filed a petition for certiorari with the SEC en banc. An order denying a
motion to dismiss is an interlocutory order which neither terminates nor finally disposes of a
case, because it leaves something to be done by the court before the case is finally decided on the
merits. The general rule is that the denial of a motion to dismiss cannot be questioned in a special
civil action for certiorari which is a remedy designed to correct errors of jurisdiction and not
errors of judgment. Neither can a denial of a motion to dismiss be the subject of an appeal unless
and until a final judgment or order is rendered.6 In order to justify the grant of the extraordinary
remedy of certiorari, the denial of the motion to dismiss must have been tainted with grave abuse
of discretion amounting to lack or excess of jurisdiction.7 The same does not obtain here.
The SEC en banc correctly sustained the SICD Hearing Panels denial of petitioners motion to
dismiss. We quote with approval the findings of the SEC en banc on this matter:
The hearing panel held that although it entertains doubts as to the truth of the facts averred, it
shall not dismiss the complaint. We believe that the hearing panel exercised its judgment within
26

its proper limits in issuing said order. On the contrary, the factual issues of the case are not
merely confined to the question of membership, but also to the existence of the devices and
schemes amounting to fraud as alleged by the petitioner below [TMBC]. If it is convinced that
there are factual issues which should be discussed in the answer and ventilated during the trial on
the merits, such as whether or not the transferor of the MSE was a PSE member, the rights of the
successor-in-interest of a purported member of the PSE, Inc., and the evidence supporting the
allegations of herein respondent [TMBC] regarding bad faith and fraud committed by PSE
against TMBC, it is within the limits of its power considering the fact that there are evidence
supporting its ruling. (Words in brackets ours.)
We cannot fault the SICD Hearing Panel in requiring a more in-depth and thorough
determination of issues raised before it. After all, the allegations in the mandamus petition
sufficiently stated a cause of action against the petitioners. Verily, the complaint should contain a
concise statement of ultimate facts. Ultimate facts refer to the principal, determinative,
constitutive facts upon which rest the existence of the cause of action. The term does not refer to
details of probative matter or particulars of evidence which establish the material elements.8
Section 6 of the SEC Revised Rules of Procedure merely requires, thus:
SECTION 6. Complaint - The complaint shall contain the names and residences of the parties, a
concise statement of the ultimate facts constituting the complainants cause or causes of action. It
shall specify the relief/s sought, but it may add a general prayer further or other relief/s as may
be deemed just and equitable.
In a number of cases,9 this Court has repeatedly held that so rigid is the prescribed norm that if
the Court should doubt the truth of the facts averred, it must not dismiss the complaint but
require an answer and proceed to hear the case on the merits.
It is axiomatic that jurisdiction over the subject matter is conferred by law and is determined by
the allegations of the complaint or the petition irrespective of whether the plaintiff is entitled to
all or some of the claims or reliefs asserted therein. The three tribunals below are unanimous in
appreciating TMBCs cause of action against petitioners and that the same falls within the ambit
of Section 5(a) of P.D. 902-A, 10 as aptly ratiocinated by the CA in its ruling, thus:
In the present case, it is our perception that what respondent TMBC alleged to be the device and
scheme utilized by petitioners, was in the petition expounded exhaustively enough as to
intelligently inform the petitioner about the overt acts therein referred to as constituting the
device or scheme. For this reason, the SEC committed no error in refusing to dismiss the petition
filed before it. xxx [T]he petition bristles with recitals of facts and statements demonstrating
petitioners perpetration of devices and schemes amounting to fraud.

27

xxx A careful study of the petition filed with the SEC by respondent TMBC reveals that the
factual allegations therein set forth sufficiently make out a case of fraud, misrepresentation and
bad faith against petitioners. Among the salient allegations were: (1) that the MSE had already
recognized the legal or naked ownership of respondent TMBC to MSE Seat No. 97, yet PSE,
acting through its board of Governors, composed of members of the MSE, unjustifiably refused
to recognize the corresponding seat in the PSE; (2) that TMBCs predecessor-in interest, Mr.
Roberto K. Recio was issued a Certificate of Membership by the PSE; and (3) that Mr. Recio
was consistently listed as member of the PSE in the PSEs Monthly Report.
These allegations would suffice to constitute a cause of action against petitioners. That
petitioners have a valid defense is another matter. At any rate, matters such as the propriety of the
refusal of TMBCs membership to PSE and veracity of the assertion that MSE Seat No. 97 is
separate and distinct from PSE Seat No. 29, among others, are best ventilated during trial. They
require evidentiary proof and support that can be better threshed out in a full blown trial on the
merits. These matters, indeed, would not yet go into the question of the absence of a cause of
action as a ground to dismiss.11
As to the propriety of mandamus as a remedy, petitioners claim it was not their ministerial duty
to acknowledge the proprietary, legal or naked ownership of TMBC over PSE Seat No. 29. True,
the Court has invariably ruled that generally, the performance of an official act or duty, which
necessarily involves the exercise of discretion or judgment, cannot be compelled by mandamus.
However, the Court has also declared that the general rule does not apply in cases where there is
gross abuse of discretion, manifest injustice, or palpable excess of authority.12 These exceptions
apply to the present case. As aptly observed by the CA and we quote:
It is beyond cavil that the MSE had already recognized the legal or naked ownership of private
respondent to MSE Seat No. 97, but for reasons only known to them, the PSE Board of
Governors, who are members of the MSE, adamantly refused to recognize the corresponding seat
in the PSE. In fact, it is not seriously disputed that MSE Seat No. 97 became PSE Seat No. 29
upon the latters incorporation. Petitioners dubious claim that they could not acknowledge the
proprietary interest of respondent TMBC over the seat since allegedly even respondent Roberto
K. Recio was not a recognized member due to his failure to so apply is belied by the facts. For
one thing Mr. Recio was issued a Certificate of Membership by the PSE. For another, Mr.
Recios name has consistently appeared as a member of the PSE in the PSEs Monthly Report.
Given these facts, it cannot be gainsaid that petitioners refusal to acknowledge respondent
TMBCs proprietary right over PSE Seat No. 29 was grossly unjust and tyrannical and, therefore
controllable by the extraordinary writ of mandamus.
In fine, the Court finds no reversible error committed by the CA in affirming the order of the
SEC and in rendering the herein challenged decision.1avvphi1

28

On a final note, on July 18, 2000, prior to the promulgation of the assailed CA decision, Republic
Act No. 8799 otherwise known as The Securities Regulation Code was enacted and upon its
effectivity, the SECs jurisdiction over this case was transferred to the courts of general
jurisdiction or the Regional Trial Courts. 13
WHEREFORE, the petition is DENIED and the assailed decision and resolution of the CA are
AFFIRMED.
Costs against the petitioners.
SO ORDERED.

G.R. No. 125078

May 30, 2011

BERNABE L. NAVIDA, JOSE P. ABANGAN, JR., CEFERINO P. ABARQUEZ,

ORLANDITO A. ABISON, FELIPE ADAYA, ALBERTO R. AFRICA, BENJAMIN M.
ALBAO, FELIPE ALCANTARA, NUMERIANO S. ALCARIA, FERNANDO C.
29

ALEJADO, LEOPOLDO N. ALFONSO, FLORO I. ALMODIEL, ANTONIO B.

ALVARADO, ELEANOR AMOLATA, RODOLFO P. ANCORDA, TRIFINO F.
ANDRADA, BERT B. ANOCHE, RAMON E. ANTECRISTO, ISAGANI D. ANTINO,
DOMINGO ANTOPINA, MANSUETO M. APARICIO, HERMINIGILDO AQUINO,
MARCELO S. AQUINO, JR., FELIPE P. ARANIA, ULYSES M. ARAS, ARSENIO ARCE,
RUPERTO G. ARINZOL, MIGUEL G. ARINZOL, EDGARADO P. ARONG, RODRIGO
D.R. ASTRALABIO, RONNIE BACAYO, SOFRONIO BALINGIT, NELSON M.
BALLENA, EMNIANO BALMONTE, MAXIMO M. BANGI, SALVADOR M. BANGI,
HERMOGENES T. BARBECHO, ARSENIO B. BARBERO, DIOSDADO BARREDO,
VIRGILIO BASAS, ALEJANDRO G. BATULAN, DOMINGO A. BAUTISTA, VICTOR
BAYANI, BENIGNO BESARES, RUFINO BETITO, GERARDO A. BONIAO, CARLO B.
BUBUNGAN, FERNANDO B. BUENAVISTA, ALEJANDRINO H. BUENO, TOMAS P.
BUENO, LEONARDO M. BURDEOS, VICENTE P. BURGOS, MARCELINO J.
CABALUNA, DIOSDADO CABILING, EMETRIO C. CACHUELA, BRAULIO B.
CADIVIDA, JR., SAMSON C. CAEL, DANIEL B. CAJURAO, REY A. CALISO,
NORBERTO F. CALUMPAG, CELESTINO CALUMPAG, LORETO CAMACHO,
VICTORIANO CANETE, DOMINADOR P. CANTILLO, FRUCTUSO P. CARBAJOSA,
VICTORINO S. CARLOS, VICTOR CARLOS, GEORGE M. CASSION, JAIME S.
CASTAARES, FLAVIANO C. CASTAARES, ELPIDIO CATUBAY, NATHANIEL B.
CAUSANG, BEOFIL B. CAUSING, ADRIANO R. CEJAS, CIRILO G. CERERA, SR.,
CRISTITUTO M. CEREZO, DANTE V. CONCHA, ALBERT CORNELIO, CESAR
CORTES, NOEL Y. CORTEZ, SERNUE CREDO, CORNELIO A. CRESENCIO, ALEX
CRUZ, ROGER CRUZ, RANSAM CRUZ, CANUTO M. DADULA, ROMEO L. DALDE,
ZACARIAS DAMBAAN, ELISEO DAPROZA, VIRGILIO P. DAWAL, TESIFREDO I.
DE TOMAS, GAMALLER P. DEANG, CARMELINO P. DEANG, DIOSDADO P.
DEANG, DOMINGO A. DEANG, FELIPE R. DEANG, JR., JULIETO S. DELA CRUZ,
ELIEZER R. DELA TORRE, JEFFREY R. DELA TORRE, RAUL DEMONTEVERDE,
FELIPE P. DENOLAN, RUBENCIO P. DENOY, RODRIGO M. DERMIL, ROLANDO B.
DIAZ, LORENZO DIEGO, JOVENCIO DIEGO, SATURNINO DIEGO, GREGORIO
DIONG, AMADO R. DIZON, FE DIZON, VIRGILO M. DOMANTAY, LEO S. DONATO,
DOMINADOR L. DOSADO, NESTOR DUMALAG, FREDDIE DURAN, SR., MARIO C.
ECHIVERE, AQUILLO M. EMBRADORA, MIGUEL EMNACE, RIO T. EMPAS,
EFRAIM ENGLIS, ANICETO ENOPIA, DIOCENE ENTECOSA, RUBENTITO D.
ENTECOSA, AVELINO C. ENTERO, FORTUNATA ENTRADA, ROGELIO P. EROY,
RODOLFO M. ESCAMILLA, SERGIO C. ESCANTILLA, LAZARO A. ESPAOLA,
EULOGIO M. ETURMA, PRIMO P. FERNANDEZ, EDILBERTO D. FERNANDO,
GREGORIO S. FERNANDO, VICENTE P. FERRER, MARCELO T. FLOR, ANTONIO
M. FLORES, REDENTOR T. FLOREZA, NORBERTO J. FUENTES, RICARDO C.
GABUTAN, PEDRO D.V. GALEOS, ARNULFO F. GALEOS, EDGARDO V. GARCESA,
BERNARDO P. GENTOBA, EDUARDO P. GENTOBA, VICTORIO B. GIDO,
ROLANDO V. GIMENA, EARLWIN L. GINGOYO, ERNESTO GOLEZ, JUANITO G.
30

GONZAGA, ONOFRE GONZALES, AMADO J. GUMERE, LEONARDO M. GUSTO,

ALEJANDRO G. HALILI, NOEL H. HERCEDA, EMILIO V. HERMONDO, CLAUDIO
HIPOLITO, TORIBIO S ILLUSORIO, TEODURO G. IMPANG, JR., GIL A. JALBUNA,
HERMIE L. JALICO, ARMANDO B. JAMERLAN, NARCISO JAPAY, LIBURO C.
JAVINAS, ALEJANDO S. JIMENEZ, FEDERICO T. JUCAR, NAPOLEON T.
JUMALON, OSCAR JUNSAY, ANASTACIO D. LABANA, CARLOS C. LABAY,
AVELINO L. LAFORTEZA, LOE LAGUMBAY, NORBETO D. LAMPERNIS,
ROLANDO J. LAS PEAS, ISMAEL LASDOCE, RENOLO L. LEBRILLA, CAMILO G.
LEDRES, ANASTACIO LLANOS, ARMANDO A. LLIDO, CARLITO LOPEZ, ARISTON
LOS BAEZ, CONCISO L. LOVITOS, ARQUILLANO M. LOZADA, RODOLFO C.
LUMAKIN, PRIMITIVO LUNTAO, JR., EMILIO S. MABASA, JR., JUANITO A.
MACALISANG, TEOTIMO L. MADULIN, JOSEPH D. MAGALLON, PEDRO P.
MAGLASANG, MARIO G. MALAGAMBA, JAIME B. MAMARADLO, PANFILO A.
MANADA, SR., RICARDO S. MANDANI, CONCHITA MANDANI, ALBERTO T.
MANGGA, ALEJANDRO A. MANSANES, RUFINO T. MANSANES, EUTIQUIO P.
MANSANES, ALCIO P. MARATAS, AGAPITO D. MARQUEZ, RICARDO R.
MASIGLAT, DENDERIA MATABANG, ARNELO N. MATILLANO, HERNANI C.
MEJORADA, ROSITA MENDOZA, GREGORIO R. MESA, RENATO N. MILLADO,
ANTONIO L. MOCORRO, ALBERTO M. MOLINA, JR., DOMINGO P. MONDIA,
JUANITO P. MONDIA, RICARDO MONTAO, RAUL T. MONTEJO, ROGELIO
MUNAR, RODOLFO E. MUEZ, CRESENCIO NARCISO, PANFILO C. NARCISO,
BRICS P. NECOR, MOISES P. NICOLAS, NEMESIO G. NICOLAS, ALFREDO
NOFIEL, FELIX T. NOVENA, MARCELO P. OBTIAL, SR., TEODORO B. OCRETO,
BIBIANO C. ODI, ALFREDO M. OPERIO, TEOTISTO B. OPON, IZRO M. ORACION,
ALAN E. ORANAS, ELPEDIO T. OSIAS, ERNESTO M. PABIONA, NARCISO J.
PADILLA, NELSON G. PADIOS, SR., FRNACISCO G. PAGUNTALAN, RENE B.
PALENCIA, MICHAEL P. PALOMAR, VIRGILIO E. PANILAGAO, NOLITO C.
PANULIN, ROMEO PARAGUAS, NESTOR B. PASTERA, VICENTE Q. PEDAZO,
EDGAR M. PEARANDA, ILUMINIDO B. PERACULLO, ANTONIO C. PEREZ,
DOMINGO PEREZ, OSCAR C. PLEOS, ANTONIETO POLANCOS, SERAFIN G.
PRIETO, ZENAIDA PROVIDO, FERNANDO Y. PROVIDO, ERNESTO QUERO,
ELEAZAR QUIJARDO, WILLIAM U. QUINTOY, LAURO QUISTADIO, ROGELIO
RABADON, MARCELINO M. RELIZAN, RAUL A. REYES, OCTAVIO F. REYES,
EDDIE M. RINCOR, EMMANUEL RIVAS, RODULFO RIVAS, BIENVENIDO C.
ROMANCA, JACINTO ROMOC, ROMEO S. ROMUALDO, ALBERTO ROSARIO,
ROMEO L. SABIDO, SIMON SAGNIP, TIMOTEO SALIG, ROMAN G. SALIGONAN,
VICTORINO SALOMON, GENEROSO J. SALONGKONG, RODOLFO E. SALVANI,
JIMMY A. SAMELIN, EDUARDO A. SAMELIN, ANDRES A. SAMELIN, GEORGE
SAMELIN, ROMEO A. SARAOSOS, RUDIGELIO S. SARMIENTO, CIRILO
SAYAANG, JARLO SAYSON, LEONCIO SERDONCILLO, RODOLFO C. SERRANO,
NESTOR G. SEVILLA, SIMEON F. SIMBA, CATALINO S. SIMTIM, SERAFIN T.
31

SINSUANGCO, EDUARDO A. SOLA, VICTORINO M. SOLOMON, JAIME B.

SUFICIENCIA, LYNDON SUMAJIT, ALFREDO P. SUMAJIT, ALFREDO L. SUMAJIT,
PEDRO A. SUMARAGO, ERNESTO SUMILE, NESTOR S. SUMOG-OY, MANUEL T.
SUPAS, WILFREDO A. TABAQUE, CONSTANCIO L. TACULAD, EUFROCINO A.
TAGOTO, JR., SERAPIO TAHITIT, PANTALEON T. TAMASE, ERNESTO TARRE,
MAGNO E. TATOY, AVELINO TAYAPAD, SAMUEL S. TERRADO, APOLINARIO B.
TICO, ORLANDO TINACO, ALBERT G. TINAY, ANTONIO TOLEDO, ANTONIO M.
TORREGOSA, ISABELO TORRES, JIMMY C. TORRIBIO, EDUARDO Y. TUCLAOD,
JACINTO UDAL, RICARDO M. URBANO, ERNESTO G. VAFLOR, FILOMENO E.
VALENZUELA, SALORIANO VELASCO, RODOLFO VIDAL, WALTER VILLAFAE,
DANTE VILLALVA, PERIGRINO P. VILLARAN, JESUS L. VILLARBA, ELEAZAR D.
VILLARBA, JENNY T. VILLAVA, HENRY C. VILLEGAS, DELFIN C. WALOG,
RODOLFO YAMBAO, EDGAR A. YARE, MANSUETO M. YBERA, EDUARDO G.
YUMANG, HENRY R. YUNGOT, ROMEO P. YUSON, ARSENIA ZABALA, FELIX N.
ZABALA and GRACIANO ZAMORA, Petitioners,
vs.
HON. TEODORO A. DIZON, JR., Presiding Judge, Regional Trial Court, Branch 37,
General Santos City, SHELL OIL CO., DOW CHEMICAL CO., OCCIDENTAL
CHEMICAL CORP., STANDARD FRUIT CO., STANDARD FRUIT & STEAMSHIP CO.,
DOLE FOOD CO., INC., DOLE FRESH FRUIT CO., DEL MONTE FRESH PRODUCE
N.A., DEL MONTE TROPICAL FRUIT CO., CHIQUITA BRANDS INTERNATIONAL,
INC. and CHIQUITA BRANDS, INC., Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 125598
THE DOW CHEMICAL COMPANY and OCCIDENTAL CHEMICAL CORPORATION,
Petitioners,
vs.
BERNABE L. NAVIDA, JOSE P. ABANGAN, JR., CEFERINO P. ABARQUEZ,
ORLANDITO A. ABISON, FELIPE ADAYA, ALBERTO R. AFRICA, BENJAMIN M.
ALBAO, FELIPE ALCANTARA, NUMERIANO S. ALCARIA, FERNANDO C.
ALEJADO, LEOPOLDO N. ALFONSO, FLORO I. ALMODIEL, ANTONIO B.
ALVARADO, ELEANOR AMOLATA, RODOLFO P. ANCORDA, TRIFINO F.
ANDRADA, BERT B. ANOCHE, RAMON E. ANTECRISTO, ISAGANI D. ANTINO,
DOMINGO ANTOPINA, MANSUETO M. APARICIO, HERMINIGILDO AQUINO,
MARCELO S. AQUINO, JR., FELIPE P. ARANIA, ULYSES M. ARAS, ARSENIO ARCE,
RUPERTO G. ARINZOL, MIGUEL G. ARINZOL, EDGARADO P. ARONG, RODRIGO
D.R. ASTRALABIO, RONNIE BACAYO, SOFRONIO BALINGIT, NELSON M.
BALLENA, EMNIANO BALMONTE, MAXIMO M. BANGI, SALVADOR M. BANGI,
32

HERMOGENES T. BARBECHO, ARSENIO B. BARBERO, DIOSDADO BARREDO,

VIRGILIO BASAS, ALEJANDRO G. BATULAN, DOMINGO A. BAUTISTA, VICTOR
BAYANI, BENIGNO BESARES, RUFINO BETITO, GERARDO A. BONIAO, CARLO B.
BUBUNGAN, FERNANDO B. BUENAVISTA, ALEJANDRINO H. BUENO, TOMAS P.
BUENO, LEONARDO M. BURDEOS, VICENTE P. BURGOS, MARCELINO J.
CABALUNA, DIOSDADO CABILING, EMETRIO C. CACHUELA, BRAULIO B.
CADIVIDA, JR., SAMSON C. CAEL, DANIEL B. CAJURAO, REY A. CALISO,
NORBERTO F. CALUMPAG, CELESTINO CALUMPAG, LORETO CAMACHO,
VICTORIANO CANETE, DOMINADOR P. CANTILLO, FRUCTUSO P. CARBAJOSA,
VICTORINO S. CARLOS, VICTOR CARLOS, GEORGE M. CASSION, JAIME S.
CASTAARES, FLAVIANO C. CASTAARES, ELPIDIO CATUBAY, NATHANIEL B.
CAUSANG, BEOFIL B. CAUSING, ADRIANO R. CEJAS, CIRILO G. CERERA, SR.,
CRISTITUTO M. CEREZO, DANTE V. CONCHA, ALBERT CORNELIO, CESAR
CORTES, NOEL Y. CORTEZ, SERNUE CREDO, CORNELIO A. CRESENCIO, ALEX
CRUZ, ROGER CRUZ, RANSAM CRUZ, CANUTO M. DADULA, ROMEO L. DALDE,
ZACARIAS DAMBAAN, ELISEO DAPROZA, VIRGILIO P. DAWAL, TESIFREDO I.
DE TOMAS, GAMALLER P. DEANG, CARMELINO P. DEANG, DIOSDADO P.
DEANG, DOMINGO A. DEANG, FELIPE R. DEANG, JR., JULIETO S. DELA CRUZ,
ELIEZER R. DELA TORRE, JEFFREY R. DELA TORRE, RAUL DEMONTEVERDE,
FELIPE P. DENOLAN, RUBENCIO P. DENOY, RODRIGO M. DERMIL, ROLANDO B.
DIAZ, LORENZO DIEGO, JOVENCIO DIEGO, SATURNINO DIEGO, GREGORIO
DIONG, AMADO R. DIZON, FE DIZON, VIRGILO M. DOMANTAY, LEO S. DONATO,
DOMINADOR L. DOSADO, NESTOR DUMALAG, FREDDIE DURAN, SR., MARIO C.
ECHIVERE, AQUILLO M. EMBRADORA, MIGUEL EMNACE, RIO T. EMPAS,
EFRAIM ENGLIS, ANICETO ENOPIA, DIOCENE ENTECOSA, RUBENTITO D.
ENTECOSA, AVELINO C. ENTERO, FORTUNATA ENTRADA, ROGELIO P. EROY,
RODOLFO M. ESCAMILLA, SERGIO C. ESCANTILLA, LAZARO A. ESPAOLA,
EULOGIO M. ETURMA, PRIMO P. FERNANDEZ, EDILBERTO D. FERNANDO,
GREGORIO S. FERNANDO, VICENTE P. FERRER, MARCELO T. FLOR, ANTONIO
M. FLORES, REDENTOR T. FLOREZA, NORBERTO J. FUENTES, RICARDO C.
GABUTAN, PEDRO D.V. GALEOS, ARNULFO F. GALEOS, EDGARDO V. GARCESA,
BERNARDO P. GENTOBA, EDUARDO P. GENTOBA, VICTORIO B. GIDO,
ROLANDO V. GIMENA, EARLWIN L. GINGOYO, ERNESTO GOLEZ, JUANITO G.
GONZAGA, ONOFRE GONZALES, AMADO J. GUMERE, LEONARDO M. GUSTO,
ALEJANDRO G. HALILI, NOEL H. HERCEDA, EMILIO V. HERMONDO, CLAUDIO
HIPOLITO, TORIBIO S ILLUSORIO, TEODURO G. IMPANG, JR., GIL A. JALBUNA,
HERMIE L. JALICO, ARMANDO B. JAMERLAN, NARCISO JAPAY, LIBURO C.
JAVINAS, ALEJANDO S. JIMENEZ, FEDERICO T. JUCAR, NAPOLEON T.
JUMALON, OSCAR JUNSAY, ANASTACIO D. LABANA, CARLOS C. LABAY,
AVELINO L. LAFORTEZA, LOE LAGUMBAY, NORBETO D. LAMPERNIS,
ROLANDO J. LAS PEAS, ISMAEL LASDOCE, RENOLO L. LEBRILLA, CAMILO G.
33

LEDRES, ANASTACIO LLANOS, ARMANDO A. LLIDO, CARLITO LOPEZ, ARISTON

LOS BAEZ, CONCISO L. LOVITOS, ARQUILLANO M. LOZADA, RODOLFO C.
LUMAKIN, PRIMITIVO LUNTAO, JR., EMILIO S. MABASA, JR., JUANITO A.
MACALISANG, TEOTIMO L. MADULIN, JOSEPH D. MAGALLON, PEDRO P.
MAGLASANG, MARIO G. MALAGAMBA, JAIME B. MAMARADLO, PANFILO A.
MANADA, SR., RICARDO S. MANDANI, CONCHITA MANDANI, ALBERTO T.
MANGGA, ALEJANDRO A. MANSANES, RUFINO T. MANSANES, EUTIQUIO P.
MANSANES, ALCIO P. MARATAS, AGAPITO D. MARQUEZ, RICARDO R.
MASIGLAT, DENDERIA MATABANG, ARNELO N. MATILLANO, HERNANI C.
MEJORADA, ROSITA MENDOZA, GREGORIO R. MESA, RENATO N. MILLADO,
ANTONIO L. MOCORRO, ALBERTO M. MOLINA, JR., DOMINGO P. MONDIA,
JUANITO P. MONDIA, RICARDO MONTAO, RAUL T. MONTEJO, ROGELIO
MUNAR, RODOLFO E. MUEZ, CRESENCIO NARCISO, PANFILO C. NARCISO,
BRICS P. NECOR, MOISES P. NICOLAS, NEMESIO G. NICOLAS, ALFREDO
NOFIEL, FELIX T. NOVENA, MARCELO P. OBTIAL, SR., TEODORO B. OCRETO,
BIBIANO C. ODI, ALFREDO M. OPERIO, TEOTISTO B. OPON, IZRO M. ORACION,
ALAN E. ORANAS, ELPEDIO T. OSIAS, ERNESTO M. PABIONA, NARCISO J.
PADILLA, NELSON G. PADIOS, SR., FRANCISCO G. PAGUNTALAN, RENE B.
PALENCIA, MICHAEL P. PALOMAR, VIRGILIO E. PANILAGAO, NOLITO C.
PANULIN, ROMEO PARAGUAS, NESTOR B. PASTERA, VICENTE Q. PEDAZO,
EDGAR M. PEARANDA, ILUMINIDO B. PERACULLO, ANTONIO C. PEREZ,
DOMINGO PEREZ, OSCAR C. PLEOS, ANTONIETO POLANCOS, SERAFIN G.
PRIETO, ZENAIDA PROVIDO, FERNANDO Y. PROVIDO, ERNESTO QUERO,
ELEAZAR QUIJARDO, WILLIAM U. QUINTOY, LAURO QUISTADIO, ROGELIO
RABADON, MARCELINO M. RELIZAN, RAUL A. REYES, OCTAVIO F. REYES,
EDDIE M. RINCOR, EMMANUEL RIVAS, RODULFO RIVAS, BIENVENIDO C.
ROMANCA, JACINTO ROMOC, ROMEO S. ROMUALDO, ALBERTO ROSARIO,
ROMEO L. SABIDO, SIMON SAGNIP, TIMOTEO SALIG, ROMAN B. SALIGONAN,
VICTORINO SALOMON, GENEROSO M. SALONGKONG, RODOLFO E. SALVANI,
JIMMY A. SAMELIN, EDUARDO A. SAMELIN, ANDRES A. SAMELIN, GEORGE
SAMELIN, ROMEO A. SARAOSOS, RUDIGELIO S. SARMIENTO, CIRILO
SAYAANG, JARLO SAYSON, LEONCIO SERDONCILLO, RODOLFO C. SERRANO,
NESTOR G. SEVILLA, SIMEON F. SIMBA, CATALINO S. SIMTIM, SERAFIN T.
SINSUANGCO, EDUARDO A. SOLA, VICTORINO M. SOLOMON, JAIME B.
SUFICIENCIA, LYNDON SUMAJIT, ALFREDO P. SUMAJIT, ALFREDO L. SUMAJIT,
PEDRO A. SUMARAGO, ERNESTO SUMILE, NESTOR S. SUMOG-OY, MANUEL T.
SUPAS, WILFREDO A. TABAQUE, CONSTANCIO L. TACULAD, EUFROCINO A.
TAGOTO, JR., SERAPIO TAHITIT, PANTALEON T. TAMASE, ERNESTO TARRE,
MAGNO E. TATOY, AVELINO TAYAPAD, SAMUEL S. TERRADO, APOLINARIO B.
TICO, ORLANDO TINACO, ALBERT G. TINAY, ANTONIO TOLEDO, ANTONIO M.
TORREGOSA, ISABELO TORRES, JIMMY C. TORRIBIO, EDUARDO Y. TUCLAOD,
34

JACINTO UDAL, RICARDO M. URBANO, ERNESTO G. VAFLOR, FILOMENO E.

VALENZUELA, SALORIANO VELASCO, RODOLFO VIDAL, WALTER VILLAFAE,
DANTE VILLALVA, PERIGRINO P. VILLARAN, JESUS L. VILLARBA, ELEAZAR D.
VILLARBA, JENNY T. VILLAVA, HENRY C. VILLEGAS, DELFIN C. WALOG,
RODOLFO YAMBAO, EDGAR A. YARE, MANSUETO M. YBERA, EDUARDO G.
YUMANG, HENRY R. YUNGOT, ROMEO P. YUSON, ARSENIA ZABALA, FELIX N.
ZABALA, and GRACIANO ZAMORA, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 126654
CORNELIO ABELLA, JR., IRENEO AGABATU, PRUDENCIO ALDEPOLIA,
ARTEMIO ALEMAN, FIDEL ALLERA, DOMINGO ALONZO, CORNELIO AMORA,
FELIPE G. AMORA, LEOPOLDO AMORADO, MARCELINO ANDIMAT, JORGE
ANDOY, MARGARITO R. ANGELIA, GREGOTIO APRIANO, ALFREDO A. ARARAO,
BONIFACIO L. ARTIGAS, JERSON ASUAL, SERAFIN AZUCENA, FELIX M. BADOY,
JULIAN J. BAHALLA, REYNALDO BAHAYA, ANTONIO L. BALDAGO, CESAR N.
BALTAZAR, DOMINADO A. BARING, ANTIPAS A. BATINGAL, MARCIANO
NATINGAL, MARINO BIBANCO, LEANDRO BILIRAN, MARGARITO BLANCO,
CATALINO BONGO, MELCHOR BRIGOLE, ELISEO BRINA, ROBERTO BRINA,
LUIS BUGHAO, EDUARDO L. BURGUINZO, CELSO M. BUSIA, RPDITO CABAGTE,
RICARADO C. CABALLES, CARLITO A. CAINDOC, CANDIDO CALO, JR.,
PEDRITO CAMPAS, FERNANDO R. CAPAROSO, DANILO CARILLO, BONIFACIO
M. CATCHA, FRANKLIN CLARAS, JOSE F. COLLAMAT, BERNARDO M.
COMPENDIO, CORNELIO COSTILLAS, ENERIO R. DAGAME, FELIMON DEBUMA,
JR., RICADO C. DEIPARIME, GREGORIO S. DE LA PENA, JOSE G. DELUAO, JR.,
ELPEDIO A. DIAZ, QUINTINO DISIPULO, JR., CESAR G. DONAYRE, JOSE
DULABAY, JAIRO DUQUIZA, ANTONIO ENGBINO, ALFREDO ESPINOSA, ALONZO
FAILOG, JAIME FEROLINO, RODOLFO L. GABITO, PEDRO G. GEMENTIZA,
RICARDO A. GEROLAGA, RODULFO G. GEROY, ROGELIO GONZAGA, ROLANDO
GONZALES, MODESTO M. GODELOSAO, HECTOR GUMBAN, CAMILO HINAG,
LECERIO IGBALIC, SILVERIO E. IGCALINOS, ALFREDO INTOD, OLEGARIO
IYUMA, DOMINGO B. JAGMOC, JR., EDUARDO JARGUE, ROLANDO A. LABASON,
ROLANDO LACNO, VIRGILIO A. LADURA, CONSTANCIO M. LAGURA,
FRANCISCO LAMBAN, ENRIQUE LAQUERO, LUCIO B. LASACA, SISINO
LAURDEN, VIVENCIO LAWANGON, ANECITO LAYAN, FERNANDO P. LAYAO,
MARDENIO LAYAO, NEMENCIO C. LINAO, PEDRO LOCION, ENERIO LOOD,
DIOSDADO MADATE, RAMON MAGDOSA, NILO MAGLINTE, MARINO G.
MALINAO, CARLITO MANACAP, AURELIO A. MARO, CRISOSTOMO R. MIJARES,
CESAR MONAPCO, SILVANO MONCANO, EMILIO MONTAJES, CESAR B.
35

MONTERO, CLEMENTE NAKANO, RODRIGO H. NALAS, EMELIANO C. NAPITAN,

JUANITO B. NARON, JR., LUCIO NASAKA, TEOFILO NUNEZ, JORGE M.
OLORVIDA, CANULO P. OLOY, DOROTEO S. OMBRETE, TEOFILIO OMOSURA,
MIGUEL ORALO, SUSANTO C. OTANA, JR., CHARLIE P. PADICA, ALFREDO P.
PALASPAS, CATALINO C. PANA, ERNESTO M. PASCUAL, BIENVENIDO PAYAG,
RESURRECCION PENOS, PEDRO PILAGO, ROMEO PRESBITERO, OMEO L.
PRIEGO, ELADIO QUIBOL, JESUS D. QUIBOL, MAGNO QUIZON, DIONISIO
RAMOS, MAMERTO RANISES, NESTOR B. REBUYA, RODRIGO REQUILMEN,
ISIDRO RETANAL, CARLITO ROBLE, GLICERIO V. ROSETE, TINOY G. SABINO,
MELCHOR SALIGUMBA, SILVERIO SILANGAN, ROBERTO SIVA, PACITA
SUYMAN, CANILO TAJON, AVELINO TATAPOD, ROMEO TAYCO, RENATO TAYCO,
CONRADO TECSON, AGAPITO TECSON, ROMAN. E. TEJERO, ALFREDO
TILANDOCA, CARLOS B. TIMA, HERMONEGES TIRADOR, JOSELITO TIRO,
PASTOR T. TUNGKO, LEANDRO B. TURCAL, VICENTE URQUIZA, VICENTE
VILLA, ANTONIO P. VILLARAIZ, LEOPOLDO VILLAVITO and SAMUEL M.
VILLEGAS, Petitioners,
vs.
THE HON. ROMEO D. MARASIGAN, Presiding Judge of Regional Trial Court, Branch
16, Davao City, SHELL OIL CO., DOW CHEMICAL CO., OCCIDENTAL CHEMICAL
CORP., STANDARD FRUIT CO., STANDARD FRUIT & STEAMSHIP CO., DOLE
FOOD CO., INC., DOLE FRESH FRUIT CO., DEL MONTE FRESH PRODUCE N.A.,
DEL MONTE TROPICAL FRUIT CO., CHIQUITA BRANDS INTERNATIONAL, INC.
and CHIQUITA BRANDS, INC., Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 127856
DEL MONTE FRESH PRODUCE N.A. and DEL MONTE TROPICAL FRUIT CO.,
Petitioners,
vs.
THE REGIONAL TRIAL COURT OF DAVAO CITY, BRANCHES 16 AND 13,
CORNELIO ABELLA, JR., IRENEO AGABATU, PRUDENCIO ALDEPOLIA,
ARTEMIO ALEMAN, FIDEL ALLERA, DOMINGO ALONZO, CORNELIO AMORA,
FELIPE G. AMORA, LEOPOLDO AMORADO, MARCELINO ANDIMAT, JORGE
ANDOY, MARGARITO R. ANGELIA, GREGOTIO APRIANO, ALFREDO A. ARARAO,
BONIFACIO L. ARTIGAS, JERSON ASUAL, SERAFIN AZUCENA, FELIX M. BADOY,
JULIAN J. BAHALLA, REYNALDO BAHAYA, ANTONIO L. BALDAGO, CESAR N.
BALTAZAR, DOMINADO A. BARING, ANTIPAS A. BATINGAL, MARCIANO
NATINGAL, MARINO BIBANCO, LEANDRO BILIRAN, MARGARITO BLANCO,
CATALINO BONGO, MELCHOR BRIGOLE, ELISEO BRINA, ROBERTO BRINA,
36

LUIS BUGHAO, EDUARDO L. BURGUINZO, CELSO M. BUSIA, RPDITO CABAGTE,

RICARADO C. CABALLES, CARLITO A. CAINDOC, CANDIDO CALO, JR.,
PEDRITO CAMPAS, FERNANDO R. CAPAROSO, DANILO CARILLO, BONIFACIO
M. CATCHA, FRANKLIN CLARAS, JOSE F. COLLAMAT, BERNARDO M.
COMPENDIO, CORNELIO COSTILLAS, ENERIO R. DAGAME, FELIMON DEBUMA,
JR., RICADO C. DEIPARIME, GREGORIO S. DE LA PENA, JOSE G. DELUAO, JR.,
ELPEDIO A. DIAZ, QUINTINO DISIPULO, JR., CESAR G. DONAYRE, JOSE
DULABAY, JAIRO DUQUIZA, ANTONIO ENGBINO, ALFREDO ESPINOSA, ALONZO
FAILOG, JAIME FEROLINO, RODOLFO L. GABITO, PEDRO G. GEMENTIZA,
RICARDO A. GEROLAGA, RODULFO G. GEROY, ROGELIO GONZAGA, ROLANDO
GONZALES, MODESTO M. GODELOSAO, HECTOR GUMBAN, CAMILO HINAG,
LECERIO IGBALIC, SILVERIO E. IGCALINOS, ALFREDO INTOD, OLEGARIO
IYUMA, DOMINGO B. JAGMOC, JR., EDUARDO JARGUE, ROLANDO A. LABASON,
ROLANDO LACNO, VIRGILIO A. LADURA, CONSTANCIO M. LAGURA,
FRANCISCO LAMBAN, ENRIQUE LAQUERO, LUCIO B. LASACA, SISINO
LAURDEN, VIVENCIO LAWANGON, ANECITO LAYAN, FERNANDO P. LAYAO,
MARDENIO LAYAO, NEMENCIO C. LINAO, PEDRO LOCION, ENERIO LOOD,
DIOSDADO MADATE, RAMON MAGDOSA, NILO MAGLINTE, MARINO G.
MALINAO, CARLITO MANACAP, AURELIO A. MARO, CRISOSTOMO R. MIJARES,
CESAR MONAPCO, SILVANO MONCANO, EMILIO MONTAJES, CESAR B.
MONTERO, CLEMENTE NAKANO, RODRIGO H. NALAS, EMELIANO C. NAPITAN,
JUANITO B. NARON, JR., LUCIO NASAKA, TEOFILO NUNEZ, JORGE M.
OLORVIDA, CANULO P. OLOY, DOROTEO S. OMBRETE, TEOFILIO OMOSURA,
MIGUEL ORALO, SUSANTO C. OTANA, JR., CHARLIE P. PADICA, ALFREDO P.
PALASPAS, CATALINO C. PANA, ERNESTO M. PASCUAL, BIENVENIDO PAYAG,
RESURRECCION PENOS, PEDRO PILAGO, ROMEO PRESBITERO, OMEO L.
PRIEGO, ELADIO QUIBOL, JESUS D. QUIBOL, MAGNO QUIZON, DIONISIO
RAMOS, MAMERTO RANISES, NESTOR B. REBUYA, RODRIGO REQUILMEN,
ISIDRO RETANAL, CARLITO ROBLE, GLICERIO V. ROSETE, TINOY G. SABINO,
MELCHOR SALIGUMBA, SILVERIO SILANGAN, ROBERTO SIVA, PACITA
SUYMAN, CANILO TAJON, AVELINO TATAPOD, ROMEO TAYCO, RENATO TAYCO,
CONRADO TECSON, AGAPITO TECSON, ROMAN. E. TEJERO, ALFREDO
TILANDOCA, CARLOS B. TIMA, HERMONEGES TIRADOR, JOSELITO TIRO,
PASTOR T. TUNGKO, LEANDRO B. TURCAL, VICENTE URQUIZA, VICENTE
VILLA, ANTONIO P. VILLARAIZ, LEOPOLDO VILLAVITO and SAMUEL M.
VILLEGAS, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 128398

37

CHIQUITA BRANDS, INC., and CHIQUITA BRANDS INTERNATIONAL, INC.,

Petitioners,
vs.
HON. ANITA ALFELOR-ALAGABAN, in her capacity as Presiding Judge of the Regional
Trial Court, Davao City, Branch 13, CORNELIO ABELLA, JR., IRENEO AGABATU,
PRUDENCIO ALDEPOLIA, ARTEMIO ALEMAN, FIDEL ALLERA, DOMINGO
ALONZO, CORNELIO AMORA, FELIPE G. AMORA, LEOPOLDO AMORADO,
MARCELINO ANDIMAT, JORGE ANDOY, MARGARITO R. ANGELIA, GREGOTIO
APRIANO, ALFREDO A. ARARAO, BONIFACIO L. ARTIGAS, JERSON ASUAL,
SERAFIN AZUCENA, FELIX M. BADOY, JULIAN J. BAHALLA, REYNALDO
BAHAYA, ANTONIO L. BALDAGO, CESAR N. BALTAZAR, DOMINADO A. BARING,
ANTIPAS A. BATINGAL, MARCIANO NATINGAL, MARINO BIBANCO, LEANDRO
BILIRAN, MARGARITO BLANCO, CATALINO BONGO, MELCHOR BRIGOLE,
ELISEO BRINA, ROBERTO BRINA, LUIS BUGHAO, EDUARDO L. BURGUINZO,
CELSO M. BUSIA, RPDITO CABAGTE, RICARADO C. CABALLES, CARLITO A.
CAINDOC, CANDIDO CALO, JR., PEDRITO CAMPAS, FERNANDO R. CAPAROSO,
DANILO CARILLO, BONIFACIO M. CATCHA, FRANKLIN CLARAS, JOSE F.
COLLAMAT, BERNARDO M. COMPENDIO, CORNELIO COSTILLAS, ENERIO R.
DAGAME, FELIMON DEBUMA, JR., RICADO C. DEIPARIME, GREGORIO S. DE LA
PENA, JOSE G. DELUAO, JR., ELPEDIO A. DIAZ, QUINTINO DISIPULO, JR.,
CESAR G. DONAYRE, JOSE DULABAY, JAIRO DUQUIZA, ANTONIO ENGBINO,
ALFREDO ESPINOSA, ALONZO FAILOG, JAIME FEROLINO, RODOLFO L.
GABITO, PEDRO G. GEMENTIZA, RICARDO A. GEROLAGA, RODULFO G.
GEROY, ROGELIO GONZAGA, ROLANDO GONZALES, MODESTO M.
GODELOSAO, HECTOR GUMBAN, CAMILO HINAG, LECERIO IGBALIC,
SILVERIO E. IGCALINOS, ALFREDO INTOD, OLEGARIO IYUMA, DOMINGO B.
JAGMOC, JR., EDUARDO JARGUE, ROLANDO A. LABASON, ROLANDO LACNO,
VIRGILIO A. LADURA, CONSTANCIO M. LAGURA, FRANCISCO LAMBAN,
ENRIQUE LAQUERO, LUCIO B. LASACA, SISINO LAURDEN, VIVENCIO
LAWANGON, ANECITO LAYAN, FERNANDO P. LAYAO, MARDENIO LAYAO,
NEMENCIO C. LINAO, PEDRO LOCION, ENERIO LOOD, DIOSDADO MADATE,
RAMON MAGDOSA, NILO MAGLINTE, MARINO G. MALINAO, CARLITO
MANACAP, AURELIO A. MARO, CRISOSTOMO R. MIJARES, CESAR MONAPCO,
SILVANO MONCANO, EMILIO MONTAJES, CESAR B. MONTERO, CLEMENTE
NAKANO, RODRIGO H. NALAS, EMELIANO C. NAPITAN, JUANITO B. NARON,
JR., LUCIO NASAKA, TEOFILO NUNEZ, JORGE M. OLORVIDA, CANULO P. OLOY,
DOROTEO S. OMBRETE, TEOFILIO OMOSURA, MIGUEL ORALO, SUSANTO C.
OTANA, JR., CHARLIE P. PADICA, ALFREDO P. PALASPAS, CATALINO C. PANA,
ERNESTO M. PASCUAL, BIENVENIDO PAYAG, RESURRECCION PENOS, PEDRO
PILAGO, ROMEO PRESBITERO, OMEO L. PRIEGO, ELADIO QUIBOL, JESUS D.
QUIBOL, MAGNO QUIZON, DIONISIO RAMOS, MAMERTO RANISES, NESTOR B.
38

REBUYA, RODRIGO REQUILMEN, ISIDRO RETANAL, CARLITO ROBLE,

GLICERIO V. ROSETE, TINOY G. SABINO, MELCHOR SALIGUMBA, SILVERIO
SILANGAN, ROBERTO SIVA, PACITA SUYMAN, CANILO TAJON, AVELINO
TATAPOD, ROMEO TAYCO, RENATO TAYCO, CONRADO TECSON, AGAPITO
TECSON, ROMAN. E. TEJERO, ALFREDO TILANDOCA, CARLOS B. TIMA,
HERMONEGES TIRADOR, JOSELITO TIRO, PASTOR T. TUNGKO, LEANDRO B.
TURCAL, VICENTE URQUIZA, VICENTE VILLA, ANTONIO P. VILLARAIZ,
LEOPOLDO VILLAVITO and SAMUEL M. VILLEGAS, Respondents.
DECISION
LEONARDO-DE CASTRO, J.:
Before the Court are consolidated Petitions for Review on Certiorari under Rule 45 of the Rules
of Court, which arose out of two civil cases that were filed in different courts but whose factual
background and issues are closely intertwined.
The petitions in G.R. Nos. 1250781 and 1255982 both assail the Order3 dated May 20, 1996 of the
Regional Trial Court (RTC) of General Santos City, Branch 37, in Civil Case No. 5617. The said
Order decreed the dismissal of the case in view of the perceived lack of jurisdiction of the RTC
over the subject matter of the complaint. The petition in G.R. No. 125598 also challenges the
Orders dated June 4, 19964 and July 9, 1996,5 which held that the RTC of General Santos City no
longer had jurisdiction to proceed with Civil Case No. 5617.
On the other hand, the petitions in G.R. Nos. 126654,6 127856,7 and 1283988 seek the reversal of
the Order9 dated October 1, 1996 of the RTC of Davao City, Branch 16, in Civil Case No.
24,251-96, which also dismissed the case on the ground of lack of jurisdiction.
G.R. Nos. 125078, 125598, 126654, 127856, and 128398 were consolidated in the Resolutions
dated February 10, 1997,10 April 28, 199711 and March 10, 1999.12
The factual antecedents of the petitions are as follows:
Proceedings before the Texas Courts
Beginning 1993, a number of personal injury suits were filed in different Texas state courts by
citizens of twelve foreign countries, including the Philippines. The thousands of plaintiffs sought
damages for injuries they allegedly sustained from their exposure to dibromochloropropane
(DBCP), a chemical used to kill nematodes (worms), while working on farms in 23 foreign
countries. The cases were eventually transferred to, and consolidated in, the Federal District
Court for the Southern District of Texas, Houston Division. The cases therein that involved
plaintiffs from the Philippines were "Jorge Colindres Carcamo, et al. v. Shell Oil Co., et al.,"
39

which was docketed as Civil Action No. H-94-1359, and "Juan Ramon Valdez, et al. v. Shell Oil
Co., et al.," which was docketed as Civil Action No. H-95-1356. The defendants in the
consolidated cases prayed for the dismissal of all the actions under the doctrine of forum non
conveniens.
In a Memorandum and Order dated July 11, 1995, the Federal District Court conditionally
granted the defendants motion to dismiss. Pertinently, the court ordered that:
Delgado, Jorge Carcamo, Valdez and Isae Carcamo will be dismissed 90 days after the entry of
this Memorandum and Order provided that defendants and third- and fourth-party defendants
have:
(1) participated in expedited discovery in the United States xxx;
(2) either waived or accepted service of process and waived any other jurisdictional
defense within 40 days after the entry of this Memorandum and Order in any action
commenced by a plaintiff in these actions in his home country or the country in which his
injury occurred. Any plaintiff desiring to bring such an action will do so within 30 days
after the entry of this Memorandum and Order;
(3) waived within 40 days after the entry of this Memorandum and Order any limitationsbased defense that has matured since the commencement of these actions in the courts of
Texas;
(4) stipulated within 40 days after the entry of this Memorandum and Order that any
discovery conducted during the pendency of these actions may be used in any foreign
proceeding to the same extent as if it had been conducted in proceedings initiated there;
and
(5) submitted within 40 days after the entry of this Memorandum and Order an agreement
binding them to satisfy any final judgment rendered in favor of plaintiffs by a foreign
court.
xxxx
Notwithstanding the dismissals that may result from this Memorandum and Order, in the event
that the highest court of any foreign country finally affirms the dismissal for lack of jurisdiction
of an action commenced by a plaintiff in these actions in his home country or the country in
which he was injured, that plaintiff may return to this court and, upon proper motion, the court
will resume jurisdiction over the action as if the case had never been dismissed for [forum non
conveniens].13

40

Civil Case No. 5617 before the RTC of General Santos City and G.R. Nos. 125078 and 125598
In accordance with the above Memorandum and Order, a total of 336 plaintiffs from General
Santos City (the petitioners in G.R. No. 125078, hereinafter referred to as NAVIDA, et al.) filed
a Joint Complaint14 in the RTC of General Santos City on August 10, 1995. The case was
docketed as Civil Case No. 5617. Named as defendants therein were: Shell Oil Co. (SHELL);
Dow Chemical Co. (DOW); Occidental Chemical Corp. (OCCIDENTAL); Dole Food Co., Inc.,
Dole Fresh Fruit Co., Standard Fruit Co., Standard Fruit and Steamship Co. (hereinafter
collectively referred to as DOLE); Chiquita Brands, Inc. and Chiquita Brands International, Inc.
(CHIQUITA); Del Monte Fresh Produce N.A. and Del Monte Tropical Fruit Co. (hereinafter
collectively referred to as DEL MONTE); Dead Sea Bromine Co., Ltd.; Ameribrom, Inc.;
Bromine Compounds, Ltd.; and Amvac Chemical Corp. (The aforementioned defendants are
hereinafter collectively referred to as defendant companies.)
Navida, et al., prayed for the payment of damages in view of the illnesses and injuries to the
reproductive systems which they allegedly suffered because of their exposure to DBCP. They
claimed, among others, that they were exposed to this chemical during the early 1970s up to the
early 1980s when they used the same in the banana plantations where they worked at; and/or
when they resided within the agricultural area where such chemical was used. Navida, et al.,
claimed that their illnesses and injuries were due to the fault or negligence of each of the
defendant companies in that they produced, sold and/or otherwise put into the stream of
commerce DBCP-containing products. According to NAVIDA, et al., they were allowed to be
exposed to the said products, which the defendant companies knew, or ought to have known,
were highly injurious to the formers health and well-being.
Instead of answering the complaint, most of the defendant companies respectively filed their
Motions for Bill of Particulars.15 During the pendency of the motions, on March 13, 1996,
NAVIDA, et al., filed an Amended Joint Complaint,16 excluding Dead Sea Bromine Co., Ltd.,
Ameribrom, Inc., Bromine Compounds, Ltd. and Amvac Chemical Corp. as party defendants.
Again, the remaining defendant companies filed their various Motions for Bill of Particulars.17
On May 15, 1996, DOW filed an Answer with Counterclaim.18
On May 20, 1996, without resolving the motions filed by the parties, the RTC of General Santos
City issued an Order dismissing the complaint. First, the trial court determined that it did not
have jurisdiction to hear the case, to wit:
THE COMPLAINT FOR DAMAGES FILED WITH THE REGIONAL TRIAL COURT
SHOULD BE DISMISSED FOR LACK OF JURISDICTION
xxxx
41

The substance of the cause of action as stated in the complaint against the defendant foreign
companies cites activity on their part which took place abroad and had occurred outside and
beyond the territorial domain of the Philippines. These acts of defendants cited in the complaint
included the manufacture of pesticides, their packaging in containers, their distribution through
sale or other disposition, resulting in their becoming part of the stream of commerce.
Accordingly, the subject matter stated in the complaint and which is uniquely particular to the
present case, consisted of activity or course of conduct engaged in by foreign defendants outside
Philippine territory, hence, outside and beyond the jurisdiction of Philippine Courts, including
the present Regional Trial Court.19
Second, the RTC of General Santos City declared that the tort alleged by Navida, et al., in their
complaint is a tort category that is not recognized in Philippine laws. Said the trial court:
THE TORT ASSERTED IN THE PRESENT COMPLAINT AGAINST DEFENDANT
FOREIGN COMPANIES IS NOT WITHIN THE SUBJECT MATTER JURISDICTION OF
THE REGIONAL TRIAL COURT, BECAUSE IT IS NOT A TORT CATEGORY WITHIN THE
PURVIEW OF THE PHILIPPINE LAW
The specific tort asserted against defendant foreign companies in the present complaint is
product liability tort. When the averments in the present complaint are examined in terms of the
particular categories of tort recognized in the Philippine Civil Code, it becomes stark clear that
such averments describe and identify the category of specific tort known as product liability tort.
This is necessarily so, because it is the product manufactured by defendant foreign companies,
which is asserted to be the proximate cause of the damages sustained by the plaintiff workers,
and the liability of the defendant foreign companies, is premised on being the manufacturer of
the pesticides.
It is clear, therefore, that the Regional Trial Court has jurisdiction over the present case, if and
only if the Civil Code of the Philippines, or a suppletory special law prescribes a product liability
tort, inclusive of and comprehending the specific tort described in the complaint of the plaintiff
workers.20
Third, the RTC of General Santos City adjudged that Navida, et al., were coerced into submitting
their case to the Philippine courts, viz:
FILING OF CASES IN THE PHILIPPINES - COERCED AND ANOMALOUS
The Court views that the plaintiffs did not freely choose to file the instant action, but rather were
coerced to do so, merely to comply with the U.S. District Courts Order dated July 11, 1995, and
in order to keep open to the plaintiffs the opportunity to return to the U.S. District Court.21
42

Fourth, the trial court ascribed little significance to the voluntary appearance of the defendant
companies therein, thus:
THE DEFENDANTS SUBMISSION TO JURISDICTION IS CONDITIONAL AS IT IS
ILLUSORY
Defendants have appointed their agents authorized to accept service of summons/processes in the
Philippines pursuant to the agreement in the U.S. court that defendants will voluntarily submit to
the jurisdiction of this court. While it is true that this court acquires jurisdiction over persons of
the defendants through their voluntary appearance, it appears that such voluntary appearance of
the defendants in this case is conditional. Thus in the "Defendants Amended Agreement
Regarding Conditions of Dismissal for Forum Non Conveniens" (Annex to the Complaint) filed
with the U.S. District Court, defendants declared that "(t)he authority of each designated
representative to accept service of process will become effective upon final dismissal of these
actions by the Court". The decision of the U.S. District Court dismissing the case is not yet final
and executory since both the plaintiffs and defendants appealed therefrom (par. 3(h), 3(i),
Amended Complaint). Consequently, since the authority of the agent of the defendants in the
Philippines is conditioned on the final adjudication of the case pending with the U.S. courts, the
acquisition of jurisdiction by this court over the persons of the defendants is also conditional. x x
x.
The appointment of agents by the defendants, being subject to a suspensive condition, thus
produces no legal effect and is ineffective at the moment.22
Fifth, the RTC of General Santos City ruled that the act of NAVIDA, et al., of filing the case in
the Philippine courts violated the rules on forum shopping and litis pendencia. The trial court
expounded:
THE JURISDICTION FROWNS UPON AND PROHIBITS FORUM SHOPPING
This court frowns upon the fact that the parties herein are both vigorously pursuing their appeal
of the decision of the U.S. District court dismissing the case filed thereat. To allow the parties to
litigate in this court when they are actively pursuing the same cases in another forum, violates
the rule on forum shopping so abhorred in this jurisdiction. x x x.
xxxx
THE FILING OF THE CASE IN U.S. DIVESTED THIS COURT OF ITS OWN
JURISDICTION
Moreover, the filing of the case in the U.S. courts divested this court of its own jurisdiction. This
court takes note that the U.S. District Court did not decline jurisdiction over the cause of action.
43

The case was dismissed on the ground of forum non conveniens, which is really a matter of
venue. By taking cognizance of the case, the U.S. District Court has, in essence, concurrent
jurisdiction with this court over the subject matter of this case. It is settled that initial acquisition
of jurisdiction divests another of its own jurisdiction. x x x.
xxxx
THIS CASE IS BARRED BY THE RULE OF "LITIS PENDENCIA"
Furthermore, the case filed in the U.S. court involves the same parties, same rights and interests,
as in this case. There exists litis pendencia since there are two cases involving the same parties
and interests. The court would like to emphasize that in accordance with the rule on litis
pendencia x x x; the subsequent case must be dismissed. Applying the foregoing [precept] to the
case-at-bar, this court concludes that since the case between the parties in the U.S. is still
pending, then this case is barred by the rule on "litis pendencia."23
In fine, the trial court held that:
It behooves this Court, then to dismiss this case. For to continue with these proceedings, would
be violative of the constitutional provision on the Bill of Rights guaranteeing speedy disposition
of cases (Ref. Sec. 16, Article III, Constitution). The court has no other choice. To insist on
further proceedings with this case, as it is now presented, might accord this court a charming
appearance. But the same insistence would actually thwart the very ends of justice which it seeks
to achieve.
This evaluation and action is made not on account of but rather with due consideration to the fact
that the dismissal of this case does not necessarily deprive the parties especially the plaintiffs
of their possible remedies. The court is cognizant that the Federal Court may resume proceedings
of that earlier case between the herein parties involving the same acts or omissions as in this
case.
WHEREFORE, in view of the foregoing considerations, this case is now considered
DISMISSED.24
On June 4, 1996, the RTC of General Santos City likewise issued an Order,25 dismissing DOWs
Answer with Counterclaim.
CHIQUITA, DEL MONTE and SHELL each filed a motion for reconsideration26 of the RTC
Order dated May 20, 1996, while DOW filed a motion for reconsideration27 of the RTC Order
dated June 4, 1996. Subsequently, DOW and OCCIDENTAL also filed a Joint Motion for
Reconsideration28 of the RTC Order dated May 20, 1996.

44

In an Order29 dated July 9, 1996, the RTC of General Santos City declared that it had already lost
its jurisdiction over the case as it took into consideration the Manifestation of the counsel of
NAVIDA, et al., which stated that the latter had already filed a petition for review on certiorari
before this Court.
CHIQUITA and SHELL filed their motions for reconsideration30 of the above order.
On July 11, 1996, NAVIDA, et al., filed a Petition for Review on Certiorari in order to assail the
RTC Order dated May 20, 1996, which was docketed as G.R. No. 125078.
The RTC of General Santos City then issued an Order31 dated August 14, 1996, which merely
noted the incidents still pending in Civil Case No. 5617 and reiterated that it no longer had any
jurisdiction over the case.
On August 30, 1996, DOW and OCCIDENTAL filed their Petition for Review on Certiorari,32
challenging the orders of the RTC of General Santos City dated May 20, 1996, June 4, 1996 and
July 9, 1996. Their petition was docketed as G.R. No. 125598.
In their petition, DOW and OCCIDENTAL aver that the RTC of General Santos City erred in
ruling that it has no jurisdiction over the subject matter of the case as well as the persons of the
defendant companies.
In a Resolution33 dated October 7, 1996, this Court resolved to consolidate G.R. No. 125598 with
G.R. No. 125078.
CHIQUITA filed a Petition for Review on Certiorari,34 which sought the reversal of the RTC
Orders dated May 20, 1996, July 9, 1996 and August 14, 1996. The petition was docketed as
G.R. No. 126018. In a Resolution35 dated November 13, 1996, the Court dismissed the aforesaid
petition for failure of CHIQUITA to show that the RTC committed grave abuse of discretion.
CHIQUITA filed a Motion for Reconsideration,36 but the same was denied through a Resolution37
dated January 27, 1997.
Civil Case No. 24,251-96 before the RTC of Davao City and G.R. Nos. 126654, 127856, and
128398
Another joint complaint for damages against SHELL, DOW, OCCIDENTAL, DOLE, DEL
MONTE, and CHIQUITA was filed before Branch 16 of the RTC of Davao City by 155 plaintiffs
from Davao City. This case was docketed as Civil Case No. 24,251-96. These plaintiffs (the
petitioners in G.R. No. 126654, hereinafter referred to as ABELLA, et al.) amended their JointComplaint on May 21, 1996.38

45

Similar to the complaint of NAVIDA, et al., ABELLA, et al., alleged that, as workers in the
banana plantation and/or as residents near the said plantation, they were made to use and/or were
exposed to nematocides, which contained the chemical DBCP. According to ABELLA, et al.,
such exposure resulted in "serious and permanent injuries to their health, including, but not
limited to, sterility and severe injuries to their reproductive capacities."39 ABELLA, et al.,
claimed that the defendant companies manufactured, produced, sold, distributed, used, and/or
made available in commerce, DBCP without warning the users of its hazardous effects on health,
and without providing instructions on its proper use and application, which the defendant
companies knew or ought to have known, had they exercised ordinary care and prudence.
Except for DOW, the other defendant companies filed their respective motions for bill of
particulars to which ABELLA, et al., filed their opposition. DOW and DEL MONTE filed their
respective Answers dated May 17, 1996 and June 24, 1996.
The RTC of Davao City, however, junked Civil Case No. 24,251-96 in its Order dated October 1,
1996, which, in its entirety, reads:
Upon a thorough review of the Complaint and Amended Complaint For: Damages filed by the
plaintiffs against the defendants Shell Oil Company, DOW Chemicals Company, Occidental
Chemical Corporation, Standard Fruit Company, Standard Fruit and Steamship, DOLE Food
Company, DOLE Fresh Fruit Company, Chiquita Brands, Inc., Chiquita Brands International,
Del Monte Fresh Produce, N.A. and Del Monte Tropical Fruits Co., all foreign corporations with
Philippine Representatives, the Court, as correctly pointed out by one of the defendants, is
convinced that plaintiffs "would have this Honorable Court dismiss the case to pave the way for
their getting an affirmance by the Supreme Court" (#10 of Defendants Del Monte Fresh
Produce, N.A. and Del Monte Tropical Fruit Co., Reply to Opposition dated July 22, 1996).
Consider these:
1) In the original Joint Complaint, plaintiffs state that: defendants have no properties in the
Philippines; they have no agents as well (par. 18); plaintiffs are suing the defendants for tortuous
acts committed by these foreign corporations on their respective countries, as plaintiffs, after
having elected to sue in the place of defendants residence, are now compelled by a decision of a
Texas District Court to file cases under torts in this jurisdiction for causes of actions which
occurred abroad (par. 19); a petition was filed by same plaintiffs against same defendants in the
Courts of Texas, USA, plaintiffs seeking for payment of damages based on negligence, strict
liability, conspiracy and international tort theories (par. 27); upon defendants Motion to Dismiss
on Forum non [conveniens], said petition was provisionally dismissed on condition that these
cases be filed in the Philippines or before 11 August 1995 (Philippine date; Should the Philippine
Courts refuse or deny jurisdiction, the U. S. Courts will reassume jurisdiction.)

46

11. In the Amended Joint Complaint, plaintiffs aver that: on 11 July 1995, the Federal District
Court issued a Memorandum and Order conditionally dismissing several of the consolidated
actions including those filed by the Filipino complainants. One of the conditions imposed was
for the plaintiffs to file actions in their home countries or the countries in which they were
injured x x x. Notwithstanding, the Memorandum and [O]rder further provided that should the
highest court of any foreign country affirm the dismissal for lack of jurisdictions over these
actions filed by the plaintiffs in their home countries [or] the countries where they were injured,
the said plaintiffs may return to that court and, upon proper motion, the Court will resume
jurisdiction as if the case had never been dismissed for forum non conveniens.
The Court however is constrained to dismiss the case at bar not solely on the basis of the above
but because it shares the opinion of legal experts given in the interview made by the Inquirer in
its Special report "Pesticide Cause Mass Sterility," to wit:
1. Former Justice Secretary Demetrio Demetria in a May 1995 opinion said: The
Philippines should be an inconvenient forum to file this kind of damage suit against
foreign companies since the causes of action alleged in the petition do not exist under
Philippine laws. There has been no decided case in Philippine Jurisprudence awarding to
those adversely affected by DBCP. This means there is no available evidence which will
prove and disprove the relation between sterility and DBCP.
2. Retired Supreme Court Justice Abraham Sarmiento opined that while a class suit is
allowed in the Philippines the device has been employed strictly. Mass sterility will not
qualify as a class suit injury within the contemplation of Philippine statute.
3. Retired High Court Justice Rodolfo Nocom stated that there is simply an absence of
doctrine here that permits these causes to be heard. No product liability ever filed or tried
here.
Case ordered dismissed.40
Docketed as G.R. No. 126654, the petition for review, filed on November 12, 1996 by ABELLA,
et al., assails before this Court the above-quoted order of the RTC of Davao City.
ABELLA, et al., claim that the RTC of Davao City erred in dismissing Civil Case No. 24,251-96
on the ground of lack of jurisdiction.
According to ABELLA, et al., the RTC of Davao City has jurisdiction over the subject matter of
the case since Articles 2176 and 2187 of the Civil Code are broad enough to cover the acts
complained of and to support their claims for damages.

47

ABELLA, et al., further aver that the dismissal of the case, based on the opinions of legal
luminaries reported in a newspaper, by the RTC of Davao City is bereft of basis. According to
them, their cause of action is based on quasi-delict under Article 2176 of the Civil Code. They
also maintain that the absence of jurisprudence regarding the award of damages in favor of those
adversely affected by the DBCP does not preclude them from presenting evidence to prove their
allegations that their exposure to DBCP caused their sterility and/or infertility.
SHELL, DOW, and CHIQUITA each filed their respective motions for reconsideration of the
Order dated October 1, 1996 of the RTC of Davao City. DEL MONTE also filed its motion for
reconsideration, which contained an additional motion for the inhibition of the presiding judge.
The presiding judge of Branch 16 then issued an Order41 dated December 2, 1996, voluntarily
inhibiting himself from trying the case. Thus, the case was re-raffled to Branch 13 of the RTC of
Davao City.
In an Order42 dated December 16, 1996, the RTC of Davao City affirmed the Order dated
October 1, 1996, and denied the respective motions for reconsideration filed by defendant
companies.
Thereafter, CHIQUITA filed a Petition for Review dated March 5, 1997, questioning the Orders
dated October 1, 1996 and December 16, 1996 of the RTC of Davao City. This case was
docketed as G.R. No. 128398.
In its petition, CHIQUITA argues that the RTC of Davao City erred in dismissing the case motu
proprio as it acquired jurisdiction over the subject matter of the case as well as over the persons
of the defendant companies which voluntarily appeared before it. CHIQUITA also claims that the
RTC of Davao City cannot dismiss the case simply on the basis of opinions of alleged legal
experts appearing in a newspaper article.
Initially, this Court in its Resolution43 dated July 28, 1997, dismissed the petition filed by
CHIQUITA for submitting a defective certificate against forum shopping. CHIQUITA, however,
filed a motion for reconsideration, which was granted by this Court in the Resolution44 dated
October 8, 1997.
On March 7, 1997, DEL MONTE also filed its petition for review on certiorari before this Court
assailing the above-mentioned orders of the RTC of Davao City. Its petition was docketed as
G.R. No. 127856.
DEL MONTE claims that the RTC of Davao City has jurisdiction over Civil Case No. 24,25196, as defined under the law and that the said court already obtained jurisdiction over its person
by its voluntary appearance and the filing of a motion for bill of particulars and, later, an answer
48

to the complaint. According to DEL MONTE, the RTC of Davao City, therefore, acted beyond its
authority when it dismissed the case motu proprio or without any motion to dismiss from any of
the parties to the case.
In the Resolutions dated February 10, 1997, April 28, 1997, and March 10, 1999, this Court
consolidated G.R. Nos. 125078, 125598, 126654, 127856, and 128398.
The Consolidated Motion to Drop DOW, OCCIDENTAL, and SHELL as Party-Respondents
filed by NAVIDA, et al. and ABELLA, et al.
On September 26, 1997, NAVIDA, et al., and ABELLA, et al., filed before this Court a
Consolidated Motion (to Drop Party-Respondents).45 The plaintiff claimants alleged that they had
amicably settled their cases with DOW, OCCIDENTAL, and SHELL sometime in July 1997.
This settlement agreement was evidenced by facsimiles of the "Compromise Settlement,
Indemnity, and Hold Harmless Agreement," which were attached to the said motion. Pursuant to
said agreement, the plaintiff claimants sought to withdraw their petitions as against DOW,
OCCIDENTAL, and SHELL.
DOLE, DEL MONTE and CHIQUITA, however, opposed the motion, as well as the settlement
entered into between the plaintiff claimants and DOW, OCCIDENTAL, and SHELL.
The Memoranda of the Parties
Considering the allegations, issues, and arguments adduced by the parties, this Court, in a
Resolution dated June 22, 1998,46 required all the parties to submit their respective memoranda.
CHIQUITA filed its Memorandum on August 28, 1998;47 SHELL asked to be excused from the
filing of a memorandum alleging that it had already executed a compromise agreement with the
plaintiff claimants.48 DOLE filed its Memorandum on October 12, 199849 while DEL MONTE
filed on October 13, 1998.50 NAVIDA, et al., and ABELLA, et al., filed their Consolidated
Memorandum on February 3, 1999;51 and DOW and OCCIDENTAL jointly filed a Memorandum
on December 23, 1999.52
The Motion to Withdraw Petition for Review in G.R. No. 125598
On July 13, 2004, DOW and OCCIDENTAL filed a Motion to Withdraw Petition for Review in
G.R. No. 125598, 53 explaining that the said petition "is already moot and academic and no
longer presents a justiciable controversy" since they have already entered into an amicable
settlement with NAVIDA, et al. DOW and OCCIDENTAL added that they have fully complied
with their obligations set forth in the 1997 Compromise Agreements.

49

DOLE filed its Manifestation dated September 6, 2004,54 interposing no objection to the
withdrawal of the petition, and further stating that they maintain their position that DOW and
OCCIDENTAL, as well as other settling defendant companies, should be retained as defendants
for purposes of prosecuting the cross-claims of DOLE, in the event that the complaint below is
reinstated.
NAVIDA, et al., also filed their Comment dated September 14, 2004,55 stating that they agree
with the view of DOW and OCCIDENTAL that the petition in G.R. No. 125598 has become
moot and academic because Civil Case No. 5617 had already been amicably settled by the
parties in 1997.
On September 27, 2004, DEL MONTE filed its Comment on Motion to Withdraw Petition for
Review Filed by Petitioners in G.R. No. 125598,56 stating that it has no objections to the
withdrawal of the petition filed by DOW and OCCIDENTAL in G.R. No. 125598.
In a Resolution57 dated October 11, 2004, this Court granted, among others, the motion to
withdraw petition for review filed by DOW and OCCIDENTAL.
THE ISSUES
In their Consolidated Memorandum, NAVIDA, et al., and ABELLA, et al., presented the
following issues for our consideration:
IN REFUTATION
I. THE COURT DISMISSED THE CASE DUE TO LACK OF JURISDICTION.
a) The court did not simply dismiss the case because it was filed in bad faith with
petitioners intending to have the same dismissed and returned to the Texas court.
b) The court dismissed the case because it was convinced that it did not have jurisdiction.
IN SUPPORT OF THE PETITION
II. THE TRIAL COURT HAS JURISDICTION OVER THE SUBJECT MATTER OF THE
CASE.
a. The acts complained of occurred within Philippine territory.
b. Art. 2176 of the Civil Code of the Philippines is broad enough to cover the acts
complained of.

50

c. Assumption of jurisdiction by the U.S. District Court over petitioner[s] claims did not
divest Philippine [c]ourts of jurisdiction over the same.
d. The Compromise Agreement and the subsequent Consolidated Motion to Drop Party
Respondents Dow, Occidental and Shell does not unjustifiably prejudice remaining
respondents Dole, Del Monte and Chiquita.58
DISCUSSION
On the issue of jurisdiction
Essentially, the crux of the controversy in the petitions at bar is whether the RTC of General
Santos City and the RTC of Davao City erred in dismissing Civil Case Nos. 5617 and 24,251-96,
respectively, for lack of jurisdiction.
Remarkably, none of the parties to this case claims that the courts a quo are bereft of jurisdiction
to determine and resolve the above-stated cases. All parties contend that the RTC of General
Santos City and the RTC of Davao City have jurisdiction over the action for damages,
specifically for approximately P2.7 million for each of the plaintiff claimants.
NAVIDA, et al., and ABELLA, et al., argue that the allegedly tortious acts and/or omissions of
defendant companies occurred within Philippine territory. Specifically, the use of and exposure
to DBCP that was manufactured, distributed or otherwise put into the stream of commerce by
defendant companies happened in the Philippines. Said fact allegedly constitutes reasonable
basis for our courts to assume jurisdiction over the case. Furthermore, NAVIDA, et al., and
ABELLA, et al., assert that the provisions of Chapter 2 of the Preliminary Title of the Civil
Code, as well as Article 2176 thereof, are broad enough to cover their claim for damages. Thus,
NAVIDA, et al., and ABELLA, et al., pray that the respective rulings of the RTC of General
Santos City and the RTC of Davao City in Civil Case Nos. 5617 and 24,251-96 be reversed and
that the said cases be remanded to the courts a quo for further proceedings.
DOLE similarly maintains that the acts attributed to defendant companies constitute a quasidelict, which falls under Article 2176 of the Civil Code. In addition, DOLE states that if there
were no actionable wrongs committed under Philippine law, the courts a quo should have
dismissed the civil cases on the ground that the Amended Joint-Complaints of NAVIDA, et al.,
and ABELLA, et al., stated no cause of action against the defendant companies. DOLE also
argues that if indeed there is no positive law defining the alleged acts of defendant companies as
actionable wrong, Article 9 of the Civil Code dictates that a judge may not refuse to render a
decision on the ground of insufficiency of the law. The court may still resolve the case, applying
the customs of the place and, in the absence thereof, the general principles of law. DOLE posits
that the Philippines is the situs of the tortious acts allegedly committed by defendant companies
51

as NAVIDA, et al., and ABELLA, et al., point to their alleged exposure to DBCP which occurred
in the Philippines, as the cause of the sterility and other reproductive system problems that they
allegedly suffered. Finally, DOLE adds that the RTC of Davao City gravely erred in relying upon
newspaper reports in dismissing Civil Case No. 24,251-96 given that newspaper articles are
hearsay and without any evidentiary value. Likewise, the alleged legal opinions cited in the
newspaper reports were taken judicial notice of, without any notice to the parties. DOLE,
however, opines that the dismissal of Civil Case Nos. 5617 and 24,251-96 was proper, given that
plaintiff claimants merely prosecuted the cases with the sole intent of securing a dismissal of the
actions for the purpose of convincing the U.S. Federal District Court to re-assume jurisdiction
over the cases.
In a similar vein, CHIQUITA argues that the courts a quo had jurisdiction over the subject matter
of the cases filed before them. The Amended Joint-Complaints sought approximately P2.7
million in damages for each plaintiff claimant, which amount falls within the jurisdiction of the
RTC. CHIQUITA avers that the pertinent matter is the place of the alleged exposure to DBCP,
not the place of manufacture, packaging, distribution, sale, etc., of the said chemical. This is in
consonance with the lex loci delicti commisi theory in determining the situs of a tort, which
states that the law of the place where the alleged wrong was committed will govern the action.
CHIQUITA and the other defendant companies also submitted themselves to the jurisdiction of
the RTC by making voluntary appearances and seeking for affirmative reliefs during the course
of the proceedings. None of the defendant companies ever objected to the exercise of jurisdiction
by the courts a quo over their persons. CHIQUITA, thus, prays for the remand of Civil Case Nos.
5617 and 24,251-96 to the RTC of General Santos City and the RTC of Davao City, respectively.
The RTC of General Santos City and the RTC of Davao City have jurisdiction over Civil Case
Nos. 5617 and 24,251-96, respectively
The rule is settled that jurisdiction over the subject matter of a case is conferred by law and is
determined by the allegations in the complaint and the character of the relief sought, irrespective
of whether the plaintiffs are entitled to all or some of the claims asserted therein.59 Once vested
by law, on a particular court or body, the jurisdiction over the subject matter or nature of the
action cannot be dislodged by anybody other than by the legislature through the enactment of a
law.
At the time of the filing of the complaints, the jurisdiction of the RTC in civil cases under Batas
Pambansa Blg. 129, as amended by Republic Act No. 7691, was:
SEC. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive original
jurisdiction:
xxxx
52

(8) In all other cases in which the demand, exclusive of interest, damages of whatever kind,
attorneys fees, litigation expenses, and costs or the value of the property in controversy exceeds
One hundred thousand pesos (P100,000.00) or, in such other cases in Metro Manila, where the
demand, exclusive of the abovementioned items exceeds Two hundred thousand pesos
(P200,000.00).60
Corollary thereto, Supreme Court Administrative Circular No. 09-94, states:
2. The exclusion of the term "damages of whatever kind" in determining the jurisdictional
amount under Section 19 (8) and Section 33 (1) of B.P. Blg. 129, as amended by R.A. No. 7691,
applies to cases where the damages are merely incidental to or a consequence of the main cause
of action. However, in cases where the claim for damages is the main cause of action, or one of
the causes of action, the amount of such claim shall be considered in determining the jurisdiction
of the court.
Here, NAVIDA, et al., and ABELLA, et al., sought in their similarly-worded Amended JointComplaints filed before the courts a quo, the following prayer:
PRAYER
WHEREFORE, premises considered, it is most respectfully prayed that after hearing, judgment
be rendered in favor of the plaintiffs ordering the defendants:
a) TO PAY EACH PLAINTIFF moral damages in the amount of One Million Five
Hundred Thousand Pesos (P1,500,00.00);
b) TO PAY EACH PLAINTIFF nominal damages in the amount of Four Hundred
Thousand Pesos (P400,000.00) each;
c) TO PAY EACH PLAINTIFF exemplary damages in the amount of Six Hundred
Thousand Pesos (P600,000.00);
d) TO PAY EACH PLAINTIFF attorneys fees of Two Hundred Thousand Pesos
(P200,000.00); and
e) TO PAY THE COSTS of the suit.61
From the foregoing, it is clear that the claim for damages is the main cause of action and that the
total amount sought in the complaints is approximately P2.7 million for each of the plaintiff
claimants. The RTCs unmistakably have jurisdiction over the cases filed in General Santos City
and Davao City, as both claims by NAVIDA, et al., and ABELLA, et al., fall within the purview
of the definition of the jurisdiction of the RTC under Batas Pambansa Blg. 129.
53

Moreover, the allegations in both Amended Joint-Complaints narrate that:

THE CAUSES OF ACTION
4. The Defendants manufactured, sold, distributed, used, AND/OR MADE AVAILABLE IN
COMMERCE nematocides containing the chemical dibromochloropropane, commonly known
as DBCP. THE CHEMICAL WAS USED AGAINST the parasite known as the nematode, which
plagued banana plantations, INCLUDING THOSE in the Philippines. AS IT TURNED OUT,
DBCP not only destroyed nematodes. IT ALSO CAUSED ILL-EFFECTS ON THE HEALTH
OF PERSONS EXPOSED TO IT AFFECTING the human reproductive system as well.
5. The plaintiffs were exposed to DBCP in the 1970s up to the early 1980s WHILE (a) they used
this product in the banana plantations WHERE they were employed, and/or (b) they resided
within the agricultural area WHERE IT WAS USED. As a result of such exposure, the plaintiffs
suffered serious and permanent injuries TO THEIR HEALTH, including, but not limited to,
STERILITY and severe injuries to their reproductive capacities.
6. THE DEFENDANTS WERE AT FAULT OR WERE NEGLIGENT IN THAT THEY
MANUFACTURED, produced, sold, and/or USED DBCP and/or otherwise, PUT THE SAME
into the stream of commerce, WITHOUT INFORMING THE USERS OF ITS HAZARDOUS
EFFECTS ON HEALTH AND/OR WITHOUT INSTRUCTIONS ON ITS PROPER USE AND
APPLICATION. THEY allowed Plaintiffs to be exposed to, DBCP-containing materials which
THEY knew, or in the exercise of ordinary care and prudence ought to have known, were highly
harmful and injurious to the Plaintiffs health and well-being.
7. The Defendants WHO MANUFACTURED, PRODUCED, SOLD, DISTRIBUTED, MADE
AVAILABLE OR PUT DBCP INTO THE STREAM OF COMMERCE were negligent OR AT
FAULT in that they, AMONG OTHERS:
a. Failed to adequately warn Plaintiffs of the dangerous characteristics of DBCP, or to
cause their subsidiaries or affiliates to so warn plaintiffs;
b. Failed to provide plaintiffs with information as to what should be reasonably safe and
sufficient clothing and proper protective equipment and appliances, if any, to protect
plaintiffs from the harmful effects of exposure to DBCP, or to cause their subsidiaries or
affiliates to do so;
c. Failed to place adequate warnings, in a language understandable to the worker, on
containers of DBCP-containing materials to warn of the dangers to health of coming into
contact with DBCP, or to cause their subsidiaries or affiliates to do so;

54

d. Failed to take reasonable precaution or to exercise reasonable care to publish, adopt

and enforce a safety plan and a safe method of handling and applying DBCP, or to cause
their subsidiaries or affiliates to do so;
e. Failed to test DBCP prior to releasing these products for sale, or to cause their
subsidiaries or affiliates to do so; and
f. Failed to reveal the results of tests conducted on DBCP to each plaintiff, governmental
agencies and the public, or to cause their subsidiaries or affiliate to do so.
8. The illnesses and injuries of each plaintiff are also due to the FAULT or negligence of
defendants Standard Fruit Company, Dole Fresh Fruit Company, Dole Food Company, Inc.,
Chiquita Brands, Inc. and Chiquita Brands International, Inc. in that they failed to exercise
reasonable care to prevent each plaintiffs harmful exposure to DBCP-containing products which
defendants knew or should have known were hazardous to each plaintiff in that they, AMONG
OTHERS:
a. Failed to adequately supervise and instruct Plaintiffs in the safe and proper application
of DBCP-containing products;
b. Failed to implement proper methods and techniques of application of said products, or
to cause such to be implemented;
c. Failed to warn Plaintiffs of the hazards of exposure to said products or to cause them to
be so warned;
d. Failed to test said products for adverse health effects, or to cause said products to be
tested;
e. Concealed from Plaintiffs information concerning the observed effects of said products
on Plaintiffs;
f. Failed to monitor the health of plaintiffs exposed to said products;
g. Failed to place adequate labels on containers of said products to warn them of the
damages of said products; and
h. Failed to use substitute nematocides for said products or to cause such substitutes to
[be] used.62 (Emphasis supplied and words in brackets ours.)
Quite evidently, the allegations in the Amended Joint-Complaints of NAVIDA, et al., and
ABELLA, et al., attribute to defendant companies certain acts and/or omissions which led to
55

their exposure to nematocides containing the chemical DBCP. According to NAVIDA, et al., and
ABELLA, et al., such exposure to the said chemical caused ill effects, injuries and illnesses,
specifically to their reproductive system.
Thus, these allegations in the complaints constitute the cause of action of plaintiff claimants a
quasi-delict, which under the Civil Code is defined as an act, or omission which causes damage
to another, there being fault or negligence. To be precise, Article 2176 of the Civil Code
provides:
Article 2176. Whoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no preexisting contractual relation between the parties, is called a quasi-delict and is governed by the
provisions of this Chapter.
As specifically enumerated in the amended complaints, NAVIDA, et al., and ABELLA, et al.,
point to the acts and/or omissions of the defendant companies in manufacturing, producing,
selling, using, and/or otherwise putting into the stream of commerce, nematocides which contain
DBCP, "without informing the users of its hazardous effects on health and/or without instructions
on its proper use and application." 63
Verily, in Citibank, N.A. v. Court of Appeals,64 this Court has always reminded that jurisdiction
of the court over the subject matter of the action is determined by the allegations of the
complaint, irrespective of whether or not the plaintiffs are entitled to recover upon all or some of
the claims asserted therein. The jurisdiction of the court cannot be made to depend upon the
defenses set up in the answer or upon the motion to dismiss, for otherwise, the question of
jurisdiction would almost entirely depend upon the defendants. What determines the jurisdiction
of the court is the nature of the action pleaded as appearing from the allegations in the complaint.
The averments therein and the character of the relief sought are the ones to be consulted.
Clearly then, the acts and/or omissions attributed to the defendant companies constitute a quasidelict which is the basis for the claim for damages filed by NAVIDA, et al., and ABELLA, et al.,
with individual claims of approximately P2.7 million for each plaintiff claimant, which
obviously falls within the purview of the civil action jurisdiction of the RTCs.
Moreover, the injuries and illnesses, which NAVIDA, et al., and ABELLA, et al., allegedly
suffered resulted from their exposure to DBCP while they were employed in the banana
plantations located in the Philippines or while they were residing within the agricultural areas
also located in the Philippines. The factual allegations in the Amended Joint-Complaints all point
to their cause of action, which undeniably occurred in the Philippines. The RTC of General
Santos City and the RTC of Davao City obviously have reasonable basis to assume jurisdiction
over the cases.
56

It is, therefore, error on the part of the courts a quo when they dismissed the cases on the ground
of lack of jurisdiction on the mistaken assumption that the cause of action narrated by NAVIDA,
et al., and ABELLA, et al., took place abroad and had occurred outside and beyond the territorial
boundaries of the Philippines, i.e., "the manufacture of the pesticides, their packaging in
containers, their distribution through sale or other disposition, resulting in their becoming part of
the stream of commerce,"65 and, hence, outside the jurisdiction of the RTCs.
Certainly, the cases below are not criminal cases where territoriality, or the situs of the act
complained of, would be determinative of jurisdiction and venue for trial of cases. In personal
civil actions, such as claims for payment of damages, the Rules of Court allow the action to be
commenced and tried in the appropriate court, where any of the plaintiffs or defendants resides,
or in the case of a non-resident defendant, where he may be found, at the election of the
plaintiff.66
In a very real sense, most of the evidence required to prove the claims of NAVIDA, et al., and
ABELLA, et al., are available only in the Philippines. First, plaintiff claimants are all residents of
the Philippines, either in General Santos City or in Davao City. Second, the specific areas where
they were allegedly exposed to the chemical DBCP are within the territorial jurisdiction of the
courts a quo wherein NAVIDA, et al., and ABELLA, et al., initially filed their claims for
damages. Third, the testimonial and documentary evidence from important witnesses, such as
doctors, co-workers, family members and other members of the community, would be easier to
gather in the Philippines. Considering the great number of plaintiff claimants involved in this
case, it is not far-fetched to assume that voluminous records are involved in the presentation of
evidence to support the claim of plaintiff claimants. Thus, these additional factors, coupled with
the fact that the alleged cause of action of NAVIDA, et al., and ABELLA, et al., against the
defendant companies for damages occurred in the Philippines, demonstrate that, apart from the
RTC of General Santos City and the RTC of Davao City having jurisdiction over the subject
matter in the instant civil cases, they are, indeed, the convenient fora for trying these cases.67
The RTC of General Santos City and the RTC of Davao City validly acquired jurisdiction over
the persons of all the defendant companies
It is well to stress again that none of the parties claims that the courts a quo lack jurisdiction over
the cases filed before them. All parties are one in asserting that the RTC of General Santos City
and the RTC of Davao City have validly acquired jurisdiction over the persons of the defendant
companies in the action below. All parties voluntarily, unconditionally and knowingly appeared
and submitted themselves to the jurisdiction of the courts a quo.
Rule 14, Section 20 of the 1997 Rules of Civil Procedure provides that "[t]he defendants
voluntary appearance in the action shall be equivalent to service of summons." In this
connection, all the defendant companies designated and authorized representatives to receive
57

summons and to represent them in the proceedings before the courts a quo. All the defendant
companies submitted themselves to the jurisdiction of the courts a quo by making several
voluntary appearances, by praying for various affirmative reliefs, and by actively participating
during the course of the proceedings below.
In line herewith, this Court, in Meat Packing Corporation of the Philippines v. Sandiganbayan,68
held that jurisdiction over the person of the defendant in civil cases is acquired either by his
voluntary appearance in court and his submission to its authority or by service of summons.
Furthermore, the active participation of a party in the proceedings is tantamount to an invocation
of the courts jurisdiction and a willingness to abide by the resolution of the case, and will bar
said party from later on impugning the court or bodys jurisdiction.69
Thus, the RTC of General Santos City and the RTC of Davao City have validly acquired
jurisdiction over the persons of the defendant companies, as well as over the subject matter of the
instant case. What is more, this jurisdiction, which has been acquired and has been vested on the
courts a quo, continues until the termination of the proceedings.
It may also be pertinently stressed that "jurisdiction" is different from the "exercise of
jurisdiction." Jurisdiction refers to the authority to decide a case, not the orders or the decision
rendered therein. Accordingly, where a court has jurisdiction over the persons of the defendants
and the subject matter, as in the case of the courts a quo, the decision on all questions arising
therefrom is but an exercise of such jurisdiction. Any error that the court may commit in the
exercise of its jurisdiction is merely an error of judgment, which does not affect its authority to
decide the case, much less divest the court of the jurisdiction over the case.70
Plaintiffs purported bad faith in filing the subject civil cases in Philippine courts
Anent the insinuation by DOLE that the plaintiff claimants filed their cases in bad faith merely to
procure a dismissal of the same and to allow them to return to the forum of their choice, this
Court finds such argument much too speculative to deserve any merit.
It must be remembered that this Court does not rule on allegations that are unsupported by
evidence on record. This Court does not rule on allegations which are manifestly conjectural, as
these may not exist at all. This Court deals with facts, not fancies; on realities, not appearances.
When this Court acts on appearances instead of realities, justice and law will be short-lived.71
This is especially true with respect to allegations of bad faith, in line with the basic rule that good
faith is always presumed and bad faith must be proved.72
In sum, considering the fact that the RTC of General Santos City and the RTC of Davao City
have jurisdiction over the subject matter of the amended complaints filed by NAVIDA, et al., and
ABELLA, et al., and that the courts a quo have also acquired jurisdiction over the persons of all
58

the defendant companies, it therefore, behooves this Court to order the remand of Civil Case
Nos. 5617 and 24,251-96 to the RTC of General Santos City and the RTC of Davao City,
respectively.
On the issue of the dropping of DOW, OCCIDENTAL and SHELL as respondents in view of
their amicable settlement with NAVIDA, et al., and ABELLA, et al.
NAVIDA, et al., and ABELLA, et al., are further praying that DOW, OCCIDENTAL and SHELL
be dropped as respondents in G.R. Nos. 125078 and 126654, as well as in Civil Case Nos. 5617
and 24,251-96. The non-settling defendants allegedly manifested that they intended to file their
cross-claims against their co-defendants who entered into compromise agreements. NAVIDA, et
al., and ABELLA, et al., argue that the non-settling defendants did not aver any cross-claim in
their answers to the complaint and that they subsequently sought to amend their answers to plead
their cross-claims only after the settlement between the plaintiff claimants and DOW,
OCCIDENTAL, and SHELL were executed. NAVIDA, et al., and ABELLA, et al., therefore,
assert that the cross-claims are already barred.
In their Memoranda, CHIQUITA and DOLE are opposing the above motion of NAVIDA, et al.,
and ABELLA, et al., since the latters Amended Complaints cited several instances of tortious
conduct that were allegedly committed jointly and severally by the defendant companies. This
solidary obligation on the part of all the defendants allegedly gives any co-defendant the
statutory right to proceed against the other co-defendants for the payment of their respective
shares. Should the subject motion of NAVIDA, et al., and ABELLA, et al., be granted, and the
Court subsequently orders the remand of the action to the trial court for continuance, CHIQUITA
and DOLE would allegedly be deprived of their right to prosecute their cross-claims against their
other co-defendants. Moreover, a third party complaint or a separate trial, according to
CHIQUITA, would only unduly delay and complicate the proceedings. CHIQUITA and DOLE
similarly insist that the motion of NAVIDA, et al., and ABELLA, et al., to drop DOW, SHELL
and OCCIDENTAL as respondents in G.R. Nos. 125078 and 126654, as well as in Civil Case
Nos. 5617 and 24,251-96, be denied.
Incidentally, on April 2, 2007, after the parties have submitted their respective memoranda, DEL
MONTE filed a Manifestation and Motion73 before the Court, stating that similar settlement
agreements were allegedly executed by the plaintiff claimants with DEL MONTE and
CHIQUITA sometime in 1999. Purportedly included in the agreements were Civil Case Nos.
5617 and 24,251-96. Attached to the said manifestation were copies of the Compromise
Settlement, Indemnity, and Hold Harmless Agreement between DEL MONTE and the settling
plaintiffs, as well as the Release in Full executed by the latter.74 DEL MONTE specified therein
that there were "only four (4) plaintiffs in Civil Case No. 5617 who are claiming against the Del
Monte parties"75 and that the latter have executed amicable settlements which completely
satisfied any claims against DEL MONTE. In accordance with the alleged compromise
59

agreements with the four plaintiffs in Civil Case No. 5617, DEL MONTE sought the dismissal of
the Amended Joint-Complaint in the said civil case. Furthermore, in view of the above settlement
agreements with ABELLA, et al., in Civil Case No. 24,251-96, DEL MONTE stated that it no
longer wished to pursue its petition in G.R. No. 127856 and accordingly prayed that it be
allowed to withdraw the same.
Having adjudged that Civil Case Nos. 5617 and 24,251-96 should be remanded to the RTC of
General Santos City and the RTC of Davao City, respectively, the Court deems that the
Consolidated Motions (to Drop Party-Respondents) filed by NAVIDA, et al., and ABELLA, et
al., should likewise be referred to the said trial courts for appropriate disposition.
Under Article 2028 of the Civil Code, "[a] compromise is a contract whereby the parties, by
making reciprocal concessions, avoid a litigation or put an end to one already commenced." Like
any other contract, an extrajudicial compromise agreement is not excepted from rules and
principles of a contract. It is a consensual contract, perfected by mere consent, the latter being
manifested by the meeting of the offer and the acceptance upon the thing and the cause which are
to constitute the contract.76 Judicial approval is not required for its perfection.77 A compromise
has upon the parties the effect and authority of res judicata78 and this holds true even if the
agreement has not been judicially approved.79 In addition, as a binding contract, a compromise
agreement determines the rights and obligations of only the parties to it.80
In light of the foregoing legal precepts, the RTC of General Santos City and the RTC of Davao
City should first receive in evidence and examine all of the alleged compromise settlements
involved in the cases at bar to determine the propriety of dropping any party as a defendant
therefrom.
The Court notes that the Consolidated Motions (to Drop Party-Respondents) that was filed by
NAVIDA, et al., and ABELLA, et al., only pertained to DOW, OCCIDENTAL and SHELL in
view of the latter companies alleged compromise agreements with the plaintiff claimants.
However, in subsequent developments, DEL MONTE and CHIQUITA supposedly reached their
own amicable settlements with the plaintiff claimants, but DEL MONTE qualified that it entered
into a settlement agreement with only four of the plaintiff claimants in Civil Case No. 5617.
These four plaintiff claimants were allegedly the only ones who were asserting claims against
DEL MONTE. However, the said allegation of DEL MONTE was simply stipulated in their
Compromise Settlement, Indemnity, and Hold Harmless Agreement and its truth could not be
verified with certainty based on the records elevated to this Court. Significantly, the 336 plaintiff
claimants in Civil Case No. 5617 jointly filed a complaint without individually specifying their
claims against DEL MONTE or any of the other defendant companies. Furthermore, not one
plaintiff claimant filed a motion for the removal of either DEL MONTE or CHIQUITA as
defendants in Civil Case Nos. 5617 and 24,251-96.

60

There is, thus, a primary need to establish who the specific parties to the alleged compromise
agreements are, as well as their corresponding rights and obligations therein. For this purpose,
the courts a quo may require the presentation of additional evidence from the parties. Thereafter,
on the basis of the records of the cases at bar and the additional evidence submitted by the
parties, if any, the trial courts can then determine who among the defendants may be dropped
from the said cases.
It is true that, under Article 2194 of the Civil Code, the responsibility of two or more persons
who are liable for the same quasi-delict is solidary. A solidary obligation is one in which each of
the debtors is liable for the entire obligation, and each of the creditors is entitled to demand the
satisfaction of the whole obligation from any or all of the debtors.81
In solidary obligations, the paying debtors right of reimbursement is provided for under Article
1217 of the Civil Code, to wit:
Art. 1217. Payment made by one of the solidary debtors extinguishes the obligation. If two or
more solidary debtors offer to pay, the creditor may choose which offer to accept.
He who made the payment may claim from his co-debtors only the share which corresponds to
each, with the interest for the payment already made. If the payment is made before the debt is
due, no interest for the intervening period may be demanded.
When one of the solidary debtors cannot, because of his insolvency, reimburse his share to the
debtor paying the obligation, such share shall be borne by all his co-debtors, in proportion to the
debt of each.1avvphil
The above right of reimbursement of a paying debtor, and the corresponding liability of the codebtors to reimburse, will only arise, however, if a solidary debtor who is made to answer for an
obligation actually delivers payment to the creditor. As succinctly held in Lapanday Agricultural
Development Corporation v. Court of Appeals,82 "[p]ayment, which means not only the delivery
of money but also the performance, in any other manner, of the obligation, is the operative fact
which will entitle either of the solidary debtors to seek reimbursement for the share which
corresponds to each of the [other] debtors."83
In the cases at bar, there is no right of reimbursement to speak of as yet. A trial on the merits
must necessarily be conducted first in order to establish whether or not defendant companies are
liable for the claims for damages filed by the plaintiff claimants, which would necessarily give
rise to an obligation to pay on the part of the defendants.
At the point in time where the proceedings below were prematurely halted, no cross-claims have
been interposed by any defendant against another defendant. If and when such a cross-claim is
61

made by a non-settling defendant against a settling defendant, it is within the discretion of the
trial court to determine the propriety of allowing such a cross-claim and if the settling defendant
must remain a party to the case purely in relation to the cross claim.
In Armed Forces of the Philippines Mutual Benefit Association, Inc. v. Court of Appeals,84 the
Court had the occasion to state that "where there are, along with the parties to the compromise,
other persons involved in the litigation who have not taken part in concluding the compromise
agreement but are adversely affected or feel prejudiced thereby, should not be precluded from
invoking in the same proceedings an adequate relief therefor."85
Relevantly, in Philippine International Surety Co., Inc. v. Gonzales,86 the Court upheld the ruling
of the trial court that, in a joint and solidary obligation, the paying debtor may file a third-party
complaint and/or a cross-claim to enforce his right to seek contribution from his co-debtors.
Hence, the right of the remaining defendant(s) to seek reimbursement in the above situation, if
proper, is not affected by the compromise agreements allegedly entered into by NAVIDA, et al.,
and ABELLA, et al., with some of the defendant companies.
WHEREFORE, the Court hereby GRANTS the petitions for review on certiorari in G.R. Nos.
125078, 126654, and 128398. We REVERSE and SET ASIDE the Order dated May 20, 1996 of
the Regional Trial Court of General Santos City, Branch 37, in Civil Case No. 5617, and the
Order dated October 1, 1996 of the Regional Trial Court of Davao City, Branch 16, and its
subsequent Order dated December 16, 1996 denying reconsideration in Civil Case No. 24,25196, and REMAND the records of this case to the respective Regional Trial Courts of origin for
further and appropriate proceedings in line with the ruling herein that said courts have
jurisdiction over the subject matter of the amended complaints in Civil Case Nos. 5617 and
24,251-96.
The Court likewise GRANTS the motion filed by Del Monte to withdraw its petition in G.R. No.
127856. In view of the previous grant of the motion to withdraw the petition in G.R. No. 125598,
both G.R. Nos. 127856 and 125598 are considered CLOSED AND TERMINATED.
No pronouncement as to costs.
SO ORDERED.

62

G.R. No. 172218, November 26, 2014

FELICIANO B. DUYON, SUBSTITUTED BY HIS CHILDREN: MAXIMA R. DUYONORSAME, EFREN R. DUYON, NOVILYN R. DUYON, ELIZABETH R. DUYONSIBUMA, MODESTO R. DUYON, ERROL R. DUYON, AND DIVINA R. DUYONVINLUAN, Petitioners, v. THE FORMER SPECIAL FOURTH DIVISION OF THE
COURT OF APPEALS AND ELEONOR P. BUNAG-CABACUNGAN, Respondent.
FELICIANO B. DUYON, SUBSTITUTED BY HIS CHILDREN: MAXIMA R. DUYONORSAME, EFREN R. DUYON, NOVILYN R. DUYON, ELIZABETH R. DUYONSIBUMA, MODESTO R. DUYON, ERROL R. DUYON, AND DIVINA R. DUYONVINLUAN, Petitioners, v. THE FORMER SPECIAL FOURTH DIVISION OF THE
COURT OF APPEALS AND ELEONOR P. BUNAG-CABACUNGAN, Respondents.
DECISION
LEONARDO-DE CASTRO, J.:
Challenged in this petition for certiorari is the September 16, 2005 Decision1 and April 6, 2006
Resolution2 of the Court of Appeals in CA-G.R. SP No. 86630.
Herein petitioner Feliciano B. Duyon (Duyon), on August 27, 1979, was issued Certificate of
Land Transfer (CLT) No. 0-0052243 over the 6,358-square meter parcel of land (subject land) he
had been tilling since 1957. The subject land was denominated as Lot 20 of Lot 797 under
subdivision plan PSD-03-012599 dated January 7, 1987.4chanRoblesvirtualLawlibrary
Apparently, the same parcel of land was also covered by Transfer Certificate of Title (TCT) E.P.
No. 440975 under Emancipation Patent No. A-347307, which had been issued to herein private
respondent Eleonor P. Bunag-Cabacungan (Bunag-Cabacungan) on June 6, 1989.
Sometime in November 2002, Duyon discovered the double registration and filed a complaintaffidavit6 for misconduct or abuse of authority, docketed as OMB-L-A-03-0111-A
(administrative aspect of the case) and for violation of Republic Act No. 3019 and Falsification
of Public Documents under Article 171 of the Revised Penal Code, docketed as OMB L-C-030125-A (criminal aspect of the case) against Bunag-Cabacungan, who was an employee of the
Municipal Agriculture Office of Nueva Ecija under the Department of Agriculture, and her
husband, Eutiquio Cabacungan (Cabacungan), who then worked at the Department of Agrarian
Reform (DAR), for allegedly taking advantage of their official positions to cause the issuance of
the TCT in favor of Bunag-Cabacungan. Duyon further asseverated that Bunag-Cabacungan
misrepresented herself in her application with the DAR by stating therein that she was single
despite having been married to Cabacungan since 1979.7chanRoblesvirtualLawlibrary

63

Explaining their side, Cabacungan and Bunag-Cabacungan, in their Joint Counter-Affidavit,8

denied Duyon's accusations and alleged that he was never deprived possession of the subject
land. They claimed that an error had been made in the issuance of the Emancipation Patent, such
was not their fault, and that the DAR Office in Nueva Ecija had already requested for its
correction. Moreover, they argued, the lot Bunag Cabacungan applied for had a bigger land area
at 18,257 square meters than the 6,358-square meter subject land of Duyon.
Finding that the Cabacungan spouses flaunted unlawful behavior and intentional neglect, the
Office of the Deputy Ombudsman (OMB) for Luzon, on December 11, 2003, issued its Decision9
in OMB-L-A-03-0111-A, finding the spouses guilty of simple misconduct, to
wit:chanroblesvirtuallawlibrary
WHEREFORE, premises considered, it is respectfully recommended that the respondents
Eutiquio Cabacungan and Eleonor P. Bunag-Cabacungan be meted a penalty of suspension of
SIX (6) MONTHS WITHOUT PAY for Simple Misconduct. Respondents are sternly warned
that repetition of the same or similar acts in the future shall be dealt with more severely. 10
The same OMB for Luzon recommended in OMB-L-C-03-0125-A, the filing of an Information
for Violation of Section 3(e) of Republic Act No. 3019 against the Cabacungan spouses in its
Resolution dated December 11, 2003 for causing undue injury to Duyon by evident bad
faith.11chanRoblesvirtualLawlibrary
However, acting on the Motions for Reconsideration filed by the Cabacungan spouses and the
Partial Motion for Reconsideration filed by Duyon, the OMB for Luzon, in a Joint Order12 dated
August 27, 2004, modified its December 11, 2003 Decision and Resolution by dismissing the
charges filed against Cabacungan, and reducing the suspension imposed against BunagCabacungan. The dispositive portion of the Joint Order reads as
follows:chanroblesvirtuallawlibrary
WHEREFORE, PREMISES CONSIDERED, it is most respectfully recommended that the
Resolution and Decision both dated 11 [December] 2003 be MODIFIED as follows: The
criminal as well as the administrative case filed against respondent Eutiquio Cabacungan are
hereby DISMISSED for insufficiency and lack of substantial evidence, respectively. The
recommendation for the filing of an information for violation of Section 3(e) of Republic Act No.
3019 against respondent Eleonor Bunag-Cabacungan is AFFIRMED. The penalty of six (6)
months suspension imposed upon Eleonor Bunag[-Cabacungan] is hereby REDUCED to three
(3) months suspension from office without pay.
The Provincial Prosecutor of Nueva Ecija is hereby ordered to file the hereto attached
information against respondent Eleonor Bunag Cabacungan before the proper court.13
Accordingly, Bunag-Cabacungan filed a Petition for Review on Ceriorari14 before the Court of
Appeals, docketed as CA-G.R. SP No. 86630, seeking the reversal of the December 11, 2003
Decision and August 27, 2004 Joint Order with respect to the administrative aspect of the case;
while Duyon filed his own Petition for Certiorari before the Court of Appeals, docketed as CAG.R. SP No. 87325, assailing the Joint Order dated August 27, 2004 and a motion to consolidate
CA-G.R. SP No. 87325 with CA-G.R. SP No. 86630.
64

In a Resolution15 dated January 27, 2005, the Court of Appeals resolved Duyon's petition for
certiorari and his motion to consolidate the aforementioned cases, as
follows:chanroblesvirtuallawlibrary
WHEREFORE, premises considered, we hereby DISMISS the petition for petitioner's failure to
avail of the proper mode of appeal (with respect to the administrative disciplinary aspect of the
case) and for lack of jurisdiction (with respect to the criminal as Bect of the case), and DENY as
well petitioner's Motion for Consolidation.16
Laying down the grounds for its dismissal of the petition for certiorari and denial of the motion
for consolidation, the Court of Appeals held:chanroblesvirtuallawlibrary
Our examination of the present petition shows that it is, on its face, fatally defective so that a
consolidation with a pending related case is legally inappropriate.
The defect in the present petition is rooted in the petitioner's use of a petition for certiorari as a
remedy against the assailed order. Under current case law, all appeals from decisions of the
Ombudsman in administrative disciplinary cases shall be taken to this Court under Rule 43 of the
Rules of Court; on the other hand, decisions of the Ombudsman in criminal cases are
unappealable. However, where the findings of the Ombudsman on the existence of probable
cause (in criminal cases) are tainted with grave abuse of discretion amounting to lack or excess
of jurisdiction, the aggrieved party may file before the Supreme Court a petition for certiorari
under Rule 65 of the Rules of Court.17 (Citations omitted.)
Duyon filed a Motion for Reconsideration of the Court of Appeals' Resolution, claiming that a
Petition for Certiorari would best serve him.18chanRoblesvirtualLawlibrary
Verily, the Court of Appeals denied such motion for lack of merit on August 12,
2005.19chanRoblesvirtualLawlibrary
Emphasizing the grounds for such denial, the Court of Appeals held:chanroblesvirtuallawlibrary
The petitioner completely misses our point. We dismissed the petition not because of strict
adherence to the rules of court on matters of appeal but because of jurisdictional grounds.
Jurisprudence dictates that all appeals from decisions of the Ombudsman in administrative
disciplinary cases shall be taken to this Court under Rule 43 of the Rules of Court. The Rules
only allow fifteen (15) days from notice of the award, decision or order within which to file a
petition for review. The petitioner filed this petition for certiorari sixty (60) days from receipt of
the assailed order. Thus, the decision of the Office of the Ombudsman (as to the administrative
aspect of the case) was already final at the time this petition was filed. As a final decision, the
Ombudsman's decision on the administrative aspect of the case is no longer within the scope of
the power of review of any court in the absence of grounds for review affecting jurisdiction. This
ground for dismissal is a substantive ground rather than mere technicality. The Honorable
Supreme Court in its Circular No. 2-90 specifically commands that, "an appeal taken to the Court
of Appeals by the wrong or inappropriate mode shall be dismissed. "
65

We cannot entertain the criminal aspect of the case for lack of jurisdiction. By law, decisions of
the Ombudsman in criminal cases are unappealable. However, where the findings of the
Ombudsman on the existence of probable cause (in criminal cases) are tainted with grave abuse
of discretion amounting to lack or excess of jurisdiction, the remedy is a petition for certiorari
under Rule 65 filed, not with us, but before the Honorable Supreme Court.20 (Citations omitted.)
However, notwithstanding that the issue raised m Bunag Cabacungan's petition in CA-G.R. SP
No. 86630 was limited to the administrative aspect of the case, the Court of Appeals promulgated
a contrary decision dated September 16, 2005, which reversed and set aside the assailed Decision
and Joint Order and dismissed Duyon's complaint against Bunag-Cabacungan for violation of
Section 3(e) of Republic Act No. 3019.
In resolving the criminal aspect of the case, the Court of Appeals found that the elements of
Section 3(e) of Republic Act No. 3019 were not present in the case, given the evidence on
record. Thus, it held that "no probable cause exists to warrant the filing of charges against
[Bunag Cabacungan]."21 The Court of Appeals added that there was nothing to show that BunagCabacungan, an employee of the Department of Agriculture, had acted in conspiracy with the
officers or officials of the DAR, the office responsible for the issuance of the Emancipation
Patent. Moreover, the Court of Appeals said, while Duyon alleged undue injury, he nevertheless
failed to present proof of such on him or to the Govemment.22chanRoblesvirtualLawlibrary
The fallo of the Court of Appeals decision, reads:chanroblesvirtuallawlibrary
WHEREFORE, the petition is GRANTED. The assailed decision dated December 11, 2003 and
the joint order dated August 27, 2004 are hereby REVERSED AND SET ASIDE. The complaint
of respondent Feliciano Duyon against petitioner Eleonor Bunag-Cabacungan for violation of
Section 3(e), R.A. No. 3019 is accordingly DISMISSED.23
Duyon filed a Motion for Reconsideration24 on October 10, 2005, which the Court of Appeals
denied for lack of merit in its Resolution25 dated April 6, 2005.26chanRoblesvirtualLawlibrary
Issues
Now before us is a petition for certiorari, filed by Duyon, questioning the aforementioned
decision and resolution of the Court of Appeals in CA G.R. SP No. 86630, which reversed and
set aside the OMB for Luzon's December 11, 2003 Decision, which found Bunag-Cabacungan
and her husband, Cabacungan, guilty of simple misconduct; and August 27, 2004 Joint Order,
which modified the December 11, 2003 Decision (for Simple Misconduct) and December 11,
2003 Resolution (for violation of Section 3[e] of Republic Act No. 3019) by: 1) reducing the
administrative penalty on Bunag-Cabacungan; 2) affirming the recommendation of filing an
information for violation of Section 3(e) of Republic Act No. 3019 against her; and 3) dismissing
both administrative and criminal charges against Bunag-Cabacungan's husband, Cabacungan.
The following are the issues presented for our resolution:chanroblesvirtuallawlibrary

66

WHETHER OR NOT THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF

DISCRETION IN ACTING UPON AND DISMISSING THE CRIMINAL ASPECT OF
THE CASE NOTWITHSTANDING THE CLEAR IMPORT OF THE FABIAN CASE
THAT IT HAS NO JURISDICTION OVER THE DECISIONS OF THE OFFICE OF THE
OMBUDSMAN WITH RESPECT TO CRIMINAL CASES.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN REVERSING
THE OMBUDSMAN'S DECISION WITH RESPECT TO ITS FINDINGS OF
PROBABLE CAUSE.27
Duyon28 argues that the Court of Appeals acted with grave abuse of discretion as it has no power
to review the criminal aspect of Ombudsman cases, which was also the subject of the August 27,
2004 OMB for Luzon Joint Order. Duyon contends that although Bunag-Cabacungan correctly
filed a Petition for Review before the Court of Appeals, such review should have been limited
only to the administrative aspect covered by the OMB for Luzon's Decision of December 11,
2003.29chanRoblesvirtualLawlibrary
To reiterate his point, Duyon cited and attached the Resolutions of the Court of Appeals in CAG.R. SP No. 87325, wherein the Court of Appeals, in resolving his petition for certiorari,
elaborated on the remedies the parties to an Ombudsman case may take with regard to both its
administrative and criminal aspects.
Bunag-Cabacungan, in her Comment,30 avers that the Court of Appeals has now appellate
jurisdiction to review orders and decisions of the Ombudsman regardless of its nature by reason
of Section 7 of Administrative Order No. 17, dated September 15, 2003, amending Section 7,
Rule III, Administrative Order No. 07 dated April 10, 1990 of the implementing rules of the
Office of the Ombudsman. Bunag-Cabacungan argues that the phrase "in all other cases" in the
amendment does not categorically limit the cases that can be appealed to the Court of Appeals
under Rule 43, in contrast to the explicit provision in the old rule, that only appropriate
administrative cases can be appealed to the Supreme Court via a petition for
certiorari.31chanRoblesvirtualLawlibrary
Hence, Bunag-Cabacungan contends that the Court of Appeals correctly reversed and set aside
both the OMB for Luzon's December 11, 2003 Decision on the administrative charge against
Bunag-Cabacungan and her husband and the August 27, 2004 Joint Order on both the
administrative and criminal charges against Bunag-Cabacungan.
Court of Appeals' Jurisdiction Over
the Criminal Aspect of the Case
Duyon was correct in his insistence that the Court of Appeals has no jurisdiction over the
criminal aspect of an Ombudsman case. "The Court of Appeals has jurisdiction over orders,
directives and decisions of the Office of the Ombudsman in administrative disciplinary cases
only. It cannot, therefore, review the orders, directives or decisions of the Office of the
Ombudsman in criminal or non-administrative cases."32chanRoblesvirtualLawlibrary

67

In Kuizon v. Han. Desierto33 this Court clarified:chanroblesvirtuallawlibrary

The appellate court correctly ruled that its jurisdiction extends only to decisions of the Office of
the Ombudsman in administrative cases. In the Fabian case, we ruled that appeals from decisions
of the Office of the Ombudsman in administrative disciplinary cases should be taken to the Court
of Appeals under Rule 43 of the 1997 Rules of Civil Procedure. It bears stressing that when we
declared Section 27 of Republic Act No. 6770 as unconstitutional, we categorically stated that
said provision is involved only whenever an appeal by certiorari under Rule 45 is taken from a
decision in an administrative disciplinary action. It cannot be taken into account where an
original action for certiorari under Rule 65 is resorted to as a remedy for judicial review, such as
from an incident in a criminal action. (Citations omitted.)
Bunag-Cabacungan's argument that the Court of Appeals now has appellate jurisdiction to review
both the administrative and criminal aspects of orders and decisions of the Ombudsman because
of the September 15, 2003 amendment to Rule III of Administrative Order No. 07 of the Office
of the Ombudsman deserves no merit at all.
Section 7, Rule III of Administrative Order No. 07, as amended by Administrative Order No. 17,
reads:chanroblesvirtuallawlibrary
SEC. 7. Finality and execution of decision.- Where the respondent is absolved of the charge, and
in case of conviction where the penalty imposed is public censure or reprimand, suspension of
not more than one month, or a fine equivalent to one month salary, the decision shall be final,
executory and unappealable. In all other cases, the decision may be appealed to the Court of
Appeals on a verified petition for review under the requirements and conditions set forth in Rule
43 of the Rules of Court, within fifteen (15) days from receipt of the written Notice of the
Decision or Order denying the Motion for Reconsideration. (Emphasis supplied.)
Bunag-Cabacungan's contention that the phrase "in all other cases" has removed the distinction
between administrative and criminal cases of the Ombudsman is ludicrous. It must be stressed
that the above-quoted Section 7 is provided under Rule III, which deals with the procedure in
administrative cases. When Administrative Order No. 07 was amended by Administrative Order
No. 17, Section 7 was retained in Rule III. It is another rule, Rule II, which provides for the
procedure in criminal cases. Thus, the phrase "in all other cases" still refers to administrative
cases, not criminal cases, where the sanctions imposed are different from those enumerated in
Section 7.
It is important to note that the petition filed by Bunag-Cabacungan in CA-G.R. SP No. 86630
assailed only the "administrative decision" rendered against her by the OMB for Luzon. Quoted
hereunder is the pertinent portion of her petition:chanroblesvirtuallawlibrary
Believing that she is innocent of the administrative charges against her, your petitioner
interposes this instant petition for the review of the administrative decision against her by the
Office of the Ombudsman and the denial of her motion for reconsideration thereof.34 (Emphases
ours.)

68

Moreover, the lone issue she submitted to the Court of Appeals for its consideration
reads:chanroblesvirtuallawlibrary
THE HONORABLE OFFICE OF THE OMBUDSMAN COMMITTED A GRAVE
ERROR AND ABUSE OF AUTHORITY IN HOLDING COMPLAINANT GUILTY OF
SIMPLE MISCONDUCT FOR THE MISTAKE COMMITTED BY ANOTHER
[PERSON] IN THE ISSUANCE UNDER HER NAME OF EMANCIPATION PATENT No.
A-347307.35
Furthermore, her arguments all throughout her petition for review before the Court of Appeals
centered on how she should not have been found guilty of simple misconduct by the OMB for
Luzon. Even the jurisprudence she cited in support of her arguments pertained to "misconduct in
office." The same is true with Duyon's Comment,36 which focused on why Bunag-Cabacungan
should be judged guilty of misconduct. Duyon actually argued for a more severe administrative
punishment and prayed as follows:chanroblesvirtuallawlibrary
WHEREFORE, in view of the foregoing premises, it is most respectfully prayed of the
Honorable Court to MODIFY the Decision dated December 11, 2003 and the Joint Order dated
August 27, 2004 imposing upon [Bunag-Cabacungan] and her husband the penalty of
DISMISSAL from the government service for gross misconduct. Alternatively, should the
Honorable Court find the punishment to be too harsh, it is humbly asked that they be punished
for conduct grossly prejudicial to the best interest of the service punishable to a maximum period
of one (1) year suspension, without pay, in accordance with Executive Order No. 292.37
In light of the foregoing, it is apparent that in the case before us, the Court of Appeals went
beyond its jurisdiction by touching on the criminal aspect of the Decision and Joint Order of the
OMB for Luzon in OMB-L-A-03-0111-A and OMB-L-C-03-0125-A. As such, the Court of
Appeals' ruling on the criminal aspect of the aforementioned cases is
void.38chanRoblesvirtualLawlibrary
On the Administrative Aspect of the
Case at bar
Considering that the petition for review filed by Bunag-Cabacungan in CA-G.R. SP No. 86630
deals with the administrative aspect of the decision of the Office of the Ombudsman and the
herein petition for certiorari filed by Duyon seeks the dismissal of the said petition for review,
and to expedite the decision in this case, this Court shall pass upon the aforesaid issue raised
particularly as to whether or not the Court of Appeals committed grave abuse of discretion in
reversing and setting aside the OMB for Luzon Decision dated December 11, 2003 and Joint
Order dated August 27, 2004, both of which imposed, among others, administrative sanctions on
respondent Bunag-Cabacungan.
A petition for certiorari is governed by Rule 65 of the Rules of Court, which
reads:chanroblesvirtuallawlibrary

69

Section 1. Petition for certiorari.- When any tribunal, board or officer exercising judicial or
quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave
abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, nor any
plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby
may file a verified petition in the proper court, alleging the facts with certainty and praying that
judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer,
and granting such incidental reliefs as law and justice may require.
For certiorari to prosper, the following requisites must concur: (1) the writ is directed against a
tribunal, a board or any officer exercising judicial or quasi-judicial functions; (2) such tribunal,
board or officer has acted without or in excess of jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction; and (3) there is no appeal nor any plain, speedy and
adequate remedy in the ordinary course of law.39chanRoblesvirtualLawlibrary
This Court has defined grave abuse of discretion as such "capricious and whimsical exercise of
judgment as is equivalent to lack of jurisdiction, or [an] exercise of power in an arbitrary and
despotic manner by reason of passion or personal hostility, or an exercise of judgment so patent
and gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty
enjoined, or to act in a manner not at all in contemplation of law."40chanRoblesvirtualLawlibrary
The Court of Appeals granted Bunag-Cabacungan's petition and reversed and set aside both the
December 11, 2003 Decision and the August 27, 2004 Joint Order of the OMB for Luzon. Since
the December 11, 2003 Decision strictly dealt with the administrative charge against Bunag
Cabacungan, and the August 27, 2004 Joint Order resolved also said administrative charge aside
from the criminal charge against respondent Bunag-Cabacungan, the Court of Appeals in effect
also dismissed the said administrative charge.
The Court, shall, resolve the issue raised by the petition in this case, specially Duyon's prayer for
this Court to order the denial of the petition for review filed by Bunag-Cabacungan before the
Court of Appeals, relying upon the findings of fact of the Court of Appeals, which are pertinent
to the resolution of the administrative charge against respondent Bunag-Cabacungan.
The Court of Appeals found the following facts to have been
established:chanroblesvirtuallawlibrary
As pointed out by [Bunag-Cabacungan], she is an employee of the Department of Agriculture
and not the Department of Agrarian Reform (DAR) which office was responsible for the issuance
of the subject emancipation patent. No evidence was presented to show that she acted in
conspiracy with the officers or officials of the DAR or that they acted with manifest partiality,
bad faith or inexcusable negligence. It must be noted that the charges against [BunagCabacungan]'s husband Eutiquio Cabacungan, who could have provided some link between the
DAR and [Bunag-Cabacungan], were dismissed by the Office of the Ombudsman for lack of
evidence. Other than the fact of misrepresenting herself as single in the application form
and her alleged failure to rectify the error committed in the title, no specific allegations
were made regarding her actual or direct participation in the erroneous issuance of the
same. Neither was it specifically shown that she committed the alleged prohibited acts in
the performance of her official duties or public functions. Likewise, while undue injury was
70

alleged by x x x Feliciano Duyon, he nevertheless failed to present proof of such actual injury or
damage to him or to the government.41 (Emphasis ours.)
Bunag-Cabacungan and her husband were charged with misconduct for allegedly taking
advantage of their official positions to cause the issuance of the emancipation patent in the name
of respondent Bunag-Cabacungan and failing to rectify the erroneous issuance of the said
emancipation patent, as well as the wrongful use of respondent's maiden name in her application
for such emancipation patent. Misconduct in office has a specific legal meaning in our
jurisdiction. Misconduct is "a transgression of some established and definite rule of action, more
particularly, unlawful behavior or gross negligence by a public officer."42 Moreover, "to be
considered as 'misconduct,' the act must have a 'direct relation to and be connected with the
performance of his official duties amounting either to maladministration or willful, intentional
neglect or failure to discharge the duties of the office."'43chanRoblesvirtualLawlibrary
As the Court of Appeals has determined, there were no specific allegations regarding BunagCabacungan's actual or direct participation in the erroneous issuance of the emancipation patent,
nor was it specifically shown that she committed prohibited acts in the performance of her
official duties or public functions. The Court of Appeals also found no evidence to establish that
she acted in conspiracy with the officials of the DAR, which was the government office
responsible for the issuance of the emancipation patent. Thus, the charge for misconduct in office
against respondent Bunag-Cabacungan has no merit.chanrobleslaw
WHEREFORE, the petition is PARTIALLY GRANTED.
1. The September 16, 2005 Decision and April 6, 2006 Resolution of the Court of Appeals
in CA-G.R. SP No. 86630 are hereby SET ASIDE in so far as the said Court of Appeals
Decision and Resolution ordered the dismissal of the complaint filed by petitioner
Feliciano B. Duyon against respondent Eleanor Bunag-Cabacungan in OMB-L-C-030125-A (for Violation of Section 3[e] of Republic Act No. 3019) for lack of jurisdiction;
and
2. The September 16, 2005 Decision and April 6, 2006 Resolution of the Court of Appeals
in CA-G.R. SP No. 86630 are hereby AFFIRMED in so far as the said Court of Appeals
Decision and Resolution reversed and set aside the Office of the Deputy Ombudsman for
Luzon's December 11, 2003 Decision and August 27, 2004 Joint Order, which imposed
the administrative penalty of suspension on respondent Eleanor Bunag-Cabacungan in
OMB-L A-03-0111-A for Simple Misconduct.
SO ORDERED.

71

G.R. No. 154117

October 2, 2009

ERNESTO FRANCISCO, JR., Petitioner,

vs.
OMBUDSMAN ANIANO A. DESIERTO, JOSEPH EJERCITO ESTRADA, MARIANO Z.
VELARDE, FRANKLIN M. VELARDE, ROBERT C. NACIANCENO, REY DIVINO S.
DAVAL-SANTOS, SOLEDAD S. MEDINA-CUE, PATRICK B. GATAN, LUIS V.
MEDINA-CUE, SILVESTRE A. DE LEON, RAMON V. DUMAUAL, RUBEN A. DE
OCAMPO, MARIANO A. BENEDICTO II, GREGORIO R. VIGILAR, LUIS JUAN L.
VIRATA, CESAR E. A. VIRATA, MANUEL B. ZAMORA, JR., RONALDO B. ZAMORA,
FRISCO F. SAN JUAN and ARSENIO B. YULO Respondents.
RESOLUTION
LEONARDO-DE CASTRO, J.:
Before the Court is a petition for review on certiorari filed under Rule 45 of the 1997 Rules of
Civil Procedure to review and set aside the Resolution1 issued by the Office of the Ombudsman
dated November 16, 2001 dismissing, for lack of evidence, the case filed by petitioner Ernesto B.
Francisco, Jr. (hereinafter, petitioner); and the Order,2 likewise issued by said Office, dated June
24, 2002 denying, for lack of merit, petitioners Motion for Reconsideration.
I. STATEMENT OF FACTS.
On 16 April 2001, petitioner filed a Complaint-Affidavit docketed as OMB-0-01-0577 with the
Office of the Ombudsman, alleging that the following respondents, by their individual acts
and/or by conspiring and confederating with one another, have committed the offenses/acts
enumerated hereunder:
a) For violation of Republic Act No. 7080, otherwise known as an Act Defining and Penalizing
the Crime of Plunder, specifically Section 2, in relation to Section 1, sub-paragraph d(1), (3) and
(6), as amended, by Republic Act No. 7659[:]
1. Joseph Ejercito Estrada former President of the Republic of the Philippines
2. Mariano "Bro. Mike" Z. Velarde
3. Franklin M. Velarde

72

4. Gregorio R. Vigilar former Secretary of [Department of Public Works and Highways

(DPWH)] and Chairman, [Toll Regulatory Board (TRB)]
5. Mariano E. Benedicto II Executive Director, TRB
6. Ramon V. Dumaual former Officer-in-Charge, TRB
7. Frisco San Juan former Chairman, [Public Estates Authority (PEA)]
8. John Does and Jane Does
b) For violation of Section 3(a) of [Republic Act No. 3019:]
1. Joseph Ejercito Estrada
2. Gregorio R. Vigilar
3. Mariano E. Benedicto
4. Ramon V. Dumaual
5. Frisco San Juan
6. John Does and Jane Does
c) For violation of Section 3(e) of R.A. No. 3019:
1. Joseph Ejercito Estrada
2. Mariano "Brother Mike" Z. Velarde
3. Franklin M. Velarde
4. Gregorio R. Vigilar
5. Mariano E. Benedicto II
6. Ramon V. Dumaual
7. Ruben de Ocampo
8. Frisco San Juan
9. Arsenio B. Yulo former Chairman and [General] Manager, PEA

73

10. Robert Nacianceno former [Metro Manila Development Authority (MMDA)]

Manager and Chairman, Paraaque City Appraisal Committee (PCAC)
11. Patrick B. Gatan DPWH Representative, PCAC Member
12. Luis V. Medina-Cue Pasay City Assessor, PCAC Member
13. Soledad V. Medina-Cue Paraaque City Assessor, PCAC Member
14. Rey Divino Daval-Santos OIC Paraaque City Engineers Office, PCAC Member
15. Silvestre de Leon Paraaque City Treasurer, PCAC Member
16. Ronaldo B. Zamora former Executive Secretary
17. Luis J. L. Virata
18. Manuel B. Zamora, Jr.
19. Cesar E.A. Virata
20. John Does and Jane Does
d) For violation of Section 3(g) of R.A. 3019;
1. Joseph Ejercito Estrada
2. Mariano "Brother Mike" Z. Velarde
3. Franklin M. Velarde
4. Gregorio R. Vigilar
5. Mariano E. Benedicto, II
6. Ramon V. Dumaual
7. Ruben de Ocampo
8. Frisco San Juan
9. Ronaldo B. Zamora
10. Luis J. L. Virata
11. Manuel B. Zamora, Jr.
74

12. Cesar E.A. Virata

13. John Does and Jane Does
e) For violation of Section 3(h) of R.A. 3019;
1. Ronaldo B. Zamora
f) For violation of Section 3(j) of R.A. 3019;
1. Joseph Ejercito Estrada
2. Mariano "Brother Mike" Z. Velarde
3. Franklin M. Velarde
2. Gregorio R. Vigilar
3. Mariano E. Benedicto, II
4. Frisco San Juan
5. Ronaldo B. Zamora
6. Luis J. L. Virata
7. Manuel B. Zamora, Jr.
8. Cesar E.A. Virata
9. John Does and Jane Does
[g] For violation of Section 7(a) and (d) of R.A. 6713;
1. Ronaldo B. Zamora3
On May 31, 1990, during the administration of President Corazon Aquino, the Republic of the
Philippines, through the Toll Regulatory Board (TRB),4 granted the Public Estates Authority
(PEA) a Toll Operation Certificate to construct, rehabilitate, maintain and operate a toll
expressway, namely, (a) Seaside Drive at Paraaque to C-6 at Bacoor, Cavite; and (b)
Expressway Extension to Noveleta/Kawit.
On February 3, 1994, during the administration of President Fidel Ramos, Renong Berhad,
Majlis Amanah Rakyat (MARA), and the PEA entered into a Memorandum of Understanding to
jointly undertake the implementation of the tollway project.5

75

On December 27, 1994, also during the administration of President Ramos, Renong Berhad,
MARA and the PEA entered into a Joint Venture Agreement to develop and operate as a toll road
the R-1 Expressway Extension. The entire project became known as the "MCTE Project."6
On August 17, 1995, Renong Berhad, MARA, PEA and United Engineers (Malaysia) Berhad
entered into a Novation Agreement whereby Renong Berhad assigned to United Engineers
(Malaysia) Berhad (UEM) its rights, liabilities and obligations under the Joint Venture
Agreement.7
On July 26, 1996, the Republic of the Philippines, acting through the TRB, PEA and UEMMARA Philippines Corporation (UMPC) entered into a Toll Operations Agreement (TOA)8 for
the design, construction, operation and maintenance of the MCTE project, which covered the
Manila-Cavite Toll Expressway, the R-1 Expressway, the C-5 Link Expressway, and the R-1
Expressway Extension. President Fidel Ramos approved the TOA on the same day, July 26,
1996. Under the terms of the TOA:
1. UEM-MARA shall design and construct the expressways covered by the TOA;
2. TRB shall ensure the availability and assume responsibility for the acquisition of the
lands required for the right of way including the costs for procuring the area for the right
of way;
3. PEA shall operate and maintain the expressways; and
4. PEA shall advance the funds necessary for the acquisition of the Right of Way subject
to reimbursement by the Republic of the Philippines.9
On August 9, 1997, the TRB approved the original alignment for the C-5 link. On the basis of
this alignment, the TRB issued notices to the owners of all properties affected, some of which
either belonged to AMVEL Land Corporation (AMVEL) or were part of joint venture
agreements between AMVEL and the property owners. Private respondent Mariano Z. Velarde is
the Chairman of AMVEL while private respondent Franklin M. Velarde is the Executive Vice
President.
Among those property owners to whom TRB sent notices were the following:
a. Mariano Z. Velarde;
b. Asuncion de Jugo;
c. Cornelia Medina;
d. Rosario Medina; and
e. Silvestre Medina.10

76

Under the Memorandum of Agreement11 (MOA) between PEA and the Republic of the
Philippines through the TRB and the DPWH, the obligations of PEA and TRB/DPWH with
respect to the acquisition of the right-of-way were set forth. Under the MOA, the parties agreed
that PEA shall have the following obligations:
1. To pay the purchase price of the lots to be expropriated for right of way as determined
and requested by TRB/DPWH, x x x
2. To pay the expenses incurred in the relocation or eviction of squatters for the right-ofway requirements, subject to TRB/DPWHs repayment x x x;
3. The total amount to be disbursed in the acquisition of right-of-way and the additional
expenses incurred in the relocation and eviction of squatters shall not exceed the amount
borrowed under the loan agreement.12
On the other hand, TRB shall have the following obligations:
1. To identify and locate the lots to be acquired for the right-of-way;
2. To negotiate with individual owners of the lands their purchase price in accordance
with Executive Order No. 329 dated July 11, 1988, Executive Order No. 368 dated
August 24, 1989 and Executive Order No. 369 dated September 14, 1989;
3. To cause the removal and/or relocation of the squatters that may hinder the
construction of the expressway;
4. To prepare the necessary documents between the TRB/DPWH and the lot owners and
owners of improvements;
5. To cause the cancellation of the Certificate of Title in the name of individual lot
owners; [and]
6. To certify to the PEA that the lots for payment are free from all encumbrances and
liens in accordance with the TOA.
It was pursuant to this MOA that the TRB identified and negotiated with the owners of the
properties affected by the construction of the Tollway Project C-5 Link Expressway. Among the
properties affected by the Tollway Project were properties owned or held by AMVEL Land
Development Corporation (AMVEL), namely:
Land No

Landowner

TCT No.

Affected Area
(sq m)

Lot 1-A

Corazon & Cornelia Medina

33989

1,520

Lot 1-B

AMVEL Land Development Corp. (AMVEL)

33989

6,583

77

Lot 2-A

AMVEL

33988

6,062

Lot B-3-1

ADV Realty Corp.

122510

2,153

Lot 1

AMVEL

33550

6,643

Lot 2-B

AMVEL

31446

3,908

Lot 2-C-1

AMVEL

31460

3,813

Lot 2-D-1

Ma. Asuncion de Jugo

113793

753

Lot 2-F-1

Rona Agustines

113796

2,973

Lot 1

Julieta Evangelista, et al.

122378

5,229

Lot 3-A E.

Tirona, et al.

133990

16,543

Lot 2-B

AMVEL

31988

16,313

Lot 4-A

Tirona, et al.

133991

7,075

Total

79,568

Pursuant to the MOA, the TRB requested the Paraaque City Appraisal Committee (PCAC) of
the Metropolitan Manila Development Authority (MMDA) to appraise the affected properties.
This Appraisal Committee was created by virtue of Executive Order No. 329 dated July 11, 1988
as amended by Executive Order No. 369 dated August 24, 1989 specifically for the purpose of
determining the fair valuation of properties to be purchased or acquired for development and
infrastructure projects for public use.13
On April 21, 1998, PCAC issued Resolution Nos. 98-5,14 98-615 and 98-716 appraising properties
along Dr. A. Santos Avenue as follows:
1. All lots abutting Dr. A. Santos Avenue at TWENTY FIVE THOUSAND PESOS
(P25,000.00) per sq. m.;
2. All lots interior of Dr. A. Santos Avenue particularly along Palasan and CalangCalangan, Bgy. San Dionisio at TWENTY THOUSAND PESOS (P20,000.00) per sq. m.;
3. All untitled lots abutting Dr. A. Santos Avenue at SEVENTEEN THOUSAND FIVE
HUNDRED PESOS (P17,500.00) per sq. m.; and
4. All untitled lots interior of Dr. A. Santos Avenue along Palasan and Calang-Calangan at
FOURTEEN THOUSAND PESOS (P14,000.00) per sq. m.17
On May 6, 1998, the PCAC transmitted copies of Resolution Nos. 98-5, 98-6, 98-7 to the TRB.18
On May 7, 1998, the TRB, through its Resolution No. 98-26, approved the acquisition of
properties affected by the C-5 Link in accordance with the PCAC appraisals.19

78

On May 8, 1998, the TRB, through Ramon V. Dumaual, made Payment Instructions20 to PEA to
pay AMVELs property at P20,000.00 per sq. m. pursuant to the PCAC Recommendation.
On April 28, 1998, PEA received a copy of the Memorandum from then President Fidel Ramos,
dated April 27, 1998, regarding the "Request of Bro. Mike Velarde Re: DPWH Road Right of
Way Payments/Settlement on C-5 (PEA-Renong Berhad)." The Memorandum contained the
handwritten marginal note of then President Fidel V. Ramos directing the DPWH to "Fast-Track
the remaining issues NLT April 30, 1998 re the C5-Coastal Road Project in order to alleviate
heavy traffic congestion in the area." At that time, one of the remaining issues was the payment
of the purchase price of AMVEL lands for the right of way, which was then fixed at P20,000.00
per sq. m.21
To determine further the fair market value of the affected lands, the matter was referred to three
independent appraisers, namely: Asian Appraisal, Inc.; Royal Asia Appraisal Corporation, and
Cuervo Appraisal, Inc.
On October 6, 1998, Asian Appraisal, Inc. submitted its Appraisal Report22 on the affected lands.
It determined the fair market value at P422,622,000.00 for 130,848 sq. m., or P3,229.87 per sq.
m.
In its letters dated October 19 and 20, 1998, AMVEL questioned the valuation and sought a
reconsideration of said appraisal. In reply thereto, the TRB, in its letter dated October 20, 1998,
informed AMVEL that it would commission another private appraisal company to determine the
true market value of the properties in the area.
On December 28, 1998, Royal Asia Appraisal Corporation submitted its Appraisal Report23 on
the affected lands. It determined the fair market value at P4,395,179,000.00 for 319,398 sq. m.,
or P13,760.82 per sq. m.
In a letter24 dated November 8, 1998, AMVEL also questioned the valuation of Royal Asia and
claimed that it was "not realistically indicative of the prevailing market value of the properties."
To break the impasse, AMVEL proposed that a third appraisal be conducted to which then
Secretary of the DPWH, respondent Gregorio Vigilar, agreed. For this purpose, Cuervo
Appraisers, Inc. was engaged to conduct a third appraisal.
On December 9, 1998, AMVEL complained of the "long-delayed payment" for its lands while
"other landowners adjoining [their] property also affected by the C-5 road right-of-way have
already been paid at a price of P25,000.00 per sq. m."25
In his reply dated December 29, 1998, respondent Vigilar took exception to the claim of AMVEL
that there was "long-delayed payment," considering that several appraisals of the affected
properties were made. In the same letter, he proposed that the average of the three (3) private
appraisals be used as a final valuation.

79

On January 11, 1999, Cuervo Appraisers, Inc. submitted its Fair Market Value Appraisal26 of the
affected lands. It determined the fair market value at P4,531,752,000 for 251,764 sq. m., or
P18,000 per sq. m.
Further negotiations ensued between the parties. Finally, a consensus was reached to fix the price
by averaging the four appraisals done by MMDA, Royal Asia, Asian Appraisal, and Cuervo.
On January 15, 1999, the TRB, through its Resolution No. 99-02,27 approved the purchase price
of P1,221,799,804.00 for the acquisition of a total area of 79,598 sq. m. The average price per sq.
m., as approved by the TRB, was P15,350.00.
On February 17, 1999, respondent Joseph E. Estrada, then President of the Republic of the
Philippines, issued Administrative Order No. 50 entitled "Prescribing the Guidelines for the
Acquisition of Certain Parcels of Private Land for Public Use including the Right of Way,
Easement of Several Public Infrastructure Projects."
On March 30, 1999, respondent Estrada issued two (2) Memoranda to respondent Benedicto, the
Executive Director of TRB. The first Memorandum28 states:
"You are hereby directed to proceed with right of way acquisition of properties covered by the
TRB Resolution #99-02 dated January 15, 1999, subject to existing laws, rules and regulations."
The second Memorandum29 states:
"The contracts for acquisition of the right of way at the C-5 Link of the Manila-Cavite Toll
Expressway, stated in Resolution No. 99-02 of the Toll Regulatory Board, is hereby approved,
subject to compliance with existing laws, rules and regulations.
"Further, you are directed to submit to this office a certification, stating that the said contracts are
above board, that due diligence has been complied with, that these contracts are free from all
defects and that the terms of the contract are the most advantageous to the government."
On March 30, 1999, TRB transmitted to PEA the Deeds of Absolute Sale executed by TRB and
AMVEL as well as the other parties represented by AMVEL. TRB advised PEA that it shall
immediately inform PEA of the approval by the President, and that, in the meantime, PEA should
take note of the Deed of Sale and prepare for the eventual payment of the properties in
accordance with the TOA and the MOA.30
On April 5, 1999, the TRB, in compliance with the Memorandum of the President dated March
30, 1999 and pursuant to its express obligations under the MOA to certify to PEA that the lots to
be acquired were free from all liens and encumbrances, issued its Compliance and Certification31
stating that the Deed of Sale between the Republic of the Philippines and AMVEL Land
Development Corp., dated March 30, 1999 "was above-board; that due diligence had been
complied with in the negotiation and execution thereof; that to the best of our knowledge, the
same are free from defects and that the terms thereof are not disadvantageous to the
Government."
80

Based on such Compliance and Certification issued by the TRB, PEA paid fifty percent (50%) of
the purchase price to AMVEL.32
On April 8, 1999, respondent Benedicto sent a memorandum33 to the TRB informing it that:
a. The parties executed three (3) deeds of sale on [March 30, 1999];
b. The amounts for the right of way acquisition were those stated in the TRBs Resolution
No. 99-02;
c. Total amount payable of P1,221,766,640 actually lower by 33,244 from the Board
approved amount of P1,221,799,884. 34
On April 29, 1999, or after nearly a year of negotiations for the purchase of the properties subject
of the Right of Way and upon receipt of the required documentation, PEA released the balance of
the purchase price for the AMVEL properties.35
II. PETITIONERS ALLEGATIONS
Petitioner, in his complaint-affidavit36 filed before the Office of the Ombudsman, alleges
irregularities in the above-mentioned transactions. In particular, petitioner contends that the
government acquisition of the AMVEL lands took place in just two and a half working days,
considering that it was Holy Tuesday on March 30, 1999, the date that respondent Estrada issued
the Memorandum to TRB and PEA to proceed with the acquisition of lands for the right-of-way
of the C-5 Link of the MCTE Project, and PEA immediately released on April 5, 1999 fifty
percent (50%) of the total purchase price. He points out that Holy Wednesday was a half-working
day, and what followed was a long holiday, commencing on Holy Thursday and ending on Easter
Sunday.37 Petitioner alleges that it was due to the personal intervention of respondent Estrada and
his close association with respondent Mariano Velarde that AMVEL was able to close this deal.
In his 183-page petition, he alleges:
65. Respondent Mike Velarde received a P685,892,495.00 windfall from the government for a
property which he acquired for almost nothing! His only capital was his closeness to respondent
Estrada and the tremendous amount of influence he wielded in the latters administration. Of
course, all of these he owes to his mostly impoverished flock who voted for respondent Estrada
after "Brother Mike" endorsed him as "tiyak yon."38
Petitioner claims that the nine (9) parcels of land sold by AMVEL to the government, subject of
his complaint, were outrageously overpriced. He alleges that the Transfer Certificates of Title
covering said parcels of land and their corresponding areas, declared market values, assessed
values and selling prices are as follows:39

Transfer
Certificate
of Title

Area (sq. Declared

meters)
Market Value

Assessed
Selling Price
Value (Pesos) (Pesos)

81

(Pesos)

Total

140389

2,153

1,507,100

301,420

33,059,315

140388

6,643

4,650,100

930,020

102,003,265

131446

3,908

1,914,920

382,980

60,007,340

140402

3,813

1,868,370

373,670

58,548,615

140396

9,427

6,598,900

1,319,780

144,751,585

140397

44,669

31,268,300

6,253,660

685,892,495

140404

753

368,970

73,790

11,562,315

140405

2,973

1,456,770

291,350

45,650,415

140408

5,299

2,562,210

512,440

81,366,145

79,638

52,195,640

10,439,110 1,222,841,490

Petitioner likewise claims that based on the 1999 tax declarations, AMVEL sold parcels of land,
which were "undeveloped agricultural lands and salt-making beds (salinar) but which had been
reclassified as residential, to the government at a price which was more than 2,300% percent of
their total declared market value and 11,700% percent of their total assessed value."40

82

Petitioner asserts that the purchase price for right-of-way acquisition "should be the equivalent of
the zonal value plus ten (10%) percent thereof," based on Administrative Order No. 50,41 which
respondent Estrada issued on February 17, 1999 and was made effective immediately. Since the
zonal value of the subject parcels of land was set the year before at Four Thousand Five Hundred
Pesos (P4,500.00) per sq. m. by the Department of Finance,42 the purchase price should have
been Four Thousand Nine Hundred Fifty Pesos (P4,950.00) only, for a total purchase price of
Three Hundred Ninety-Four Million Two Hundred-Eight Thousand and One Hundred Pesos only
(P394,208,100.00). He claims that the price that the government paid (P15,355.00 per sq. m.)
was 310% of the zonal value.43
Petitioner argues that "[by] not following the guidelines set by Administrative Order No. 50, the
government was defrauded of the staggering amount of [P828,633,390.00]" and burdened with
the payment of interest. The government was made to pay in full when the guidelines set by said
Administrative Order provided that, should the landowner refuse to accept the purchase price,
the government would be mandated to initiate expropriation proceedings and deposit only ten
(10%) percent of the offered amount.44
Petitioner notes that even respondent Estrada chose not to follow the guidelines prescribed by
Administrative Order No. 50 by "directing TRB to proceed with the acquisition and approving
[AMVELs] Deeds of Sale." He alleges that there was no legal impediment to its application
because the Deeds of Sale for the AMVEL acquisitions were executed long after the effectivity
date of Administrative Order No. 50.45
Petitioner questions the findings of the government appraisal body, MMDA-PCAC, that the
subject parcels of land "have already been developed," and that these were classified as
commercial lands. He relies on "a document found among the records of the Legal Office of the
Presidential Management Staff"46 that states that the lands were "formerly salt-making beds
(SALINAR) which are not suitable for residential or commercial purposes;" that "AMVEL
merely covered these salt factories with trash and other low-grade filling materials;" that the
properties "did not even have access to the highway .. [until] AMVEL built a bridge from said
properties to Dr. A. Santos Avenue when it was already negotiating with the government;" and
that AMVEL knew beforehand about the proposed highway when it acquired the properties at a
purchase price of Two Thousand Pesos (P2,000.00) per sq. m., properties that were later sold to
the government at Fifteen Thousand Three Hundred Fifty-Five Pesos (P15,355.00) per sq. m.47
The rest of petitioners allegations were summarized by respondent Office of the Ombudsman in
the questioned Resolution,48 which summary we find to be succinct and hereby quote in part
below:
The complainant points out that much earlier, in March 1996, the heirs of a certain Andres
Buenaventura filed an action for annulment of title and reconveyance against the Tirona-Medina
families before the RTC-Paranaque, docketed as Civil Case No. 96-0141. The Buenaventura
heirs claimed that they were rightful owners of the parcel of land covered by TCT No. 14729.
The Buenaventura heirs caused the annotation of a Notice of Lis Pendens on TCT No. 14729.
This notice of Lis Pendens was carried over to the subdivided lots covered by TCT Nos. 133988,
133990 and 133991.
83

On 06 November 1998, AMVEL submitted to the TRB what it claimed to be a Decision dated 29
October 1998 of the Court of Appeals First Division in CA-G.R. No. 54402, which supposedly
affirmed the Decision of the RTC-Paranaque dismissing the case filed by the Buenaventura heirs.
The purported Court of Appeals Decision was signed by Associate Justices Oswaldo Agcaoili,
Fidel Purisima and Corona Ibay-Somera.
The complainant alleges that the supposed 28 October 1998 Decision was falsified and nonexistent. In fact, the records of the Court of Appeals show that, on 22 February 1999, "its Docket
was instructed to (a)wait result of the investigation of NBI as per instructions of J. Valdez."
However, based on the same records, nothing was heard or mentioned again about the result of
the said NBI investigation.
Notwithstanding the attempt to defraud the government with the submission of the falsified and
non-existent Court of Appeals Decision, TRB did not charge AMVEL and, instead, proceeded
with the execution of the Deeds of Sale on 30 March 1999.
The complainant further alleges that the original projected cost of the right-of-way for the MCTE
Project at the time the Toll Operation Agreement between the government and the foreign
investor, Renong Berhad, was being deliberated in late 1995, was P900 million only. However,
by the time the Toll Operation Agreement was approved by the Office of the President on 26 July
1996, the cost of the right-of-way acquisition had already risen to P1.7 billion.
The Toll Operation Agreement dated 26 July 1996 itself, in paragraph 5.04 thereof, likewise
provides that "the Grantee (PEA) shall advance the funds necessary for the acquisition of the
Right of Way except land to be reclaimed subject to a limit of [P1.7 million] and such funds shall
be reimbursed by the Grantor to the Grantee."
As late as October 1998, UEM-MARA Philippines Corporation ("UMPC"), the local subsidiary
of UEM Berhad and a signatory to the Toll Operation Agreement, in a report to the Board of
Investments entitled "Manila Cavite Toll Expressway Project-Project Description October 1998,"
reported in its Summary of Project Costs that the total right-of-way cost is only P1.7 billion. This
is broken down as follows: C-5 Link Expressway, P1.356 billion; and R-1 Extension
Expressway, P344 million. UMPC further reported that "TRB on the other hand will be
responsible for the acquisition of the right-of-way which will be financed by PEA in accordance
to the terms and conditions of NEDA as stipulated in the TOA."
Also, under the aforesaid NEDA Board Resolution No. 2, the Malaysian government agency,
Majilis Amanah Rakyat ("MARA") and Renong Berhads construction affiliate, United
Engineers Berhad (UEB), were supposed to advance P900 million of the P1.7 billion cost of
right-of-way acquisition to be guaranteed by the national government. Further, MARA and UEB
would secure foreign currency denominated loans for the P900 million that they were willing to
advance.
It appears that the project proponents did not even comply with the aforesaid condition for
NEDAs approval of the project. The Malaysian firms were no longer made to advance the sum
of P900 million.
84

Instead, on 5 December 1997, a Loan Agreement was executed among PEA, as borrower, the
Republic of the Philippines, as guarantor, and a syndicate of local and foreign banks, namely,
Solidbank Corporation, Far East Bank and Trust Company (now part of the Bank of the
Philippine Islands), Asianbank Corporation, Chinatrust (Phils.) Commercial Bank Corporation,
Australia and New Zealand Banking Group Limited, Standard Chartered Bank, The Bank of
Nova Scotia (Manila Offshore Branch), The Development [Bank] of Singapore Ltd., and Bank of
America (hereinafter collectively referred to as the "lender banks").
The Lead Arranger for the loan was Exchange Capital Corporation, which is majority-owned by
respondents Luis J. L. Virata and Manuel B. Zamora, Jr. [The] Co-Lead Arrangers were FEB
Investments, Inc. and SolidBank.
As earlier mentioned, TRB sent notices of acquisition to the landowners of the parcels of land
that would be affected by the C-5 Link sometime in 1997. Thereafter, the TRB Officer-in-Charge
requested the Paranaque City Appraisal Committee to appraise the said parcels of land. Thus, the
City Appraisal Committee came out with Resolution No. 98-5 dated 21 April 1998 with bloated
appraisals of said properties.
Complainant asseverates that in what appears to be an attempt to "legitimize" the bloated
appraisal made by the Paraaque City Appraisal Committee on 21 April 1998, on 7 May 1998,
TRB and PEA entered into a Memorandum of Agreement which, among others, explicitly
provides that TRB shall "identify and locate the lots of land sought to be acquired for the rightof-way" and "negotiate with the individual owners of the land the purchase price in accordance
with Executive Order No. 329 dated July 11, 1998, Executive Order No. 368 dated August 24,
1989 and Executive Order NO. 269 dated September 4, 1989." These Executive Orders were
even made part of the Memorandum of Agreement.
The complainant points out that seven (7) months after respondent Mike Velarde got his
P1,222,841,490.00, on 23 November 1999, respondent Estrada, together with respondents
Ronaldo B. Zamora, then Executive Secretary, Gregorio R. Vigilar, then Public Works and
Highways Secretary, and Frisco San Juan, then PEA Chairman, gave his imprimatur and
approval to the proposal of a four (4) month-old, P15 million company, the Coastal Road
Corporation ("CRC"), to take over UMPC and the P7.73 billion MCTE Project (including the
800-hectare reclamation project along Manila Bay going towards Cavite). This is now the subject
of a separate case before the Ombudsman entitled "Ernesto B. Francisco, Jr. vs. Joseph Ejercito
Estrada, et al.," docketed as OMB Case NO. 0-00-1758.
Complainant Francisco further points out that the beneficial owners of CRC are respondents Luis
J. L. Virata and Manuel B. Zamora, Jr. Respondent Luis J. L. Virata is also CRCs President and
Chief Executive Officer, while respondent Cesar E.A. Virata is CRCs Chairman of the Board
and is also a beneficial owner of CRC to the extent of ten (10%) [percent] of its equity.
Also, on 23 November 1999, respondent Estrada, in the presence of respondents Ronaldo B.
Zamora, Gregorio R. Vigilar and Frisco San Juan, gave his imprimatur and approval to CRCs
proposal to de-prioritize the construction of the C-5 Link Expressway, on the one hand, and to
prioritize the R-1 Expressway Extension, on the other. This was done despite the lack of the
85

requisite evaluation and approval of the TRB Board and the fact that CRC does not have the
requisite financial and technical capability and track record to take over the MCTE Project.
Worse, the de-prioritization of the C-5 Link despite the P1.85 billion already spent for right-ofway acquisitions caused the government tremendous losses in terms of the interest on the dollardenominated loan used to fund the said acquisitions.
Respondents LUIS J. L. VIRATA and MANUEL B. ZAMORA, JR. had another reason for
pushing the prioritization of the R-1 Expressway Extension. Respondents wanted to expedite the
development of the Caylabne Bay Resort in Ternate, Cavite. In the words of respondent Luis J.
L. Virata, the Caylabne Bay Resort will be developed into a "top-quality resort . . . with a whole
bunch of a Mediterranean-looking buildings" and with "a first-class resort operation." In an
interview with Mr. Philip Cu-Unjieng, which appeared in the 7 February 1999 issue of the
Philippine Star, respondent Virata himself had categorically admitted how critical is the R-1
Expressway Extension to the development of the Caylabne Bay Resort.
The real problem is that under UMPCs project timetable, the construction schedule of the C-5
Link Expressway was set from March 1997 to September 1999, while that of the R-1 Extension
was set almost near the same period, from October 1997 to September 1999. Thus, the idea is for
both expressways to be constructed and finished almost at the same time. However, by October
1998, both were already delayed by eighteen (18) months and fourteen (14) months, respectively.
Instead of correcting the problem, the government allowed respondent Luis J. L. Virata and
Manuel B. Zamora, J. to take over the project despite their lack of financial and technical
capability to do so. They even tried to borrow from public funds from the Development Bank of
the Philippines to finance their acquisition of UEM Berhads share in UMPC.
Respondents Mariano Z. Velarde, Franklin M. Velarde, Luis Juan L. Virata, Cesar E.A. Virata,
Manuel Zamora, Jr., Ronaldo Zamora, Mariano E. Benedicto II, Frisco F. San Juan, Ruben A. de
Ocampo, and Ramon V. Dumaual filed individual Counter-Affidavits; while respondents Robert
C. Nacianceno, Reydivino Bernabe Daval-Santos, Soledad Samonte Medina-Cue, Patrick
Beltran Gatan, Luis Vicente Medina-Cue, and Silvestre San Agustin de Leon, all members of
PCAC, filed a Joint Counter-Affidavit. Respondents Joseph Estrada and Arsenio Yulo were
ordered to file their counter-affidavits, but they did not file any.
Based on its findings of fact, the Office of the Ombudsman resolved to dismiss the case for lack
of evidence.49
Petitioner filed a Motion for Reconsideration50 on January 14, 2002, alleging that serious errors
of law and/or irregularities had been committed prejudicial to his interest, as follows:
1. The Ombudsman did not conduct fact-finding in the instant case and pursue
investigation requested by the complainant.
2. The Ombudsman did not issue the subpoena duces tecum requested by the complainant
as would afford the complainant the chance to file a reply-affidavit.
3. The inhibition of Desierto came too late since he had already prejudged the case.
86

4. The Ombudsman did not act on the motion for the inhibition of Overall Deputy
Ombudsman Margarito P. Gervacio, Jr. At any rate, Gervacio, out of delicadeza or sense
of decency, should have voluntarily inhibited himself.
5. The Overall Deputy Ombudsman does not have authority to approve the dismissal of
the instant case.
6. The Ombudsman took at their face value the arguments of, and interpretation of the
law by, the respondents, on the one hand, and totally disregarded the evidence of
complainant, on the other.
7. In their haste to dismiss the instant case, Desierto and Gervacio did not consider
additional evidence submitted by the complainant. 51
Respondent Office of the Ombudsman denied petitioners Motion for Reconsideration in an
Order52 dated June 24, 2002.
III. ASSIGNMENT OF ERRORS
Petitioner raises the following assignment of errors against the questioned Resolution and Order
issued by the Office of the Ombudsman:
I
The respondent Ombudsman committed a serious error of law in ruling that "the
transaction/negotiation for the purchase of affected lands was consummated as early as May
1998" and that "Administrative Order No. 50 finds no application to the already perfected
contract between TRB and AMVEL.
II
The respondent Ombudsman committed a serious error of law and grave abuse of discretion
amounting to excess or lack of jurisdiction, in concluding, without basis in fact, "that
respondents complied with the prescribed procedure in determining a fair and reasonable
valuation of the properties in question" and in not finding that respondents committed plunder
and/or graft.
III
The respondent Ombudsman committed a serious error of law and grave abuse of discretion
amounting to lack or excess of jurisdiction in not finding that respondents committed plunder
and/or graft when they changed the original alignment of the Sucat Interchange which increased
the affected land area of Amvel from 63,629 sq. mtrs. to 80,256 sq. mtrs. or a difference of
16,897 sq. mtrs. which was sold to the government for about P259,115,495.00.
IV
87

The respondent Ombudsman committed a serious error of law and grave abuse of discretion
amounting to lack or excess of jurisdiction in not finding that respondents committed plunder
and/or graft when respondent Mike Velarde made a billion-peso killing from the transaction.
V
The respondent Ombudsman committed a serious error of law and grave abuse of discretion
amounting to lack or excess of jurisdiction in not finding that respondents committed graft when
they proceeded with the transaction despite the fact that 44,699 sq. mtrs. of land sold to the
government did not have a clean title at the time of sale.
VI
The respondent Ombudsman committed a serious error of law and grave abuse of discretion
amounting to lack or excess of jurisdiction in not finding that respondents committed plunder
and graft when they bloated the cost of the road-right-of-way and depleted the proceeds of the
US$68.6 Million loan for right-of-way acquisition.
VII
The respondent Ombudsman committed a serious error of law and grave abuse of discretion
amounting to lack or excess of jurisdiction in not finding that respondents committed graft when
they de-prioritized the R-1 Expressway Extension over that of the C-5 Link Expressway.
VIII
The respondent Ombudsman committed grave abuse of discretion amounting to lack or excess of
jurisdiction when he deliberately did not conduct fact-finding to gather more evidence in the case
below despite repeated requests by the complainant.
IX
The respondent Ombudsman committed grave abuse of discretion amounting to lack or excess of
jurisdiction when he deliberately failed to act on motions to issue subpoena duces tecum and ad
testificandum to further strengthen the case.
X
The Ombudsman committed grave abuse of discretion amounting to lack or excess of
jurisdiction when he failed to act on the motion for the inhibition of Overall Deputy Ombudsman
Margarito P. Gervacio, Jr. Likewise, Overall Deputy Ombudsman Gervacio committed grave
abuse of discretion amounting to lack of jurisdiction when he failed to voluntarily inhibit himself
out of delicadeza or a sense of decency.
IV. THEORY OF RESPONDENTS

88

A. COMMENT OF RESPONDENTS ROBERT C. NACIANCENO, REYDIVINO B. DAVALSANTOS, SILVESTRE S.A. DE LEON, PATRICK B. GATAN, SOLEDAD S. MEDINA-CUE,
AND LUIS V. MEDINA-CUE
The case docketed as OMB-0-01-0577 is "primarily an action to hold them accountable for
violation of Section 3 (e) of R.A. 3019, the Anti-Graft and Corrupt Practices Act, on account of
their approval, in 1998, of PCAC Resolution No. 9805 ... as the same resolution had been
allegedly used to justify the alleged over-pricing and related graft and corrupt practices of other
respondents in connection with the acquisition of lands by the national government, in 1999, for
the right of way of the C-5 Link of the Manila-Cavite Toll Expressway Project".
Respondents were "charged in their respective [capacities] as the Chairman and members of the
[PCAC] created under [Executive] Order No. 329, as amended by Executive Order No. 369,
primarily for the determination of the reasonable compensation to be paid to properties that will
be affected by public works and projects in Paraaque City."53
Section 3(e) of Rep. Act No. 3019, under which respondents are charged, provides:
(e) Causing any undue injury to any party, including the Government, or giving any private party
any unwarranted benefits, advantage or preference in the discharge of his official administrative
or judicial functions through manifest partiality, evident bad faith or gross inexcusable
negligence. This provision shall apply to officers and employees of offices or government
corporations charged with the grant of licenses or permits or other concessions. (Underscoring
supplied by respondents.)
Respondents claim that they are neither alleged nor shown to be, as they in fact are not, "officers
and employees of offices or government corporations charged with the grant of licenses or
permits or other concessions."54
Respondents assert that PCAC Resolution No. 98-5 is recommendatory in nature, and that the
adoption of the recommendations was within the prerogative and discretion of the implementing
officers, most of all Fidel V. Ramos, then the President of the Republic at the time of issuance of
said resolution.
Respondents note that the alleged acts of plunder and graft and corrupt practices attributed to the
other respondents have been shown to have transpired during the incumbency of respondent
Joseph E. Estrada as President of the Republic, and after the issuance of said PCAC Resolution
No. 98-5.55
Respondents further argue as follows:
[PCAC] had undertaken diligently and carefully the study and evaluation of the properties that
will be affected by the C-5 Link Expressway in Barangay San Dionisio, Paraaque City, taking
cognizance of the sale of comparable property, the applicable BIR Zonal Value, the opinion
solicited from the residents of the properties near the subject parcels of land, the condition or
status of the parcels of land, the presence of other buildings and structure near the vicinity of the
89

properties, and the consequential damages to the owners of the affected properties. And, contrary
to the allegation of petitioner, the BIR Zonal Value (6th Revision) which took effect on February
2, 1998 provides for P20,000.00 per sq. m. value for commercial land along Dr. A. Santos
Avenue; and P30,000.00 per sq. m. value for Commercial land along Ninoy Aquino Avenue;
furthermore, while the allegations of the complainant that the zonal value of the residential
regular (RR) lands in Dr. A. Santos Avenue, San Dionisio, Paraaque City, was fixed by the
Department of Finance at P4,500.00 per sq. m. just a year before the AMVEL sale, the same
department has fixed the zonal value of commercial land along Dr. A. Santos Avenue, Brgy. San
Dionisio, Paraaque City at P20,000.00 and along Ninoy Aquino Avenue at P30,000.00 per sq.
m. Paraaque City Ordinance No. 97-08, prescribes the land use plan and the zoning of the
Municipality of Paraaque, [and] provides that the lands along Dr. A. Santos Avenue is classified
as within C-3 high intensity commercial zone.56 (Emphasis added)
[The] valuation of the subject properties is justified, and shown to be consonant and consistent
with existing accepted appraisal practice and procedures in the appraisal of properties,
considering that:
a) The appraisal of the properties was based on such factors as location, accessibility,
selling prices of comparable properties, opinion of people living within the vicinity of the
subject properties, the amenities present like water, electricity, transportation and
communication with the vicinity of the property and the status or condition of the parcels
of land. The Committee has noted that the parcels of land have been developed to mean a
great change in its former condition as salt beds or Salinas and the complainant has
acknowledged this truth in his complaint when he stated that the former salt beds are
filled up or covered by filling materials;
b) During the ocular inspection conducted by the technical committee tasked to inspect
the subject properties, these parcels of land were already filled and developed.
c) Ordinance No. 98-08, which prescribed the land use plan and zoning of the
Municipality of Paraaque, provides that Barangay San Dionisio where subject properties
are located, is within C-3 high intensity commercial zone.57
B. COMMENT OF PRIVATE RESPONDENTS MARIANO Z. VELARDE AND FRANKLIN
M. VELARDE
Private respondents Velarde allege that the transactions involving the purchase of the subject nine
(9) parcels of land were perfected before Administrative Order No. 50 came into effect. The sale
was perfected on May 8, 1998, almost a year before the issuance of Administrative Order No. 50,
when the TRB sent a letter to the PEA instructing the latter to prepare the checks representing
payments for the subject properties.58
Private respondents Velarde aver that Amvel never questioned the amount of the purchase price,
gave its imprimatur to the purchase price set by TRB, and the last thing to be done was the actual
receipt of the checks in payment thereof by Amvel. Unfortunately, however, Amvel was not paid.
Instead, TRB conducted a series of appraisals of the subject property.
90

As of December 9, 1998, Amvel wrote to the DPWH Secretary, asking that it be paid the
purchase price set by the PCAC as directed by TRB.59 In a letter dated January 20, 1999, TRB
informed Amvel that it was willing to purchase the latters properties at a price arrived at by
adopting a formula close to averaging all four (4) appraisals obtained from the PCAC, as well as
the three (3) private appraisal companies.60 Thereafter, TRB issued Resolution No. 99-02 on
January 15, 1999 approving the purchase of the subject properties in the aggregate amount of
P1,221,799,804.00.61
On April 22, 1999, Amvel was able to receive full payment of the agreed purchase price, but the
amount received was P1,221,766,640.00.62
Private respondents argue that the subject properties were not overpriced. The properties were
zoned and classified as commercial areas, not agricultural or residential. Massive development
and improvement works were immediately carried out and introduced after these properties were
acquired by Amvel through purchase or joint venture agreements.63
Private respondents cited several factors why a higher appraisal value than the one eventually
used should be adopted, and these are:
a. The PCAC, as early as April 21, 1998 (way before the election of respondent Estrada to
the presidency in the May 10, 1998 elections), had already fixed the price of the
properties on the site, along with those found in the area: between P20,000.00 and
P25,000.00 per sq. m.
b. In 1997, the site was appraised at P18,000.00 per sq. m., and a portion of the same with
an area of 49,316 sq. m. covered by TCT No. 133550 was given a development loan
accommodation by Metrobank in the amount of P550,000,000.00.
c. The current Bureau of Internal Revenue (BIR) zonal valuation appraised the vicinity at
P25,000.00 per sq. m.
Private respondents claim that the other properties affected by the C-5 Link Project adjacent to
and near the vicinity of the site were acquired and paid for by the government at P25,000.00 per
sq. m. in accordance with the MMDA appraisal.64 For the subject properties, the government was
able to save P4,645.00 per sq. m.65
The private appraisal companies were engaged by TRB and not Amvel. The final purchase price
was imposed upon Amvel by the government, and respondents Velarde had no hand in fixing the
said amount. Private respondents Velarde merely acted within the bounds of their duties and
powers as officers of Amvel. It was only natural that they would negotiate for an amount most
advantageous to the said company. The fact that the purchase price of the subject properties
considerably plummeted would certainly negate the allegation that respondent Mariano Z.
Velarde exerted influence on respondent Estrada or any other public officer for that matter.
Furthermore, private respondents aver that, except for a small portion, Amvel acquired the
properties at prices ranging from not less than P7,500.00 per sq. m. to as high as P9,000.00 per
91

sq. m. Petitioner thus failed to take into consideration the significant incidental expenses for the
acquisition, consolidation, improvement and development of the subject properties.
Private respondents claim that the re-alignment of the C-5 Link Project has actually resulted in
the significant reduction and decrease of the affected areas, that is, from the original 12 hectares
to 7.9 hectares. Hence, petitioner completely erred in claiming that the realignment had actually
resulted in a greater profit to Amvel. The subject property, measuring 79,568 sq. m., was just
34.28% of the total area of the site, which was 232,078 sq. m.
To provide a background of the transactions leading to the purchase by the government of the
subject properties, private respondents gave its version of the antecedent facts, as follows:
a. As early as June 1994, a company by the name of "ADV Realty" had set its sights in
developing [a] large expanse of undeveloped parcels of raw lands around the Ninoy
Aquino International Airport (NAIA) and in Barangay San Dionisio, Paraaque City into
a commercial and business park by entering into various joint venture agreements with
several landowners, particularly the Medina-Tirona family.66
b. A large amphitheater would also be constructed to serve as a multi-purpose complex
that would principally serve as the venue for the weekly prayer meetings and healing
sessions of the members of the El Shaddai Movement of which herein respondent
Mariano Z. Velarde is the Servant Leader.
c. In order to consolidate the whole area, joint ventures were likewise forged with the
other landowners of the adjacent properties who were all prominent families of
Paraaque City (e.g., Medina-Evangelista, Balinghasay and Santos). More importantly,
for those properties that were not available for joint venture, ADV Realty acquired them
by purchase.
d. In 1996, development efforts were immediately poured and instituted into the
properties in accordance with the master plan and the business development concepts for
the area. In 1997, ADV Realty was able to consolidate a 23-hectare property and predevelopment operations thereon were in full blast. ADV Realtys name was then changed
into Amvel Land Development Corporation.
e. However, Amvel was notified by the government, through the TRB, in the last quarter
of 1997 that the site will be affected by the C-5 Link Project. Ex-president Fidel V.
Ramos was still the incumbent president at that time.
f. Upon examining the proposed alignment of the aforesaid project, Amvel was surprised
to find out that it would cut across right at the center of the site. This would render the
whole property unattractive to prospective investors as the C-5 Link Project would block
all possible ingress to and egress from the property, making accessibility a major concern.
g. This would entail a re-evaluation and a radical change in the master plan of the
commercial and business park. Once the C-5 Link Project would be constructed, the
92

remaining property of Amvel would be divided into two (2) portions. Both portions
would be enclosed by the proposed C-5 Link Project and the rivers found on the north
and west side of the property.
h. Even other property owners in the area, most notably the SM Holdings Property and
ADELFA Property, Inc., also raised objections to the C-5 link Project as the original plan
of the said Project posed serious threat to their respective developmental plans for their
properties.
i. As a result, Amvel, along with SM Holdings Property and ADELFA Property, Inc.,
negotiated for the re-alignment of the C-5 Link Project.
j. As a consequence thereof, Amvel was constrained to construct another bridge as a
passageway for the portion located at the southern side of the property. To accomplish
such a task, Amvel was forced to purchase the property where the bridge would be
constructed.
k. The final re-alignment plan that was jointly prepared by Amvel, SM Prime Holdings
and ADELFA Properties, Inc. and duly approved by the TRB, had actually and in reality
resulted in the substantial reduction of the portion of the site that would be affected by the
C-5 Link Project. From the original area of TWELVE (12) hectares, it was reduced to
only 7.9 hectares.
l. Had Amvel really intended to capitalize on the business opportunity brought about by
the C-5 Link Project, as wrongfully alleged by petitioner, it could have proposed a realignment plan that would consume a larger portion of the site.
Private respondents argue that the subject properties were not bought by Amvel for the purpose
of selling them to the government, in the light of the proposed construction of the C-5 Link
Project. After Amvel and TRB finally agreed on the terms of the sale, all the portions of the site
that were caught along the path of the C-5 Link Project were sold to the government.67 These
properties are described in the following table:

TCT
No.

Original Size
(sq m)

140397

122,694

140396

10,099

140388

49,316

Previous owner

Date of JVA/
Purchase

Size sold
to govt.

Emmanuel Tirona, Ma.

Aurora T. Mercado,
Rosario T. Medina and
Corazon T. Medina

(JVA with ADV

44,669
Realty) November
16, 1994
9,427

Josefina, Adelaida, Jose

Purchased by

6,643
93

and Teofilo, all surnamed ADV realty on

Balinghasay
January 23 1998.

140389

15,721

Balinghasays

Purchased, by
ADV Realty on
January 21, 1997

2,153

140402

3,813

Arcadio C. Santos

Purchased by
ADV realty on
September 12,
1997

3,813

131446

3,908

Victor B. Santos

Purchased by
ADV Realty in
1997

3,908

140404

2 parcels
19,543 sq m

Ma. Asuncion Jugo, Jose

Ramon L. Santos and
Rona S. Agustines

JVA with ADV

753
Realty on May 27,
1997
2,973

62,448

Leonor Crisostomo,
Julieta, Amelia,
Elizabeth, Angela Katrina
and Kristina Isabela, all
surnamed Medina

Land
Development
Agreement with
ADV Realty on
December 19,
1996

140405

140408

5,229

The properties acquired by the government that were previously owned by (1) Emmanuel Tirona,
Ma. Aurora T. Mercado, Rosario T. Medina and Corazon T. Medina; (2) Ma. Asuncion Jugo, Jose
Ramon L. Santos and Rona S. Agustines; and (3) Leonor Crisostomo, Julieta, Amelia, Elizabeth,
Angela Katrina and Kristina Isabela, all surnamed Medina, were all part and parcel of larger
tracts of land that were subject of several joint venture agreements. The remaining portions were
developed in accordance with the undertaking of Amvel under said agreements.
In a Memorandum of Agreement68 dated February 2, 2000 entered into by Emmanuel Tirona,
Ma. Aurora T. Mercado, Rosario T. Medina and Corazon T. Medina, and Amvel, the latter paid
94

the former the amount of P320,000,000.00 as their share of the purchase price paid by the
government in acquiring the portion of the property subject of the Development Joint Venture
Agreement (with a Lease Clause) entered into by the same parties.
Private concrete roads were already constructed within the vicinity and modern drainage systems
were already installed therein. More than one (1) million cubic meters of soil were deposited on
the site to raise its elevation above the highest flood level recorded in the area, appropriately
compacted with the use of heavy equipment as required in a business/commercial land use.
If Amvel had an advance information that the C-5 Link Project would traverse a portion of the
site way back in 1996, then it should have only focused its sight and poured its resources on the
79,568 sq. m. of land affected by the said Project by simply purchasing only to the extent of the
same. Because of the intrusion of the C-5 Link Project into its property, Amvel had to re-evaluate
and change the master plan to conform to the significant changes in the shape and configuration
of the site, which was destructively broken into two parts by the C-5 Link Project. That the C-5
Link Project greatly reduced the viability and marketability of the intended commercial and
business park is beyond cavil, as the construction of the C-5 Link Project would leave Amvel
with a property enclosed or bounded by a highway and rivers without any access, thereby forcing
it to incur major additional costs and expenses to build the necessary bridges and access roads to
connect the remaining portions to the Ninoy Aquino Avenue.
Amvel, as a consequence of the Project, likewise incurred delays in introducing the needed
developments it undertook to infuse into the property, subject of the Land Development
Agreement it entered into with the Medina family. The amount of P10,000,000.00 was paid by
Amvel to the Medina family as penalty for the aforementioned delay.69
Respondents Velarde allege that they had no participation whatsoever in the preparation of the
fabricated CA Decision70 dated October 29, 1998 in Buenaventura-Santiago, et al. v. Sps.
Medina, et al., docketed as CA G.R. No. CV 54402. Amvel received a copy of said decision on
November 25, 1998. After receiving the same, Amvel immediately furnished a copy to the TRB
and the Register of Deeds of Paraaque City, to have the same annotated on the Transfer
Certificates of Title covering the parcels of land subject of the aforesaid case. When Amvel tried
to secure a certified true copy of the said decision from the CA, as required by the Register of
Deeds and the TRB, it discovered that the case was still pending for resolution and no such
decision had been promulgated. Amvel sent a letter dated February 8, 1999 to the Register of
Deeds of Paraaque City to explain what happened and request that the annotations already made
on the titles be immediately canceled.71 On the same date, Amvel sent a letter to the TRB
informing the latter of its discovery that the alleged decision was spurious.72 Amvel requested
that the CA conduct a full-blown investigation regarding the matter.
C. COMMENT OF RESPONDENT DUMAUAL73
Respondent Dumaual was Officer-in-Charge of the TRB from November 28, 1997 to September
8, 1998.

95

In his statement of the facts, he pointed out that the alignment of the C-5 Link Expressway
project was revised on April 1998 because, during the discussion with AMVEL on the
acquisition of right-of-way ("ROW") for the revised alignment, it was found that an area between
the south slip road and the main C-5 Link would not be acquired for ROW, which in effect would
have produced a pocket with limited use.74
On September 16, 1998, a Memorandum was sent by respondent to the Board suggesting that
"the south slip road be located nearer to the main C-5 Link to maximize use of real estate." As of
that date, TRB was still unable to formalize the transaction with AMVEL and to pay the latter.
Respondent Dumaual, despite due diligence, was unable to determine the veracity of the relevant
titles submitted for payment. He wrote to the TRB about the problems with the titles and
recommended that said properties be expropriated. He was relieved as OIC of TRB on
September 8, 1998 and had no more personal knowledge regarding the other allegations of
petitioner.75
D. COMMENT OF PRIVATE RESPONDENT VIGILAR
Private respondent Vigilar raises the following grounds for the dismissal of the petition:
1. The petition is not the proper remedy. Petitioner cannot invoke Rule 45 to question the
subject resolution and order of the Ombudsman.
2. The petition fails to raise any question of law.
3. In any case, the Office of the Ombudsman acted correctly, on the basis of evidence
presented, in dismissing the complaint considering that
a. Private respondent Vigilar, being the ex-officio chairman of the TRB during the
relevant period, was in no position to be legally responsible for the TRBs
acquisition of AMVELs properties.
b. The transaction between the TRB and AMVEL concerning the right-of-way for
the C-5 Link was perfected before the promulgation of Administrative Order No.
50.
c. The transaction between the TRB and AMVEL concerning the right-of-way for
the C-5 Link is valid, regular, and complies faithfully with Executive Order No.
132, the law governing at the time the contract of sale was perfected. The said
purchase was not grossly and manifestly disadvantageous to the government.
d. The evidence does not support a finding of probable cause for the crime of
plunder against private respondent Vigilar.
e. The evidence does not support a finding of probable cause for violation of
Section 3 (A), (E), (G) and (J) of Republic Act 3019 against private respondent
Vigilar.
96

f. The petition, like petitioners complaint before the Ombudsman, is built on

malicious half-truths, hearsay and even fabricated evidence.
Private respondent Vigilar avers that he only exercised administrative supervision over the TRB
under the provisions of Sec. 38, Ch. 7, Book IV of the Revised Administrative Code of 1987; and
that he acted in good faith, relying on the recommendation of the technical officers of the TRB,
and cites Arias v. Sandiganbayan76 to support this averment.
He asserts that as early as May 7, 1998, the TRB had already approved the properties to be
affected by the C-5 Link based on the PCAC recommendation of P20,000 per sq. m., and such
approval was made in accordance with Executive Order No. 132, the law then prevailing.
Unfortunately, the TRB had limited funds, so, hoping for a lower price, it started negotiations
with the property owners, including AMVEL. The TRB and AMVEL agreed subsequently that
the price should be adjusted by hiring independent appraisers and getting the average of the
values to be determined by these independent appraisers and the values stated in the PCAC
resolutions. Later, on January 15, 1999, in keeping with that agreement, the TRB approved the
new, substantially reduced purchase price of P15,350.00 per sq. m. More than a month later, on
February 17, 1999, Administrative Order No. 50 was promulgated setting new standards for the
determination of the fair and reasonable value of private lands that would be expropriated for
government infrastructure projects. This Administrative Order was intended to supplant
Executive Order No. 132.
Private respondent alleges that it is a basic fact that a "contract of sale is perfected at the moment
there is a meeting of minds upon the thing which is the object of the contract and upon the price"
(Article 1475 [1], Civil Code). Therefore, at the time TRB and AMVEL agreed as to the process
for determining the purchase price, the contract of sale was already perfected.
The requisites for a valid price in a contract of sale are: (1) it must be real; (2) it must be in
money or its equivalent; and (3) it must be certain or ascertainable at the time of the perfection of
the contract (Articles 1471, 1458, 1468, 1469 and 1473, Civil Code).77 Under Article 1469, price
is considered certain if "it be so with reference to another thing certain, or that the determination
thereof be left to the judgment of a specified person or persons." Said article further provides:
"Even before the fixing of the price by the designated third party, a contract of sale is deemed to
be perfected and existing."
Private respondent Vigilar avers that from the time AMVEL agreed sometime in the middle of
1998 that the price would be the average of the values stated in the independent appraisers
reports and the PCAC resolutions, the government could no longer re-negotiate for a lower price.
Thus, even before the TRB approved the price at P15,350.00 per sq.m. on January 15, 1999, the
price had already become certain. It was immaterial that the Deeds of Sale were signed later. The
execution of these Deeds of Sale was a mere formality; it was meant to document a contract that
had been perfected earlier.78
Private respondent claims that applying Administrative Order No. 50 retroactively to the contract
between the TRB and AMVEL violates Article 4 of the Civil Code, which provides that "[l]aws

97

shall have no retroactive effect, unless the contrary is provided." Administrative Order No. 50
does not state that it is exempt from this rule; it does not provide for retroactive effect.
Petitioner has not shown that private respondent Vigilar, as Secretary of the DPWH and
concurrent TRB chairman, amassed any ill-gotten wealth to warrant a charge of plunder.
Petitioner does not allege that private respondent Vigilar received any money or derived any
benefit, of any kind, from the right-of-way acquisition of the affected lands.
Regarding the allegation that he violated Sec. 3 (a) of R.A. No. 3019, private respondent points
out that it is not clear whether he was accused of being the public official who persuaded,
induced, or influenced another public officer to perform an act in violation of rules and
regulations; or the one who was so persuaded, induced, or influenced. Petitioner likewise failed
to prove that the elements of violation of Section 3 (a), (e), (g) and (j) of Rep. Act No. 3019 have
been committed by private respondent Vigilar. Thus, petitioners case against him is inadequate.
Private respondent argues that petitioner likewise failed to prove conspiracy. He states that a
conspiracy exists when two or more persons come to an agreement concerning the commission
of a felony and decide to commit it.79 He cites the "well-settled rule" that "conspiracy must be
proven as clearly as the commission of the offense itself."80
Petitioner alleges that respondents Estrada, Ronaldo Zamora, and Vigilar gave their imprimatur
to the takeover by the Coastal Road Corporation of the UMPC, as well as the de-prioritization of
the construction of the C-5 Link when, on November 23, 1999, they were present in a "photo-op"
that took place in Malacaang. Private respondent avers that the "photo-op" was staged by Cavite
government officials to show their constituents that the MCTE Project was being fast-tracked.
Respondents merely graced the occasion in response to requests made by these local officials.
They could not be taken to court simply because of this; otherwise, it would be "guilt by
photograph," which was contrary to plain and common sense.81
Private respondent points out petitioners reliance on a certain "executive summary"82 to support
the latters allegation that the subject transaction was grossly anomalous. This document,
according to private respondent, has absolutely no evidentiary value, as its origin is unknown,
and it is unsigned. As regards petitioners submission of a Special Report dated August 16, 2000
from the Philippine Daily Inquirer as evidence, private respondent points out that newspaper and
magazine articles are "hearsay twice removed and have no evidentiary value whatsoever."
Private respondent Vigilar cites in support of this contention the decision laid down by this Court
in People v. Woolcock, et al.83
E. COMMENT OF RESPONDENT OFFICE OF THE OMBUDSMAN
Public respondent raises the following grounds for the denial of the instant petition:
1. The assailed resolution and order of the public respondent are not appealable under
Rule 45 of the Rules of Court.

98

2. Petitioner has not adduced sufficient evidence to show that the transactions involving
the purchase of the AMVEL lands under Executive Order No. 132, Series of 1937 are
unlawful or irregular.
3. Whether under Administrative Order No. 50, Series of 1999 or Executive Order No.
132, Series of 1937, respondents substantially complied with the prescribed procedure in
determining a fair and reasonable valuation of the properties in question while exercising
the power of eminent domain.
4. There is no law or particular rule that prohibits the re-alignment of the C-5 Link
Project.
5. There is nothing unlawful or irregular in getting a reasonable return on investment;
neither is there evidence of bloating of prices.
6. Petitioners assertion that TCT No. 140397 (formerly TCT No. (S-14729) 876474)
comprising fifty-six (56%) percent of the total area sold by AMVEL to the government
was not a clean title is rendered moot and academic by the Court of Appeals Decision
dated 21 April 1999 and the Memorandum of Agreement executed by and between the
contending parties.
7. The public respondent cannot act on complaints based on mere speculations and
conjectures.
8. Matters that are left to the exercise of wisdom and discretion of the Office of the
Ombudsman are not appealable under Rule 45 of the 1997 Rules of Civil Procedure, and
absent any jurisdictional infirmity, the Ombudsmans determination of probable cause, or
the lack of it, deserves great respect and finality.
According to public respondent, the law on sales contemplates the consummation of the sales
transaction at the moment there is a meeting of minds of the parties thereto, upon the thing which
is the object of the contract and upon the price.84 In the case at bar, the meeting of the minds for
the purchase of AMVEL properties occurred on May 8, 1998, the date TRB instructed PEA to
pay the checks for the properties expropriated through the mode of voluntary sales. Public
respondent alleges:
Significantly, the purchase transactions over the subject properties are negotiated ones. On 9
August 1997, notices of acquisition were sent by TRB to the affected landowners. In view of the
acceptance by AMVEL of the amount offered by the government during the negotiation process,
no expropriation proceeding was initiated in court. Upon appraisal by the [PCAC], the parties
successfully arrived into an agreement as to the value or purchase price of the affected properties
on or before 08 May 1998, as evidenced by a letter sent by respondent Ramon V. Dumaual,
Officer-in-Charge, Toll Regulatory Board, to the Public Estates Authority, instructing the latter to
prepare the checks representing payments for the subject properties. It is therefore clear that the
governing law at that given time was still Executive Order No. 132, Series of 1937, and not
Administrative Order No. 50, which took effect on 17 February 1999.85
99

Public respondent Ombudsman contends that in claiming that the subject properties were
overpriced, petitioner failed to consider that the transactions were entered into by the State in the
exercise of the power of eminent domain, which necessarily involves a derogation of a
fundamental or private right of the people. Public respondent asserts that "[the] appraisal or
assessment of the property subject of the taking is not based solely on the market value or zonal
valuation made thereof by the Bureau of Internal Revenue (BIR)."86
Administrative Order No. 50, which petitioner believes should have been followed, provides the
following standards for the assessment of the value of the land:
SECTION 3.Standards for the Assessment of the Value of the Land Subject of Expropriation
Proceeding. x x x
(a) The classification and use for which the property is suited;
(b) The developmental costs for improving the land;
(c) The value declared by the owners;
(d) The current selling price of similar lands in the vicinity;
(e) The reasonable disturbance compensation for the removal and/or demolition of certain
improvements on the land and for the value of improvements thereon;
(f) The size, shape or location, tax declaration and zonal valuation of the land;
(g) The price of the land as manifested in the ocular findings, oral as well as documentary
evidence presented; and
(h) Such facts and events so as to enable the affected property owners to have sufficient
funds to acquire similarly-situated lands of approximate areas as those required from
them by the government, and thereby rehabilitate themselves as early as possible.
Executive Order No. 132 issued on December 27, 1937, on the other hand, laid down the
following procedure:
(i) The Director of the Bureau of Public Works, City or District Engineer or other
officials concerned shall make the necessary negotiations with [the] owner of the
property needed for public use with a view to having it donated, or sold to the
government at not to exceed the assessed valuation prior to the investigation and survey
of the project.
(j) If the negotiation fails, the officials concerned shall forthwith and by formal
notification submit the matter to an Appraisal Committee which is hereby created and
which shall be composed of the Provincial Treasurer, as Chairman, and the District
Engineer and the District Auditor, as members, of the province where the land is located.
100

If the property is situated in a chartered city the Appraisal Committee shall be composed
of the City Treasurer, as Chairman and the City Engineer and City Auditor, as members
thereof. x x x
Public respondent contends that there was sufficient compliance with the guidelines and
prescribed procedure set forth in both issuances. The referral to PCAC for the determination of
the fair market value of the properties was in order. PCACs appraisal of P20,000.00 per sq. m.
was a result of several factors: assessing the location accessibility; selling prices of comparable
properties; the amenities present like water, electricity, transportation and communication within
the vicinity; and the status or condition of the parcels of land. TRBs act of subjecting the
properties to another round of appraisal by independent appraisal companies was but a
manifestation that it was protecting the governments interests by ensuring that it would not be
put to a disadvantageous position by the appraisal recommended by PCAC. The result of the
appraisals conducted by the three independent appraisal companies led TRB to come up with an
average appraisal in the amount of P15,355.00 per sq. m. in purchasing AMVELs properties.
The amount was below the original recommendation of PCAC to purchase AMVELs properties
at P20,000.00 per sq. m. The determination of this just compensation price was fair and
reasonable.
The Zonal Valuation (6th Revision) that took effect on February 2, 1997 fixed the amount of
P4,500.00 per sq. m. as valuation of the residential regular (RR) lands situated on Dr. A. Santos
Avenue, San Dionisio, Paraaque City. Commercial land along the same place was fixed at
P20,000.00 per sq. m. and along Ninoy Aquino International Airport at P30,000.00 per sq. m.
The affected AMVEL properties were classified by Ordinance No. 97-08 as within the C-3 highintensity commercial zone.
Public respondent claims that the Appraisal Committees created under E.O. 132 are endowed
with special technical knowledge, skills, expertise and training on the subject of appraisal; that
the discretion given to the authorities on this matter is of such wide latitude that the Court will
not interfere therewith, unless it is apparent that it is being used as a shield to a fraudulent
transaction; and that government agencies or bodies dealing with basically technical matters
deserve to be disentangled from undue interference from the courts, and so from the Ombudsman
as well (Concerned Officials of the Metropolitan Waterworks and Sewerage System [MWSS] v.
Vasquez,87 citing Felipe Ysmael, Jr. & Co., Inc. v. Deputy Executive Secretary88).89
Public respondent further contends:
[The] final re-alignment plan duly approved by the TRB resulted in the substantial reduction of
the area traversed by the C-5 Link Project from the original area of twelve (12) hectares to only
7.9 hectares, and only after averaging the appraisals of government and private appraisers. This
factual circumstance indicated prudence on the part of private respondent PEA and TRB officials
in effecting the power of eminent domain, as they gave due regard to the rights of the landowners
thereof. Again, the reduction in the expropriated private lands upon consideration of the rights of
the landowners may not be criminally actionable absent any showing of irregularity aliunde.
xxx
101

There are well-observed rules in the field of real estate. Judicial notice may be taken of a cardinal
rule, which is likewise of common knowledge, that the value of real property appreciates over
time and at a rate which depends on the extent of development of the area where the land is
situated. Thus, the price sold at any given time does not mean that the same price would be
utilized for a subsequent sale thereof, especially where the property has undergone development
or has been converted into land for commercial purposes. [Even] petitioner concedes that
AMVEL developed the lands which were sold to the government. Thus, it was but reasonable for
the price of the lands to have appreciated. Besides, private respondents Velarde and/or AMVEL
being engaged in real estate business, it is only natural for them to ensure that profits are
obtained on top of their investments, or even speculate, for that matter. As declared by this
Honorable Court in the case of Tatad vs. Garcia, Jr., "in all cases where a party enters into a
contract with the government, he does so, not out [of] charity and not to lose money, but to gain
pecuniarily."90
xxx
In relation to petitioners allegation that the bloated cost of right-of-way (ROW) project depleted
the proceeds of the US $68.6 Million loan for the right of way acquisition, the public respondent
finds the said allegation vague and without factual basis. The amount of loan proceeds was not a
factor that should be considered in appraising the value of the subject properties.91 (Emphasis
ours)
F. COMMENT OF RESPONDENTS RONALDO B. ZAMORA, MANUEL B. ZAMORA, JR.,
CESAR E.A. VIRATA, AND LUIS L. VIRATA
1. Petition should be dismissed as Petitioner is guilty of forum-shopping
Private respondents allege that petitioner admits that he previously filed a
complaint92 with respondent Office of the Ombudsman against respondents
Ronaldo B. Zamora, Manual B. Zamora, Jr., and Luis J. L. Virata (OMB Case No.
0-00-1758); however, he did not attach a copy of said complaint to his petition
filed before this Court. Said complaint was dismissed by the Ombudsman.
Petitioners Motion for Reconsideration in said case was still pending as of the
time of the filing of the Comment. Private respondents conclude that petitioner
had filed multiple suits involving the very same issues against respondents, and he
merely rehashed the very same charges and allegations in the second complaint.
This, according to private respondents, was forum shopping, defined by this Court
in Gatmaytan v. Court of Appeals,93 as "the institution of two (2) or more actions
or proceedings grounded on the same cause on the supposition that one or the
other court would make a favorable disposition."
Both complaints filed by petitioner are grounded on the same causes and
allegations surrounding the purported illegality of the "transfer" of the Coastal
Road Project to the Coastal Road Corporation. Respondents contend further:

102

[Petitioner] simultaneously and successively availed himself of several judicial

remedies by filing two (2) separate complaints against herein respondents, all
substantially founded on the same essential facts and circumstances, and all
raising substantially the same issues. Petitioner obviously did this to increase his
chances of obtaining a favorable decision if not in one case or one court or
tribunal, then in another.94
2. Petition does not raise any question of law.
Private respondents submit that a question of law "exists when there is a doubt or
controversy as to what the law is on a certain state of facts, and there is a question
of fact when the doubt or difference arises as to the truth or falsehood of facts."
They further submit that "[one] test is whether the appellate court can determine
the issue raised without reviewing or evaluating the evidence, in which case it is a
question of law; otherwise it will be a question of fact. The question must not
involve the examination of the probative value of the evidence presented."95
3. Petition, on its face, does not raise any credible factual issue in respect to the dismissal
of the complaint against respondents.
Petitioner failed to controvert the findings of fact and law made by the
Ombudsman in his assailed Resolution. Furthermore, the Ombudsman, in its
Resolution dated July 16, 2001 in OMB Case No. 00-00-1758, comprehensively
passed upon the very same allegations of petitioner in OMB Case No. 0-00100577.
Petitioners allegations in his complaint are contradictory. On the one hand, he
claims that the de-prioritization of the C-5 Link Expressway and the prioritization
of the R-1 Expressway Extension would benefit Caylabne Bay Resort. On the
other hand, complainant himself alleges that the de-prioritization of the C-5 Link
Expressway will result in a minimal increase in vehicle volume along the R-1
Expressway. Clearly then, no appreciable benefit would result if Coastal Road
Corporation indeed pushed for the de-prioritization of the C-5 Link Expressway
because the alleged benefit to Caylabne Bay Resort would be negated by the
revenue loss due to minimal increase in the vehicular volume along the entire
expressway.96
4. The petition, like petitioners complaint before the Ombudsman, is anchored on
hearsay evidence twice removed.
Private respondents allege that in building a case against them regarding the
purported de-prioritization of the C-5 Link Expressway, petitioner quotes
extensively from the February 7, 1999 article from the Philippine Star newspaper.
They contend that "[it] is elementary that newspaper and magazine articles are
hearsay twice removed and have no evidentiary value whatsoever.97

103

G. COMMENT OF PRIVATE RESPONDENT RUBEN A. DE OCAMPO98

Private respondent Ruben de Ocampo (de Ocampo) argues that the dismissal by the public
respondent of the complaint in the proceedings a quo should be sustained in toto because:
1. Petitioner fails to raise distinct and pure questions of law in the instant petition which
omission is fatal to his appeal by certiorari pursuant to Rule 45 of the 1997 Rules of Civil
Procedure.
2. The petitioner has no legal standing to institute the charges with the Office of the
Ombudsman for alleged violations of Sec.2 in relation to Sec. 1 sub-paragraph d(1), (3)
and (6) of R.A. 7080, and Sec. 3 sub-paragraph (e) and (g) of R.A. 3019.
3. The facts as alleged in the complaint-affidavit and herein petition for review do not
constitute the commission of any offense on the part of respondent De Ocampo and no
evidence whatsoever was presented against respondent De Ocampo to support the
allegations in petitioners complaint-affidavit.
De Ocampo avers that he held the position of Public Utility Regulation Officer II at the Toll
Regulatory Board, a position rated at Salary Grade-15, and one that was neither managerial nor
supervisorial in nature. As such, he neither had recommendatory nor decision-making powers or
functions as regards the TRB.
De Ocampo contends that petitioner lacks the required personal knowledge of facts constitutive
of the charges in the latters Complaint before the Office of the Ombudsman. Petitioner failed to
allege the means by which he supposedly came to be acquainted with the material facts stated in
his Complaint. According to him:
It is patent and undeniable that Petitioner was never privy to the contracts and communications
alleged in his Complaint and in this Petition for Review. Nowhere in the records does it appear
that Petitioner ever participated in any of the transactions referred to. Petitioners conclusions are
merely hearsay and should therefore be disregarded. x x x 99
De Ocampo cites Section 20 of Rep. Act No. 6770, "The Ombudsman Act of 1989," which
states:
SECTION 20.Exceptions. The Office of the Ombudsman may not conduct the necessary
investigation of any administrative act or omission complained of if it believes that:
(1) The complainant has an adequate remedy in another judicial or quasi-judicial body;
(2) The complaint pertains to a matter outside the jurisdiction of the Office of the
Ombudsman;
(3) The complaint is trivial, frivolous, vexatious or made in bad faith;

104

(4) The complainant has no sufficient personal interest in the subject matter of the
grievance; or
(5) The complaint was filed after one (1) year from the occurrence of the act or omission
complained of.
In this case, de Ocampo alleges that petitioner failed to show any interest in or show proof of
personal knowledge of the transactions as investigated by the Office of the Ombudsman, and has
neither alleged nor proven that his rights have been violated or that he has been put at a
disadvantage by the consummation of the assailed transactions through any act or omission of de
Ocampo.100
Furthermore, private respondent contends:
[The] acts complained of by Petitioner occurred more than one (1) year prior to the institution of
the original Complaint before the Office of the Ombudsman on 16 April 2001. The last assailed
transaction, more specifically, the act of then President Estrada in granting his imprimatur and
approval to CRCs proposal to deprioritize the construction of the C-5 Link Expressway and to
prioritize the R-1 Expressway Extension, was consummated on 23 November 1999 or at least
one (1) year and four (4) months prior to the filing of the Complaint. The above-quoted Sec. 20
par. 5 of R.A. 6770 clearly states that "The Office of the Ombudsman may not conduct the
necessary investigation of any administrative act or omission of if it believes that The
complaint was filed after one year from the occurrence of the act or omission complained of."
Considering the length of time which elapsed between the act complained of and the filing of the
Complaint, the Office of the Ombudsman should not have even considered the charges put
forth by Petitioner. In any event, the Complaint was correctly and cogently dismissed by the
Ombudsman for utter lack of merit. x x x 101
H. COMMENT OF PRIVATE RESPONDENT FRISCO F. SAN JUAN
Private respondent Frisco F. San Juan (San Juan) raises the following arguments in his Comment:
I. The petition must be dismissed outright as it does not raise pure questions of law or cite
any special and important reasons for its allowance under Rule 45 of the Revised Rules
of Court.
II. In any case, respondent Ombudsman did not commit any reversible error or grave
abuse of discretion in dismissing petitioners complaint a quo, in that:
a. Petitioner completely failed to establish the existence of any of the elements of
plunder in order for the complaint to prosper as against respondent San Juan or
any of his co-respondents.
b. Nor was petitioner able to establish any violation by respondent San Juan of the
Anti-Graft and Corrupt Practices Act. On the contrary, the acquisition of the
AMVEL Properties for the governments tollway project was neither
105

disadvantageous to the government nor did it give any unwarranted benefits,

advantages or preference to any party.
c. Petitioner failed to otherwise specify any act or behavior on the part of
Respondent San Juan which constitutes a breach of the Code of Conduct and
Ethical Behavior for public officials and employees.
d. Petitioners other imputations and insinuations of anomalies in respect of the
subject expressway construction are equally baseless and purely speculative
accusations of wrongdoing on respondents part.
e. Given the patently baseless and utterly deficient complaint for "plunder",
"graft", etc., the additional "fact-finding" proceedings which petitioner sought to
have in the case would have added nothing to petitioners cause against
respondents.102
San Juan, the Chairman of the PEA from July 1998 to February 2001, submits that a petition for
review on certiorari, under the mode of appeal provided by Rule 45 of the 1997 Rules of Civil
Procedure, is required to raise "only questions of law" which shall be distinctly set forth in the
petition, the Honorable Court not being a trier of facts. Thus, in certiorari proceedings under
Rule 45, the findings of fact below as well as the conclusions on the credibility of witnesses are
generally not disturbed, the question before the court being limited to questions of law.103
According to San Juan, Rule 45 likewise provides that for the petitions to be filed under it to be
allowed, there must be special and important reasons therefor, as when the court a quo has
decided a question of substance not heretofore determined by the Honorable Court, or has
decided it in any way probably not in accord with law or with the applicable decisions thereof; or
when the court a quo has so far departed from the accepted and usual course of proceedings, or
so far sanctioned such departure by a lower court as to call for the exercise of the power of
supervision of this Court.
San Juan contends that at the heart of all the purported "serious errors of law" raised by petitioner
are essentially factual questions, which petitioner would have the Honorable Court resolve. Thus,
San Juan avers that petitioner asks that this Honorable Court determine:
if based on the appraisals of the properties involved, the right-of-way acquisitions were
"overpriced";
if the purchase of the subject properties "had been consummated on 7 May 1998" ;
if there was "compliance with the procedure for the valuation of the properties
involved";
if respondents "amassed wealth" from the subject transaction as to be liable for plunder;

106

 if President Estrada "intervened" in the purchase of the right-of-way and the payment
thereof;
if the titles transferred to the Republic were clean;
and so on.
San Juan concludes from the above that all these questions require an appreciation of the
evidence and an examination of the probative value of the proofs presented to determine the truth
or falsity of the factual claims of the parties below; these are thus factual questions.
As regards petitioners allegations of plunder, San Juan notes that "nowhere in the complaint was
it alleged that respondent San Juan or any of his co-respondents received any art of the purchase
price for the lands purchased by the Government from AMVEL from the right of way."104 The
initiative of the TRB not only in renegotiating the purchase price and in causing the re-appraisal
of the properties by three (3) appraisers but also in successfully reducing the purchase price
cannot be the product of, and is in fact inconsistent with, respondents supposed "connivance" or
"collusion" with AMVEL.
San Juan further alleges that the negotiation, perfection and execution of the Deed of Sale of the
lands in question between TRB and Amvel were all done without the participation or
involvement of PEA, as it was never involved in the renegotiation efforts. This is consistent with
the terms of the TOA and the MOA, where the "responsibility for acquiring the lands," "the
negotiation with its individual owners" and "the preparation of the necessary documents"
including the "cancellation of the titles in the name of the individual lot owners" and the "transfer
thereof in the name of the government" were all vested in TRB without the intervention of PEA.
San Juan alleges that the following steps were taken to ensure the regularity of the questioned
transaction:
1. Prior to the full payment of the purchase price to the sellers, TRB ensured that the
Deeds of Sale were executed by authorized signatories, with the required Board
resolutions and Special Powers of Attorney and duly notarized.
2. TRB likewise made certain that the real estate taxes covering the remaining quarters of
the year and the documentary stamp taxes due on the transactions equivalent to 1.5% of
the purchase price were shouldered and paid for by AMVEL with the corresponding tax
clearance duly issued by the Bureau of Internal Revenue; and that all titles to the
properties were clean and transferred in the name of the Republic of the Philippines
before the balance of the purchase price was fully paid.
3. Other than paying the purchase price for the properties, the Government did not pay
any expenses for notarization, taxes and transfer fees, registration and processing of the
transfer of titles to the Republic of the Philippines and clearing the properties of
occupants and their relocation.

107

San Juan concludes that contrary to petitioners claims, AMVEL never received a "windfall from
the government for which it acquired for almost nothing." In truth, apart from receiving a
purchase price reduced to the extent of P370 million, AMVEL was required to pay, as it did,
expenses normally shouldered by a seller all these on top of what petitioner himself recognized
as developments undertaken by AMVEL on the properties prior to their acquisition by the
government.105
San Juan contends that tax declarations, which petitioner presented as evidence of the alleged
overpriced purchase price of the properties, are neither proof of the true market value of
properties nor conclusive evidence of their value, but only enable the assessor to identify the
same for their assessment levels.106
Furthermore, San Juan alleges that the acquisition cost of a property cannot be the sole basis for
determining its fair value; the current value of similar properties and their actual or potential uses
must be considered together with other factors.107
Regarding petitioners insistence that Administrative Order (A.O.) No. 50 should have been
applied, San Juans averments are summarized below:
1. A.O. No. 50 would have no application to the contract between TRB and AMVEL
which had been priorly perfected on May 7, 1998.
2. The Zonal valuation (6th Division) which took effect on February 2, 1997, fixing the
amount of P4,500/sq m as valuation of the affected properties, refers to residential regular
(RR) lands situated in Dr. A. Santos Avenue, San Dionisio, Paranaque City. The
commercial lands along same place was fixed at P20,000.00/ sq m and along Ninoy
Aquino International Airport at P30,000/00 per sq m. The affected AMVEL properties
were classified by Ordinance No. 97-08 as within the C-3 high intensity commercial
zone.
3. A.O. No. 50 does not in any way prohibit the conduct of a negotiated sale which is
more expeditious and less expensive for the Government than engaging in a protracted
expropriation proceedings over the properties with the owners thereof. The purported
costs in terms of time, resources and money will not necessarily result in savings for the
Government.
4. Even in expropriation proceedings, just compensation for the properties must be
determined. And by "just compensation" is meant "a fair and full equivalent for the loss
sustained, which is the measure of the indemnity x x x the market value of the land taken
x x x being the sum of money which a person desirous, but not compelled to buy, and an
owner, willing, but not compelled to sell, would agree on as a price to be given and
received for such property." Thus, to determine just compensation, the parties must add to
the market value, the consequential damages. (Tuason v. LTA, 31 SCRA 413) In the
present case, the final valuation agreed upon by the TRB and AMVEL, upon
consideration of the market value as determined by four (4) independent appraisers,

108

constitutes such just compensation that is not only fair to the seller but to the Government
as well.
5. The Honorable Court itself had occasion to observe that protracted expropriation
proceedings do not only mean delay and difficulty for the Government, it also results in
the citizen losing faith in the Government and in its readiness to pay for what it
appropriates. x x x
In this case, the properties affected by the right-of-way involve numerous owners. Thus, in
pursuing a negotiated sale instead of opting for expropriation proceedings and arriving at a
mutually acceptable acquisition price in consideration for the transfer of clean and
unencumbered titles to the Republic, the Government did not suffer any losses, contrary to
petitioners claims.108
San Juan claims that neither the TRB nor PEA could have aborted the purchase of the AMVEL
properties based on the alleged falsification of the Court of Appeals Decision dated October 29,
1998. These properties were essential for the Tollway Project a fact which petitioner himself
concedes is a reasonable, necessary and urgent public work. Thus, the TRB, more so PEA, could
not have simply re-arranged the project plans and decided not to acquire the AMVEL properties.
In fact, it is absurd to even suggest that PEA could override the decision to build a cheaper and
faster expressway traversing the AMVEL properties. Not only did the AMVEL properties have
the most advantageous access to the NAIA, their development was the easiest to implement,
because they had already been cleared of squatters and other occupants.109
As for San Juans purported "approval" of the take-over of the Tollway Project by the Coastal
Road Corporation (CRC), San Juan states that there is simply no basis for this claim, for the
following reasons:
a. At the end of 1999, the Malaysian counterpart could no longer fund the project due to currency
regulations. After CRC offered to take over the interest of Renong-Berhad, PEA in fact required
it so show proof of its financial and technical capability. When respondent San Juans term as
PEA chairman ended, CRC had not yet submitted the PEA requirements. Consequently,
respondent San Juan could not have given my approval to de-prioritize the C-5 project and to
prioritize the R-1 Expressway extension as allegedly proposed by CRC. Other than his bare
allegations, petitioner has not presented any proof to show that respondent San Juan and the
other respondents have turned-over the project to CRC and acceded to its proposal to deprioritize C-5 project and to prioritize the R-1 Expressway Extensions.
b. x x x [The] Ombudsman had already dismissed a related complaint by the same petitioner
when he similarly questioned the transfer and takeover of the Project to CRC. Thus, in a
Resolution dated 16 July 2001, the Ombudsman dismissed the complaint for plunder and
violation of RA 3019 filed by the herein petitioner against Joseph Estrada and other respondents
for the transfer and take-over of the MCTE Project to CRC.110
San Juan also claims that in asserting that the acquisition price arrived at for the questioned
transaction exceeded the limit of P1.7 billion for the right-of-way purchase, petitioner ignores
109

that the landowners of the affected properties are entitled to just compensation for the taking of
their properties. San Juan contends that such just compensation is not based on the budget of the
government for the project, but is "the fair and full equivalent for the loss sustained, which is the
measure of the indemnity x x x the market value of the land taken x x x being the sum of money
which a person desirous, but not compelled to buy, and an owner, wiling, but not compelled to
sell, would agree on as a price to be given and received for such property." San Juan further
contends that petitioner has not otherwise shown how the entire MCTE Project could be
achieved within the said limit of P1.7 billion.111
V. ISSUES
The following issues were raised in the petition as well as in respondents respective Comments:
A. Whether or not the petition should be dismissed for using the wrong mode of appeal
and for raising questions of fact
B. Whether or not public respondent Office of the Ombudsman committed serious errors
of law as well as grave abuse of discretion amounting to excess or lack of jurisdiction in
issuing the questioned Resolution and Order
VI. DISCUSSION
A. Whether or not petition should be dismissed for using the wrong mode of appeal and for
raising questions of fact
Respondents Office of the Ombudsman, Mariano Z. Velarde, Franklin M. Velarde, Gregorio R.
Vigilar, Ronaldo B. Zamora, Manuel B. Zamora Jr., Cesar E.A. Virata, Luis L. Virata, and Frisco
F. San Juan contend that a petition for review on certiorari under Rule 45 of the 1997 Rules of
Civil Procedure before this Honorable Court is not the proper mode of appeal in questioning any
final order or resolution of the Office of the Ombudsman; thus, the instant petition should be
outrightly dismissed motu proprio.
Section 1 of Rule 45 of the 1997 Rules of Civil Procedure provides:
Section 1. Filing of petition with Supreme Court. A party desiring to appeal by certiorari from a
judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional
Trial Court or other courts whenever authorized by law, may file with the Supreme Court a
verified petition for review on certiorari. The petition shall raise only questions of law which
must be distinctly set forth.
Private respondents Velarde aver that the "courts" referred to in the provision quoted above are
"the courts that compose the integrated judicial system and do not include quasi-judicial bodies
or agencies such as the Office of the Ombudsman."112 They claim that the proper mode of appeal
in questioning the final judgment, order, or resolution of quasi-judicial bodies or agencies is
provided under Rule 43 of the 1997 Rules of Civil Procedure. Section 1 of said Rule states:

110

Section 1. Scope.. This Rule shall apply to appeals from judgments or final orders of the Court
of Tax Appeals and from awards, judgments, final orders or resolutions of or authorized by any
quasi-judicial agency in the exercise of its quasi-judicial functions. Among these agencies are the
Civil Service Commission, Central Board of Assessment Appeals, Securities and Exchange
Commission, Office of the President, Land Registration Authority, Social Security Commission,
Civil Aeronautics Board, Bureau of Patents, Trademarks and Technology Transfer, National
Electrification Administration, Energy Regulatory Board, National Telecommunications
Commission, Department of Agrarian Reform under Republic Act No. 6557, Government
Service Insurance System, Employees Compensation Commission, Agricultural Inventions
Board, Insurance Commission, Philippine Atomic Energy Commission, Board of Investments,
Construction Industry Arbitration Commission, and voluntary arbitrators authorized by law."
To support their contention that Rule 43 applies to this case, private respondents rely on the
Courts ruling in Fabian v. Desierto,113 which provides:
Under the present Rule 45, appeals may be brought through a petition for review on certiorari but
only from judgments and final orders of the courts enumerated in Section 1 thereof. Appeals
from judgments and final orders of quasi-judicial agencies are now required to be brought to the
Court of Appeals on a verified petition for review, under the requirements and conditions in Rule
43 which was precisely formulated and adopted to provide for a uniform rule of appellate
procedure for quasi-judicial agencies.
It is suggested, however, that the provisions of Rule 43 should apply only to "ordinary" quasijudicial agencies, but not to the Office of the Ombudsman which is a "high constitutional body."
We see no reason for this distinction for, if hierarchical rank should be a criterion, that
proposition thereby disregards the fact that Rule 43 even includes the Office of the President and
the Civil Service Commission, although the latter is even an independent constitutional
commission, unlike the Office of the Ombudsman which is a constitutionally-mandated but
statutorily-created body. (Emphasis ours.)
Public respondent Ombudsman likewise argues that petitioner has taken the wrong mode of
appeal, citing the rule as laid down by this Court in Tirol v. del Rosario,114 which states:
Section 27 of R.A. No. 6770 provides that orders, directives and decisions of the Ombudsman in
administrative cases are appealable to the Supreme Court via Rule 45 of the Rules of Court.
However, in Fabian v. Desierto, we declared that Section 27 is unconstitutional since it expanded
the Supreme Court's jurisdiction, without its advice and consent, in violation of Article VI,
Section 30 of the Constitution. Hence, all appeals from decisions of the Ombudsman in
administrative disciplinary cases may be taken to the Court of Appeals under Rule 43 of the 1997
Rules of Civil Procedure.
True, the law is silent on the remedy of an aggrieved party in case the Ombudsman found
sufficient cause to indict him in criminal or non-administrative cases. We cannot supply such
deficiency if none has been provided in the law. We have held that the right to appeal is a mere
statutory privilege and may be exercised only in the manner prescribed by, and in accordance
with, the provisions of law. Hence, there must be a law expressly granting such privilege. The
111

Ombudsman Act specifically deals with the remedy of an aggrieved party from orders, directives
and decisions of the Ombudsman in administrative disciplinary cases. As we ruled in Fabian, the
aggrieved party is given the right to appeal to the Court of Appeals. Such right of appeal is not
granted to parties aggrieved by orders and decisions of the Ombudsman in criminal cases, like
finding probable cause to indict accused persons.
Public respondent avers that no information has been filed with either the Sandiganbayan or the
Regional Trial Court; and not only did petitioner resort to the wrong mode of appeal, he also
raised factual issues in his petition, which are not proper grounds for appeal under the rule.
Public respondent further avers that an error in the choice or mode of appeal is one of the
grounds for the dismissal of the appeal under Section 5, Rule 56 of the 1997 Rules of Civil
Procedure.115 This, aggravated by improper grounds raised on appeal, has rendered the instant
petition dismissible.
Although we agree with private respondents Velarde that a petition for review on certiorari under
Rule 45 is not the proper remedy for parties seeking relief from final judgments, orders, or
resolutions of quasi-judicial bodies or agencies like the Office of the Ombudsman, as has been
repeatedly held by this Court,116 we find that the remedy of appeal under Rule 43 posited by
private respondents Velarde is not proper either. This Court subsequently held that under the
ruling in Fabian, "all appeals from decisions of the Ombudsman in administrative disciplinary
cases may be taken to the Court of Appeals under Rule 43 of the 1997 Rules of Civil
Procedure."117 Said remedy, therefore, is not applicable to cases involving criminal or nonadministrative charges filed before the Office of the Ombudsman, which is the situation in the
case before us now. As we further stated in Tirol v. Del Rosario:
[An] aggrieved party is not without recourse where the finding of the Ombudsman as to the
existence of probable cause is tainted with grave abuse of discretion, amounting to lack or excess
of jurisdiction. An aggrieved party may file a petition for certiorari under Rule 65 of the 1997
Rules of Civil Procedure.
In Fabian v. Desierto,118 the case was dismissed and remanded to the Court of Appeals. This case
being criminal and not administrative in nature, however, the conclusion in Fabian is not
applicable.
Thus, due to the nature of this case and the allegations involving grave abuse of discretion
committed by the Office of the Ombudsman, it should have been filed under Rule 65, and not
Rule 45, of the 1997 Rules of Civil Procedure.
This Court had already provided this remedy in Nava v. Commission on Audit,119 wherein we
held:
The remedy availed of by petitioner is erroneous. Instead of a petition for certiorari under Rule
65 of the Rules of Court, petitioner filed with this Court the present petition for review on
certiorari under Rule 45 of the Rules of Court pursuant to the provisions of Section 27 of
Republic Act No. 6770.

112

Rule 45 of the Rules of Court provides that only judgments or final orders or resolutions of the
Court of Appeals, Sandiganbayan, the Regional Trial Court and other courts, whenever
authorized by law, may be the subject of an appeal by certiorari to this Court. It does not include
resolutions of the Ombudsman on preliminary investigations in criminal cases. Petitioner's
reliance on Section 27 of R.A. No. 6770 is misplaced. Section 27 is involved only whenever an
appeal by certiorari under Rule 45 is taken from a decision in an administrative disciplinary
action. It cannot be taken into account where an original action for certiorari under Rule 65 is
resorted to as a remedy for judicial review, such as from an incident in a criminal action. In other
words, the right to appeal is not granted to parties aggrieved by orders and decisions of the
Ombudsman in criminal cases, like the case at bar. Such right is granted only from orders or
decisions of the Ombudsman in administrative cases.
An aggrieved party is not left without any recourse. Where the findings of the Ombudsman as to
the existence of probable cause is tainted with grave abuse of discretion amounting to lack or
excess of jurisdiction, the aggrieved party may file a petition for certiorari under Rule 65 of the
Rules of Court. (Emphasis ours.)
Again, in Flores v. Office of Ombudsman,120 we ruled as follows:
x x x The instant petition was captioned as a petition for review by certiorari under Rule 45 of
the Rules of Court. However, the arguments raised refer to alleged grave abuse of discretion
committed by the Office of the Ombudsman. In determining the nature of an action, it is not the
caption, but the averments in the petition and the character of the relief sought, that are
controlling. Accordingly, we are compelled to consider the instant petition as one under Rule 65
of the Rules of Court.
This case involves a significant amount of money that was already released by the government to
a private institution, AMVEL, as purchase price for the road right-of-way in a major
infrastructure project that was undertaken by the former and that naturally affected the general
public. Therefore, even if this case was erroneously filed as shown above, and may be dismissed
outright under the rules, the Court deems it appropriate to brush aside technicalities of procedure,
as this involves matters of transcendental importance to the public;121 and to consider the petition
as one for certiorari filed under Rule 65 of the Rules of Court.122
Respondents argue further that the petition should be instantly dismissed for failing to raise
purely questions of law. As may be gleaned from petitioners assignment of errors, this Court is
being asked to determine the following, which involve questions of fact:
1. Whether or not Administrative Order No. 50, s. 1999 is applicable to the sale of the
subject properties in this case;
2. Whether or not private respondents complied with the prescribed procedure in
determining a fair and reasonable valuation of the subject properties;
3. Whether or not respondents bloated the purchase price;

113

4. Whether or not respondents changed the original alignment of the Sucat Interchange,
which resulted in an increase in the size of the AMVEL property sold to the government;
5. Whether or not respondent Mariano Z. Velarde "made a killing" in the sale of the
subject properties;
6. Whether or not a portion of the subject properties did not have a clean title at the time
they were sold to the government;
7. Whether or not the cost of the right-of-way was bloated, which led to the depletion of
the proceeds of the US$68.6 Million loan for the right-of-way acquisition; and
8. Whether or not respondents de-prioritized the R-1 Expressway Extension over the C-5
Link Expressway.
It is settled that this Court is not a trier of facts123 and its jurisdiction is limited to errors of law.
As we held in Tirol v. Commission on Audit, "There is a question of law in any given case when
the doubt or difference arises as to what the law is on a certain state of facts. A question of fact
arises when the doubt or difference arises as to the truth or falsehood of alleged facts."124
Moreover, in Medina v. City Sheriff, Manila,125 we have stated:
For this petition to be granted, it must be shown that the respondent appellate court committed
grave abuse of discretion equivalent to lack of jurisdiction and not mere errors of judgment, for
certiorari is not a remedy for errors of judgment, which are correctible by appeal.
B. Whether or not public respondent Office of the Ombudsman committed serious errors of law
as well as grave abuse of discretion amounting to excess or lack of jurisdiction in issuing the
questioned Resolution and Order
In the case now before us, petitioner wants this Court to review the evidence that was already
thoroughly studied by public respondent Ombudsman and passed upon in the questioned
Resolution.126 Thus, public respondent found that:
The uncontroverted facts clearly show that Administrative Order No. 50 was issued on February
17, 1999, while the transaction/ negotiation for the purchase of affected lands was consummated
as early as May 1998. As correctly pointed out by respondents, the governing law is Executive
Order No. 132, (E.O. No. 132) issued on December 27, 1937, which laid down the following
procedure:
a) The Director of the Bureau of Public Works, City or District Engineer or other officials
concerned shall make the necessary negotiations with owner of the property needed for
public use with a view to having it donated, or sold to the government at not to exceed
the assessed valuation prior to the investigation and survey of the project.

114

b) If the negotiation fails, the officials concerned shall forthwith and by formal
notification submit the matter to an Appraisal Committee which is hereby created and
which shall be composed of the Provincial Treasurer, as Chairman, and the District
Engineer and the District Auditor, as members, of the province where the land is located.
If the property is situated in a chartered city the Appraisal Committee shall composed
(sic) of the City Treasurer, as Chairman and the City Engineer and City Auditor, as
members. x x x
A perusal of the guidelines as well as the documentary evidence on the transaction reveals that
respondents complied with the prescribed procedure in determining a fair and reasonable
valuation of the properties in question. The referral for the determination of the fair market value
of the properties to [the] Paranaque City Appraisal Committee which recommended the payment
of P20,000.00 per sq. m. thereof was in order. The appraisal was a result of several [factors]
ranging from assessing the location accessibility, selling prices of comparable properties, the
amenities present like water, electricity, transportation and communication within the vicinity
and the status or condition of the parcels of land. TRBs act of subjecting the properties to
another round of appraisal, this time, by three independent appraisal companies is a
manifestation that TRB had made sure that the Government would not be put in a
disadvantageous position in view of a very high appraisal recommended by PCAC. Clearly, the
result of the appraisals conducted by the three (3) independent appraiser companies led TRB to
come up with an average appraisal in the amount of P15,355.00 per square [meter] in purchasing
AMVELs property. The amount is far below the original recommendation of PCAC to purchase
AMVELs property at P20,000.00 per sq. m.
Complainant merely relied on Administrative Order No. 50 issued by respondent Estrada and
on the fact that the valuation must be based on zonal valuation fixed by BIR at P4,000.00 per sq.
m. a year prior to the sale.
As earlier stated, Administrative Order No. 50 finds no application to the already perfected
contract between TRB and AMVEL. On the Zonal Valuation (6th Revision) that took effect on
February 2, 1997 whereby it fixed the amount of P4,500.00 per sq. m. as valuation of the
affected properties however refers to residential regular (RR) lands situated in Dr. A. Santos
Avenue, San Dionisio, Paranaque City. The commercial lands along same place was fixed at
P20,000.00 per sq. m. and along Ninoy Aquino International Airport at P30,000.00 per sq. m.
The affected AMVEL properties were classified by Ordinance No. 97-08, pages 32, 33, 34 as
within the C-3 high intensity commercial zone. The properties in question being within
commercial zone, PCAC properly recommended valuation of P20,000.00 is justified (sic). We
agree with the PCAC that the appraisal of a property is not limited only to the zonal valuation by
the BIR. As correctly pointed out by respondents Nacianceno, Daval-Santos, Medina-Cue and de
Leon, the appraisal of properties are also based on location, accessibility, selling prices of
comparable properties, the amenities present like water, electricity, transportation and
communication, etc. In fact, in Administrative Order No. 50, zonal valuation is only one of the
many factors being considered in the payment of just compensation.
Complainant also anchored his complaint on two (2) Memoranda dated March 30, 1999, from
then President Estrada x x x.
115

xxx
We find no circumstance to consider the two (2) Memoranda anomalous or irregular. The
approval of the Deeds of Sale between TRB and AMVEL by respondent Estrada was in
pursuance to the provisions of P.D. 1112.
It may not be amiss to state that the transaction between TRB and AMVEL was consummated as
early as May 1998 during the administration of former President Fidel V. Ramos. The payment
of the purchase price was only delayed as the TRB conducted a re-appraisal of the property until
the new administration of respondent Estrada in June 1998. It was only in January 1999 that
TRB, then having come out with a new price per sq. m. after averaging the appraisal of the three
(3) independent appraisers and of PCAC, approved the purchase price of P1,221,799,806.00 for
the acquisition of AMVELs property totaling 79,598 per sq. m. at P15,350.00. This delay in the
determination of the consideration did not affect the already perfected contract as the
consideration thereof was already determined or determinable. The events negate complainants
claim that the transaction was concluded in just 2 working days. The insinuation that
respondent Estrada favored AMVEL in approving the purchase of subject properties . . . has no
basis. If indeed AMVEL persuaded respondent Estrada to act on its favor, then AMVEL could
have pushed for the acquisition of the properties not at P15,350.00 but at P20,000.00 per sq. m.
Besides, the valuation of P15,355.00 per sq. m. paid to AMVEL is much lower than the
advertised price of the properties adjacent to AMVEL pegged at least P19,000.00to P55,000.00
per sq. m. x x x Further, [with] respondents Velarde and/or AMVEL, being engaged in business,
it is natural that they engage in profit scheme (sic) which in this case appears justified.
While there was a complete payment in favor of AMVEL of the purchase price of
P1,221,766,640.00 within one (1) month from the time respondent Estrada approved the
transaction, we find the same not anomalous. The several [Deeds] of Sale executed by the
parties, TRB and AMVEL, stipulate that fifty (50%) percent of the purchase price shall be paid
upon execution of the contract. The other fifty (50%) percent upon issuance by the Register of
Deeds of the corresponding Transfer Certificate of Title covering the properties in the name of
the Republic of the Philippines.
In the crime of Plunder, the following elements must exist:
2. A public officer acquires wealth by himself or in connivance with another person;
3. The acquisition of the wealth was obtained through the means described in Section 1
(d).
In the instant case, the alleged ill-gotten wealth consisting of the overpriced purchase price of the
properties affected by C-5 Link, was allegedly obtained by respondents by taking undue
advantage of their official position, authority, relationship, connection or influence to unjustly
enrich themselves at the expense of the Filipino People.
We find no evidence to support complainants claim of the existence of ill-gotten wealth. The
purchase price of P1,221,799,804 paid to AMVEL could not be considered as ill-gotten wealth as
116

said amount is a consideration of a legally entered Deeds (sic) of Sale. There is no evidence that
public respondents benefited/profited or had taken shares with private respondents in the
transaction.
Complainant contends that public and private [respondents] acts constitute also violation of
Section 3(a), (e), (g), (h) and (j) of Republic Act 3019, as amended.
We find no evidence to support said allegation.
In reference to Section 3(a), there is no sufficient evidence showing that respondents, especially
respondent Estrada, induced or influenced anybody to perform an act in violation of rules and
regulation (sic). Neither was there proof of a violation of any rules or regulations promulgated by
competent authority. Administrative Order No. 50 cannot be considered as the rule violated since
it finds no applications (sic) on the questioned transaction.
Insofar as Section 3(e) is concerned, there was no showing that the government suffered undue
injury when the AMVEL properties were purchased at P15,355.00 per sq. m. As earlier pointed
out, complainant relied on the valuation of P4,500.00 per sq. m. fixed by the BIR when the said
valuation applies to regular residential land and not to commercial lots fixed at least P20,000.00
per sq. m. The P15,355.00 per square meter [price] is relatively low compared to that
recommended by PCAC and contained at BIR Zonal Valuation which was P20,000.00 per sq. m.
Referring to Section 3(g), there was no basis to conclude that the contract was grossly
disadvantageous to the government. On the contrary, the government was able to save money
when it decided to purchase the questioned properties at P15,355.00 per sq. m. and not at
P20,000.00.
Section 3(j) has no application in the instant case as it pertains to the granting of a license, permit
or benefit. Assuming as it does, it established a record that the affected properties were purchased
from persons or [entities] who were legally authorized to sell or own the same in accordance
with the applicable laws, rules and regulations.
We find no evidence that the elements of Section 3(h) exist. The provision requires that there
must be an actual intervention in the transaction for financial or pecuniary interest by public
respondent. While there was an intervention by public respondents the same were in pursuance to
the exercise official duties. Neither public respondents have direct or indirect financial or
pecuniary interest with AMVEL.
Considering that the crimes imputed against the respondents were not shown to exist, conspiracy
could not likewise be appreciated. It is a well settled ruled that conspiracy must be proven as
clearly as the commission of the offense itself.
WHEREFORE, premises considered, this case is hereby DISMISSED for lack of evidence.
SO RESOLVED.127

117

Upon Motion for Reconsideration of petitioner, respondent Office of the Ombudsman issued an
Order,128 the pertinent portions of which are quoted below:
There is no truth to the allegation that the Ombudsman deliberately failed to order the conduct of
fact-finding investigation. To conduct a fact-finding investigation is a question addressed to the
sound discretion of the Ombudsman and not therefore as a matter of right. When the instant
complaint was filed complainant attached voluminous documents which when evaluated was
sufficient in form and substance to conduct preliminary investigation. To that matter, there is no
need to conduct fact-finding activities as the compliant already reached the formal stage of
investigation to determine whether or not probable cause exists to charge respondents. In the
same manner, the request for subpoena duces tecum cannot be demanded as a matter of policy
for every [case] filed before this Office. From the very beginning it is the duty of the
complainant to present complete and ample evidence to support his allegation and not to rely on
the coercive processes of this Office lest to be accused of being a tool for every complainants
crusade and be labeled as engaged in fishing evidence.
[Complainant] questions the inhibition of the Honorable Ombudsman. We view however the
same inhibition a prudent exercise of impartiality. Prudence dictates that the Honorable
Ombudsman himself should inhibit to clear any suspicion that he would engage in any retaliatory
[act] against the complainant in view of the impeachment case filed by the latter. Far from the
accusation that the Honorable Ombudsman prejudged the case as well as the members of the
Panel, we submit that the resolution was arrived [at] after a painstaking appreciation of the
available evidence of the complainant and respondents.
As a consequence of the inhibition of the Honorable Ombudsman, the Overall Deputy
Ombudsman, Hon. Margarito P. Gervacio, Jr. had to perform the duties of the Ombudsman and
assumed and took charge of the disposition of the case. This finds support under Section 8 of
R.A. 6770, otherwise known as "Ombudsman Act of 1989". On the contrary, complainant failed
to cite the particular provision of law allegedly violated when the Overall Deputy Ombudsman
approved the dismissal of the case. In the same manner we find the insinuations of the
complainant against the Overall Deputy Ombudsman baseless much more sufficient to affect or
disturb whatever findings we have in our resolution.
Complainant alleges that his evidence were totally disregarded. He forgot however, that
respondents have evidence too. Notwithstanding with the voluminous documents complainant
submitted, this Office has to weigh the evidentiary value and credibility of the evidence as well
as the arguments of both parties. It so happened that in the appreciation thereof, we gave
credence to the evidence of the other parties. That judgment cannot be put as an issue that would
warrant the reversal of our decision.
In general, the Motion for Reconsideration failed to advance new arguments that would warrant
the reversal of the questioned Resolution. There was no new evidence submitted by the
complainant to warrant a second look of our resolution. The supposed documents he attached in
the Motion were already passed upon and examined by this Office. Lastly, complainant
miserably failed to point out specifically the findings or conclusion of the resolution which was
contrary to law.
118

WHEREFORE, premises considered, the Motion for Reconsideration of the complainant is

hereby DENIED for lack of merit.
SO ORDERED.
We find no cogent reason to weigh all over again the evidence in this case and to reverse the
findings of the public respondent quoted above. This is because, as we held in Tirol v. COA:
[This] Court ordinarily does not interfere with the discretion of the Ombudsman to determine
whether there exists reasonable ground to believe that a crime has been committed and that the
accused is probably guilty thereof and, thereafter, to file the corresponding information with the
appropriate courts. This rule is based not only upon respect for the investigatory and prosecutory
powers granted by the Constitution to the Office of the Ombudsman but upon practicality as
well. Otherwise the functions of the courts will be grievously hampered by immeasurable
petitions assailing the dismissal of investigatory proceedings conducted by the Office of the of
the Ombudsman with regard to complaints filed before it, in as much the same way that the
courts would be extremely swamped if they would be compelled to review the exercise of
discretion on the part of the fiscals or prosecuting attorneys each time they decide to file an
information in court or dismiss a complaint by a private complainant.129
More recently, we had occasion to pass upon a similar case, the core issue of which was whether
the Ombudsman committed grave abuse of discretion in dismissing petitioners' complaint against
the respondents. In that case, we ruled in the negative and, accordingly, dismissed the petition.130
Thus, we held:
We cannot overemphasize the fact that the Ombudsman is a constitutional officer duty bound to
"investigate on its own, or on complaint by any person, any act or omission of any public
official, employee, office or agency, when such act or omission appears to be illegal, unjust,
improper, or inefficient." The raison d 'etre for its creation and endowment of broad investigative
authority is to insulate it from the long tentacles of officialdom that are able to penetrate judges'
and fiscals' offices, and others involved in the prosecution of erring public officials, and through
the execution of official pressure and influence, quash, delay, or dismiss investigations into
malfeasances and misfeasances committed by public officers.
In Presidential Commission on Good Government (PCGG) v. Desierto, we dwelt on the powers,
functions and duties of the Ombudsman, to wit:
The prosecution of offenses committed by public officers is vested primarily in the Office of the
Ombudsman. It bears emphasis that the Office has been given a wide latitude of investigatory
and prosecutory powers under the Constitution and Republic Act No. 6770 (The Ombudsman
Act of 1989). This discretion is all but free from legislative, executive or judicial intervention to
ensure that the Office is insulated from any outside pressure and improper influence.
Indeed, the Ombudsman is empowered to determine whether there exist reasonable grounds to
believe that a crime has been committed and that the accused is probably guilty thereof and,
thereafter, to file the corresponding information with the appropriate courts. The Ombudsman
119

may thus conduct an investigation if the complaint filed is found to be in the proper form and
substance. Conversely, the Ombudsman may also dismiss the complaint should it be found
insufficient in form or substance.
Unless there are good and compelling reasons to do so, the Court will refrain from interfering
with the exercise of the Ombudsman's powers, and respect the initiative and independence
inherent in the latter who, beholden to no one, acts as the champion of the people and the
preserver of the integrity of public service.
The pragmatic basis for the general rule was explained in Ocampo v. Ombudsman:
The rule is based not only upon respect for the investigatory and prosecutory powers granted by
the Constitution to the Office of the Ombudsman but upon practicality as well. Otherwise, the
functions of the courts will be grievously hampered by innumerable petitions assailing the
dismissal of investigatory proceedings conducted by the Office of the Ombudsman with regard to
complaints filed before it, in much the same way that the courts would be extremely swamped if
they would be compelled to review the exercise of discretion on the part of the fiscals or
prosecuting attorneys each time they decide to file an information in court or dismiss a complaint
by private complainants.
From the foregoing, it is crystal clear that we do not interfere with the Ombudsman's exercise of
his investigatory and prosecutory powers vested by the Constitution. In short, we do not review
the Ombudsman's exercise of discretion in prosecuting or dismissing a complaint except when
the exercise thereof is tainted with grave abuse of discretion.1311avvphi1
In the recent case Lazatin v. Ombudsman,132 this Court held that the question of whether "the
Ombudsman correctly ruled that there was enough evidence to support a finding of probable
cause pertains to a mere error of judgment." The Court further held:
It must be stressed that certiorari is a remedy meant to correct only errors of jurisdiction, not
errors of judgment. This has been emphasized in First Corporation v. Former Sixth Division of
the Court of Appeals, to wit:
It is a fundamental aphorism in law that a review of facts and evidence is not the province of the
extraordinary remedy of certiorari, which is extra ordinem beyond the ambit of appeal. In
certiorari proceedings, judicial review does not go as far as to examine and assess the evidence
of the parties and to weigh the probative value thereof. It does not include an inquiry as to the
correctness of the evaluation of evidence. Any error committed in the evaluation of evidence is
merely an error of judgment that cannot be remedied by certiorari. An error of judgment is one
which the court may commit in the exercise of its jurisdiction. An error of jurisdiction is one
where the act complained of was issued by the court without or in excess of jurisdiction, or with
grave abuse of discretion, which is tantamount to lack or in excess of jurisdiction and which
error is correctible only by the extraordinary writ of certiorari. Certiorari will not be issued to
cure errors of the trial court in its appreciation of the evidence of the parties, or its conclusions
anchored on the said findings and its conclusions of law. It is not for this Court to re-examine

120

conflicting evidence, re-evaluate the credibility of the witnesses or substitute the findings of fact
of the court a quo.133
Even if the issues involved here are factual, petitioner invokes the power of the Court to reverse
the decision of the Ombudsman by alleging that the latter acted with grave abuse of discretion
amounting to lack or excess of jurisdiction. However, as in Morong Water District v. Office of
the Deputy Ombudsman,134 we find that:
[The] Order and the Resolution of the Ombudsman are based on substantial evidence. In
dismissing the complaint of petitioner, we cannot say that the Ombudsman committed grave
abuse of discretion so as to call for the exercise of our supervisory powers over him. This court is
not a trier of facts. As long as there is substantial evidence in support of the Ombudsman's
decision, that decision will not be overturned.1avvphi1
As regards petitioners insistence that the Office of the Ombudsman should have conducted a
fact-finding investigation and issued subpoena duces tecum as requested, we find that the
Ombudsmans action not to issue the same was not made in grave abuse of discretion.135 We have
previously ruled regarding this matter in this wise:
If the Ombudsman may dismiss a complaint outright for lack of merit, it necessarily follows that
it is also within his discretion to determine whether the evidence before him is sufficient to
establish probable cause. Thus, petitioners may not compel the Ombudsman to order the
production of certain documents, if in the Ombudsman's judgment such documents are not
necessary in order to establish the guilt, or innocence, of the accused.
It has been the consistent policy of the Supreme Court not to interfere with the Ombudsman's
exercise of his investigatory powers. xxx
[It] is beyond the ambit of this Court to review the exercise of discretion of the Ombudsman in
prosecuting or dismissing a complaint filed before it. Such initiative and independence are
inherent in the Ombudsman who, beholden to no one, acts as the champion of the people and
preserver of the integrity of the public service.
The rationale underlying the Court's policy of non-interference was laid down in Ocampo
v.Ombudsman and reiterated in the more recent case of Venus v. Desierto, to wit:
The rule is based not only upon respect for the investigatory and prosecutory powers granted by
the Constitution to the Office of the Ombudsman but upon practicality as well. Otherwise, the
functions of the courts will be grievously hampered by innumerable petitions assailing the
dismissal of investigatory proceedings conducted by the Office of the Ombudsman with regard to
complaints filed before it, in much the same way that the courts would be extremely swamped if
they would be compelled to review the exercise of discretion on the part of the fiscals or
prosecuting attorneys each time they decide to file an information in court or dismiss a complaint
by a private complainant.136

121

Grave abuse of discretion has been defined as "such capricious and whimsical exercise of
judgment tantamount to lack of jurisdiction." The abuse of discretion must be "so patent and
gross as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined
by law, or to act at all in contemplation of law, as where the power is exercised in an arbitrary
and despotic manner by reason of passion or hostility."137 We do not find this situation to be
present in the instant case so as to merit a reversal of the questioned Resolution and Order issued
by respondent Office of the Ombudsman.
WHEREFORE, premises considered, the petition is hereby DISMISSED. The assailed
Resolution and Order of the Ombudsman in OMB-0-01-0577 are AFFIRMED.
SO ORDERED.

G.R. No. 152496

July 30, 2009

SPOUSES GERMAN ANUNCIACION and ANA FERMA ANUNCIACION and GAVINO

G. CONEJOS, Petitioners,

122

vs.
PERPETUA M. BOCANEGRA and GEORGE M. BOCANEGRA, Respondents.
DECISION
LEONARDO-DE CASTRO, J.:
This is a petition for review on certiorari, assailing the Decision,1 dated November 19, 2001, and
the Resolution,2 dated March 31, 2002 of the Court of Appeals (CA) in CA-G.R. SP No. 65516.
The CA decision affirmed the Orders dated February 19, 20013 and May 16, 20014 of the
Regional Trial Court (RTC) of Manila, Branch 40 in Civil Case No. 00-98813 which dismissed
the complaint5 for Quieting of Title and Cancellation of TCT No. 122452 of petitioner spouses
German Anunciacion and Ana Ferma Anunciacion and their co-petitioner, Gavino G. Conejos.
The facts of the case are as follows:
On September 29, 2000, petitioners filed before the RTC, Manila, a complaint for Quieting of
Title and Cancellation of TCT No. 122452, docketed as Civil Case No. 00-98813. The complaint
averred that defendants (respondents) may be served with summons and legal processes through
Atty. Rogelio G. Pizarro, Jr., with office address at 2830 Juan Luna St., Tondo, Manila.6 The
summons, together with the copies of the complaint, were then served on Atty. Pizarro. The
record shows that before the filing of the said complaint, Atty. Pizarro wrote a demand letter7 on
behalf of respondents and addressed to petitioner German Anunciacion, among others,
demanding that they vacate the land owned by his clients (respondents), who needed the same
for their own use. The said demand letter reads:
2830 Juan Luna St.Tondo, Manila
August 19, 2000
Mr. German Anunciacion, Mesdames
Liwayway Nava, Evangeline Pineda,
and Ana Ferma
2982 Rizal Ave. Ext.
Sta. Cruz, Manila
Dear Sir and Mesdames:
I write in behalf of my clients, MS. PERPETUA M. BOCANEGRA and MR. GEORGE M.
BOCANEGRA, the registered owners of the parcel of land known as Lot 1-B (LRC) PSD230517 located at 2982 Rizal Ave. Ext., Sta. Cruz, Manila, and duly covered by Transfer
Certificate of Title No. 122452, which you are presently occupying.
123

I would like to inform you that your occupation and possession of the said land is based on mere
tolerance of the owners, and without any payment on your part of any rental. Now, the owners
need the subject property for their own use.
In view thereof, I hereby demand that you vacate the said land within a period of fifteen (15)
days from receipt of this letter. Otherwise, much to our regret, I shall be constrained to institute
the proper criminal and/or civil action against you.
Trusting that you will give this matter your most serious and preferential attention.
Very truly yours,
ATTY. ROGELIO G. PIZARRO, JR.
On October 27, 2000, respondents, through their counsel, Atty. Norby C. Caparas, Jr., filed a
Motion to Dismiss8 on the ground that the complaint stated no cause of action. Petitioners filed
their Comment on the Motion to Dismiss9 on November 6, 2000.
A Supplemental Motion to Dismiss and Reply to the Comment on the Motion to Dismiss10 dated
November 13, 2000 was filed by respondents, alleging an additional ground that petitioners
failed to pay the required filing fee. The petitioners filed, on November 27, 2000, their
Opposition to the Supplemental Motion to Dismiss and Comment to the Reply to the Comment
on the Motion to Dismiss.11
Thereafter, respondents filed a Second Supplemental Motion to Dismiss and Manifestation dated
November 27, 2000,12 citing the following grounds:
1.) That the court has no jurisdiction over the person of the defending party.
2.) That the court has no jurisdiction over the subject matter of the claim.
3.) That the pleading asserting the claim states no cause of action.
Petitioners then filed their Additional Comment on the Motion to Dismiss, Supplemental Motion
to Dismiss and Comment on the Second Supplemental Motion to Dismiss.13
In its order of February 19, 2001, the trial court sustained the respondents and dismissed the
complaint for lack of jurisdiction over the persons of respondents as defendants.lavvph!l The trial
court ruled as follows:
However, the Court finds for the defendants on the Second Supplemental Motion.

124

In point is Section 3, Rule 3 of the same Rules, which reads

"Where the action is allowed to be prosecuted or defended by a representative or someone acting
in a fiduciary capacity, the beneficiary shall be included in the title of the case and shall be
deemed to be the real party in interest. A representative may be a trustee of an express trust, a
guardian, an executor or administrator, or a party authorized by law or these Rules. x x x x"
In the case at bar Atty. Pizarro, Jr., has not been shown to be a trustee of an express trust, a
guardian, or any of the above for the action to be allowed to be defended by a representative.
The fact that Atty. Pizarro, Jr., was the lawyer of the defendants in the demand letters do not per
se make him their representative for purposes of the present action. To this effect, service on
lawyer of defendant is an invalid service of summons. (Cordova v. Provincial Sheriff of Iloilo, 89
SCRA 59)
Going to the other raised issue, Section 20, Rule 14 of the 1997 Rules of Civil Procedure
provides
"The defendants voluntary appearance in the action shall be equivalent to service of summons.
The inclusion in a motion to dismiss of other grounds aside from lack of jurisdiction over the
person of the defendant shall not be deemed a voluntary appearance."
The presentation of all objections then available as was done by the movants subserves the
omnibus motion rule and the concomitant policy against multiplicity of suits.1awphi1
WHEREFORE, premises considered, on the ground that the Court has no jurisdiction over the
persons of the defendants, the case is hereby DISMISSED.
The motion for reconsideration filed by the petitioners was denied for lack of merit.
Aggrieved, petitioners filed before the CA a Petition for Certiorari, seeking the nullification of
the RTC Orders dated February 19, 2001 and May 16, 2001, on the ground that the said orders
were issued with grave abuse of discretion.
On November 19, 2001, the CA dismissed the petition upon finding that there was no waiver of
the ground of lack of jurisdiction on the part of respondents in the form of voluntary appearance.
Applying Section 20, Rule 14 of the 1997 Rules of Civil Procedure, the CA held that although
the grounds alleged in the two (2) earlier Motion to Dismiss and Supplemental Motion to
Dismiss were lack of cause of action and failure to pay the required filing fee, the filing of the
said motions did not constitute a waiver of the ground of lack of jurisdiction on their persons as
defendants. The CA then concluded that there was no voluntary appearance on the part of
respondents/defendants despite the filing of the aforesaid motions. The CA also rejected
125

petitioners contention that the service made to Atty. Rogelio Pizarro, Jr. was deemed service
upon respondents/defendants, thus:
First of all, Atty. Rogelio Pizarro cannot be considered as counsel of record wherein We could
apply the jurisprudential rule that notice to counsel is notice to client. Atty. Pizarro cannot be
deemed counsel on record since Defendants were not the ones (sic) who instituted the action,
like plaintiffs who did the same thru counsel and therefore, obviously the one who signed the
pleadings is the counsel on record. Sadly, the Motion to Dismiss filed by Private Respondents
were signed not by Atty. Pizarro but by someone else. How then could Petitioners claim that
Atty. Pizarro represents Private Respondents?
Secondly, the fact that Atty. Pizarro was the one who wrote and signed the August 19, 2000
letter, on behalf of Private Respondents, demanding that Petitioners vacate the premises of the
formers land does not fall under the substituted service rule. To be sure, Section 7 of Rule 14 of
the 1997 Rules, provide thus:
Sec. 7. Substituted Services If, for justifiable causes the defendant cannot be served within a
reasonable time as provided in the preceding section; service maybe reflected (a) by leaving
copies of the summons at the defendants residence with some person of suitable age and
discretion then residing therein or (b) by leaving the copies at defendant (sic) office or regular
place of business with some competent person in charge thereof.
In the case at bench, service upon Atty. Pizarro did not fall under the aforequoted rule and
therefore cannot qualify as substituted service. Since the service made by Petitioners was
defective, the Public Respondent court never did acquire jurisdiction over the persons of
defendants and therefore correctly ordered the dismissal of the complaint.14
Petitioners moved for a reconsideration of the decision but it, too, was denied by the CA in its
Resolution of March 31, 2002.
Hence, the instant petition which raises the following assignment of errors:
1. THAT THE HONORABLE COURT OF APPEALS ERRED ACTED WITH GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OF JURISDICTION OR IN EXCESS OF
JURISDICTION WHEN IT DID NOT CONSIDER THAT THE FILING OF THE MOTION TO
DISMISS AND THE SUPPLEMENTAL MOTION TO DISMISS BY RESPONDENTS
AMOUNTS TO VOLUNTARY APPEARANCE BEFORE THE REGIONAL TRIAL COURT
AND THEREFORE CONFERS JURISDICTION OF THE REGIONAL TRIAL COURT ON
THE PERSON OF RESPONDENTS.

126

2. THAT THE HONORABLE COURT OF APPEALS ERRED AND ACTED WITH GRAVE
ABUSE OF DISCRETION WHEN IT DID NOT CONSIDER THAT THE SECOND
SUPPLEMENTAL MOTION ALLEGING THAT THE HONORABLE TRIAL COURT HAD
NO JURISDICTION OF THE PERSONS OF THE DEFENDANTS IS ALREADY LATE FOR
THE FIRST MOTIONS, NAMELY, THE "MOTION TO DISMISS" AND THE
"SUPPLEMENTAL MOTION TO DISMISS AND REPLY TO THE COMMENT TO THE
MOTION TO DISMISS", WHICH HAD BEEN OPPOSSED, ONE AFTER THE OTHER, BY
PETITIONERS, HAD ALREADY CONFERRED JURISDICTION OF THE HONORABLE
TRIAL COURT ON THE PERSONS OF DEFENDANTS.
3. THAT THE HONORABLE COURT OF APPEALS ERRED AND ACTED WITH GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT
CONSIDERED THAT THESE 3 MOTIONS OF RESPONDENTS ARE BEING TREATED AS
OMNIBUS MOTION AND ARE COVERED BY SECTION 20 RULE 14 OF THE 1997
RULES ON CIVIL PROCEDURE.
4. THAT THE HONORABLE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT DID NOT
CONSIDER ATTY. ROGELIO PIZARRO, JR., AS THE AUTHORIZED REPRESENTATIVE
OF RESPONDENT TO RECEIVE THE SUMMONS AND COMPLAINT.
In the Resolution dated July 14, 2003, the Court gave due course to the petition and required the
parties to submit their respective memoranda. In compliance, the respondents filed their
Memorandum on September 8, 2003,15 while the petitioners filed their Memorandum on
September 24, 2003.16
We find merit in the petition.
While it is a settled doctrine that findings of fact of the CA are binding and not to be disturbed,
they are subject to certain exceptions for very compelling reasons, such as when: (1) the
conclusion is a finding grounded entirely on speculation, surmise and conjecture; (2) the
inference made is manifestly mistaken; (3) there is grave abuse of discretion; (4) the judgment is
based on a misapprehension of facts; (5) the findings of fact of the CA are contrary to those of
the trial court; (6) said findings of fact are conclusions without citation of specific evidence on
which they are based; and (7) the findings of fact of the CA are premised on the supposed
absence of evidence and contradicted by the evidence on record.17 The Court finds here cogent
reason to take exception from the general rule.
Respondents, through counsel, filed a motion to dismiss dated October 25, 2000,18 with only one
ground, i.e., that the pleading asserting the claim "states no cause of action." Under this ground,
respondents raised the issues quoted hereunder:
127

I. Defendants19 anchored their complaint on a WRONG Decree of Registration;

II. The Government of the Republic of the Philippines has recognized the authenticity of
TCT No. 122452; and
III. Plaintiffs do NOT have the legal personality to quiet the title of the subject property.
Section 20, Rule 14 of the 1997 Rules of Civil Procedure (the Rules) states:
Sec. 20. Voluntary Appearance The defendants voluntary appearance in the action shall be
equivalent to service of summons. The inclusion in a motion to dismiss of other grounds aside
from lack of jurisdiction over the person of the defendant shall not be deemed a voluntary
appearance. (Underscoring ours)
The filing of the above-mentioned Motion to Dismiss, without invoking the lack of jurisdiction
over the person of the respondents, is deemed a voluntary appearance on the part of the
respondents under the aforequoted provision of the Rules. The same conclusion can be drawn
from the filing of the Supplemental Motion to Dismiss and Reply to the Comment on the Motion
to Dismiss dated November 13, 2000 which alleged, as an additional ground for the dismissal of
petitioners complaint, the failure of plaintiffs to pay the required filing fee again but failed to
raise the alleged lack of jurisdiction of the court over the person of the respondents.
It was only in respondents Second Supplemental Motion to Dismiss dated November 27, 2000
that respondents for the first time raised the courts lack of jurisdiction over their person as
defendants on the ground that summons were allegedly not properly served upon them. The
filing of the said Second Supplemental Motion to Dismiss did not divest the court of its
jurisdiction over the person of the respondents who had earlier voluntarily appeared before the
trial court by filing their motion to dismiss and the supplemental motion to dismiss.lavvph!l The
dismissal of the complaint on the ground of lack of jurisdiction over the person of the
respondents after they had voluntarily appeared before the trial court clearly constitutes grave
abuse of discretion amounting to lack of jurisdiction or in excess of jurisdiction on the part of the
RTC.
Quite apart from their voluntary appearance, respondents Supplemental Motion to Dismiss and
Second Supplemental Motion to Dismiss were clearly in violation of Rule 15, Section 8 in
relation to Rule 9, Section 1 of the Rules.
Rule 15, Section 8 of the Rules provides:
Sec. 8. Omnibus motion. Subject to the provisions of Section 1 of Rule 9, a motion attacking a
pleading, order, judgment, or proceeding shall include all objections then available, and all
objections not so included shall be deemed waived. (emphasis ours)
128

Rule 9, Section 1, in turn, states:

Sec. 1. Defenses and objections not pleaded. Defenses and objections not pleaded either in a
motion to dismiss or in the answer are deemed waived. However, when it appears from the
pleadings or the evidence on record that the court has no jurisdiction over the subject matter, that
there is another action pending between the same parties for the same cause, or that the action is
barred by prior judgment or by statute of limitations, the court shall dismiss the claim. (emphasis
ours)
Applying the foregoing rules, respondents failure to raise the alleged lack of jurisdiction over
their persons in their very first motion to dismiss was fatal to their cause. They are already
deemed to have waived that particular ground for dismissal of the complaint. The trial court
plainly abused its discretion when it dismissed the complaint on the ground of lack of
jurisdiction over the person of the defendants. Under the Rules, the only grounds the court could
take cognizance of, even if not pleaded in the motion to dismiss or answer, are: (a) lack of
jurisdiction over the subject matter; (b) existence of another action pending between the same
parties for the same cause; and (c) bar by prior judgment or by statute of limitations.
We likewise cannot approve the trial courts act of entertaining supplemental motions to dismiss
which raise grounds that are already deemed waived. To do so would encourage lawyers and
litigants to file piecemeal objections to a complaint in order to delay or frustrate the prosecution
of the plaintiffs cause of action.
Although the CA correctly observed that Atty. Pizarro, as the lawyer of the respondents in the
demand letters, does not per se make him their representative for purposes of the present action,
a scrutiny of the record shows that the address of Atty. Pizarro and Atty. Norby Caparas, Jr., (the
counsel who eventually entered his appearance for respondents) is the same. This circumstance
leads us to believe that respondents belated reliance on the purported improper service of
summons is a mere afterthought, if not a bad faith ploy to avoid answering the
complaint.1avvphi1
At this point, we find it appropriate to cite Philippine American Life & General Insurance
Company v. Breva,20 where this Court held that:
The trial court did not commit grave abuse of discretion when it denied the motion to dismiss
filed by the petitioner due to lack of jurisdiction over its person. In denying the motion to
dismiss, the CA correctly relied on the ruling in Lingner & Fisher GMBH vs. Intermediate
Appellate Court, thus:
A case should not be dismissed simply because an original summons was wrongfully served. It
should be difficult to conceive, for example, that when a defendant personally appears before a
129

Court complaining that he had not been validly summoned, that the case filed against him should
be dismissed. An alias summons can be actually served on said defendant
In the recent case of Teh vs. Court of Appeals, the petitioner therein also filed a motion to
dismiss before filing his answer as defendant in the trial court on the ground of failure to serve
the summons on him. In that case, the Court agreed with the appellate court's ruling that there
was no abuse of discretion on the part of the trial court when the latter denied the petitioner's
motion to dismiss the complaint and ordered the issuance of an alias summons.
To be sure, a trial court should be cautious before dismissing complaints on the sole ground of
improper service of summons considering that it is well within its discretion to order the issuance
and service of alias summons on the correct person in the interest of substantial justice.
Accordingly, the Court finds that the CA erred in dismissing the petition and affirming the
challenged orders of the RTC which dismissed the complaint on the ground of lack of
jurisdiction over the person of the respondents who were the defendants.
WHEREFORE, the petition is hereby GRANTED. The CAs Decision dated November 19, 2001
and the Resolution dated March 31, 2002 in CA-G.R. SP No. 65516 affirming the Orders dated
February 19, 2001 and May 16, 2001 of the RTC in Civil Case No. 00-98813 are reversed and
set aside. Consequently, Civil Case No. 00-98813 is hereby ordered REINSTATED. Let the
records of this case be remanded to the court of origin for further proceedings.
SO ORDERED.
G.R. No. 176657

September 1, 2010

DEPARTMENT OF FOREIGN AFFAIRS and BANGKO SENTRAL NG PILIPINAS,

Petitioners,
vs.
HON. FRANCO T. FALCON, IN HIS CAPACITY AS THE PRESIDING JUDGE OF
BRANCH 71 OF THE REGIONAL TRIAL COURT IN PASIG CITY and BCA
INTERNATIONAL CORPORATION, Respondents.
DECISION
LEONARDO-DE CASTRO, J.:
Before the Court is a Petition for Certiorari and prohibition under Rule 65 of the Rules of Court
with a prayer for the issuance of a temporary restraining order and/or a writ of preliminary
injunction filed by petitioners Department of Foreign Affairs (DFA) and Bangko Sentral ng
Pilipinas (BSP). Petitioners pray that the Court declare as null and void the Order1 dated
130

February 14, 2007 of respondent Judge Franco T. Falcon (Judge Falcon) in Civil Case No.
71079, which granted the application for preliminary injunction filed by respondent BCA
International Corporation (BCA). Likewise, petitioners seek to prevent respondent Judge Falcon
from implementing the corresponding Writ of Preliminary Injunction dated February 23, 20072
issued pursuant to the aforesaid Order.
The facts of this case, as culled from the records, are as follows:
Being a member state of the International Civil Aviation Organization (ICAO),3 the Philippines
has to comply with the commitments and standards set forth in ICAO Document No. 93034
which requires the ICAO member states to issue machine readable travel documents (MRTDs)5
by April 2010.
Thus, in line with the DFAs mandate to improve the passport and visa issuance system, as well
as the storage and retrieval of its related application records, and pursuant to our governments
ICAO commitments, the DFA secured the approval of the President of the Philippines, as
Chairman of the Board of the National Economic and Development Authority (NEDA), for the
implementation of the Machine Readable Passport and Visa Project (the MRP/V Project) under
the Build-Operate-and-Transfer (BOT) scheme, provided for by Republic Act No. 6957, as
amended by Republic Act No. 7718 (the BOT Law), and its Implementing Rules and Regulations
(IRR). Thus, a Pre-qualification, Bids and Awards Committee (PBAC) published an invitation to
pre-qualify and bid for the supply of the needed machine readable passports and visas, and
conducted the public bidding for the MRP/V Project on January 10, 2000. Several bidders
responded and BCA was among those that pre-qualified and submitted its technical and financial
proposals. On June 29, 2000, the PBAC found BCAs bid to be the sole complying bid; hence, it
permitted the DFA to engage in direct negotiations with BCA. On even date, the PBAC
recommended to the DFA Secretary the award of the MRP/V Project to BCA on a BOT
arrangement.
In compliance with the Notice of Award dated September 29, 2000 and Section 11.3, Rule 11 of
the IRR of the BOT Law,6 BCA incorporated a project company, the Philippine Passport
Corporation (PPC) to undertake and implement the MRP/V Project.
On February 8, 2001, a Build-Operate-Transfer Agreement7 (BOT Agreement) between the DFA
and PPC was signed by DFA Acting Secretary Lauro L. Baja, Jr. and PPC President Bonifacio
Sumbilla. Under the BOT Agreement, the MRP/V Project was defined as follows:
Section 1.02 MRP/V Project refers to all the activities and services undertaken in the
fulfillment of the Machine Readable Passport and Visa Project as defined in the Request for
Proposals (RFP), a copy of which is hereto attached as Annex A, including but not limited to
project financing, systems development, installation and maintenance in the Philippines and
131

Foreign Service Posts (FSPs), training of DFA personnel, provision of all project consumables
(related to the production of passports and visas, such as printer supplies, etc.), scanning of
application and citizenship documents, creation of data bases, issuance of machine readable
passports and visas, and site preparation in the Central Facility and Regional Consular Offices
(RCOs) nationwide.8
On April 5, 2002, former DFA Secretary Teofisto T. Guingona and Bonifacio Sumbilla, this time
as BCA President, signed an Amended BOT Agreement9 in order to reflect the change in the
designation of the parties and to harmonize Section 11.3 with Section 11.810 of the IRR of the
BOT Law. The Amended BOT Agreement was entered into by the DFA and BCA with the
conformity of PPC.
The two BOT Agreements (the original version signed on February 8, 2001 and the amended
version signed April 5, 2002) contain substantially the same provisions except for seven
additional paragraphs in the whereas clauses and two new provisions Section 9.05 on
Performance and Warranty Securities and Section 20.15 on Miscellaneous Provisions. The two
additional provisions are quoted below:
Section 9.05. The PPC has posted in favor of the DFA the performance security required for
Phase 1 of the MRP/V Project and shall be deemed, for all intents and purposes, to be full
compliance by BCA with the provisions of this Article 9.
xxxx
Section 20.15 It is clearly and expressly understood that BCA may assign, cede and transfer all
of its rights and obligations under this Amended BOT Agreement to PPC, as fully as if PPC is
the original signatory to this Amended BOT Agreement, provided however that BCA shall
nonetheless be jointly and severally liable with PPC for the performance of all the obligations
and liabilities under this Amended BOT Agreement.11
Also modified in the Amended BOT Agreement was the Project Completion date of the MRP/V
Project which set the completion of the implementation phase of the project within 18 to 23
months from the date of effectivity of the Amended BOT Agreement as opposed to the previous
period found in the original BOT Agreement which set the completion within 18 to 23 months
from receipt of the NTP (Notice to Proceed) in accordance with the Project Master Plan.
On April 12, 2002, an Assignment Agreement12 was executed by BCA and PPC, whereby BCA
assigned and ceded its rights, title, interest and benefits arising from the Amended BOT
Agreement to PPC.

132

As set out in Article 8 of the original and the Amended BOT Agreement, the MRP/V Project was
divided into six phases:
Phase 1. Project Planning Phase The Project Proponent [BCA] shall prepare detailed plans
and specifications in accordance with Annex A of this [Amended] BOT Agreement within three
(3) months from issuance of the NTP (Notice to Proceed) [from the date of effectivity of this
Amended BOT Agreement]. This phase shall be considered complete upon the review,
acceptance and approval by the DFA of these plans and the resulting Master Plan, including the
Master Schedule, the business process specifications, the acceptance criteria, among other plans.
xxxx
The DFA must approve all detailed plans as a condition precedent to the issuance of the CA
[Certificate of Acceptance] for Phase 1.
Phase 2. Implementation of the MRP/V Project at the Central Facility Within six (6)
months from issuance of the CA for Phase 1, the PROJECT PROPONENT [BCA] shall complete
the implementation of the MRP/V Project in the DFA Central Facility, and establish the network
design between the DFA Central Facility, the ten (10) RCOs [Regional Consular Offices] and the
eighty (80) FSPs [Foreign Service Posts].
xxxx
Phase 3. Implementation of the MRP/V Project at the Regional Consular Offices This
phase represents the replication of the systems as approved from the Central Facility to the RCOs
throughout the country, as identified in the RFP [Request for Proposal]. The approved systems
are those implemented, evaluated, and finally approved by DFA as described in Phase 1. The
Project Proponent [BCA] will be permitted to begin site preparation and the scanning and
database building operations in all offices as soon as the plans are agreed upon and accepted.
This includes site preparation and database building operations in these Phase-3 offices.
Within six (6) months from issuance of CA for Phase 2, the Project Proponent [BCA] shall
complete site preparation and implementation of the approved systems in the ten (10) RCOs,
including a fully functional network connection between all equipment at the Central Facility
and the RCOs.
Phase 4. Full Implementation, including all Foreign Service Posts Within three (3) to eight
(8) months from issuance of the CA for Phase-3, the Project Proponent [BCA] shall complete all
preparations and fully implement the approved systems in the eighty (80) FSPs, including a fully
functional network connection between all equipment at the Central Facility and the FSPs. Upon
satisfactory completion of Phase 4, a CA shall be issued by the DFA.
133

Phase 5. In Service Phase Operation and maintenance of the complete MRP/V Facility to
provide machine readable passports and visas in all designated locations around the world.
Phase 6. Transition/Turnover Transition/Turnover to the DFA of all operations and
equipment, to include an orderly transfer of ownership of all hardware, application system
software and its source code and/or licenses (subject to Section 5.02 [H]), peripherals, leasehold
improvements, physical and computer security improvements, Automated Fingerprint
Identification Systems, and all other MRP/V facilities shall commence at least six (6) months
prior to the end of the [Amended] BOT Agreement. The transition will include the training of
DFA personnel who will be taking over the responsibilities of system operation and maintenance
from the Project Proponent [BCA]. The Project Proponent [BCA] shall bear all costs related to
this transfer.13 (Words in brackets appear in the Amended BOT Agreement)
To place matters in the proper perspective, it should be pointed out that both the DFA and BCA
impute breach of the Amended BOT Agreement against each other.
According to the DFA, delays in the completion of the phases permeated the MRP/V Project due
to the submission of deficient documents as well as intervening issues regarding BCA/PPCs
supposed financial incapacity to fully implement the project.
On the other hand, BCA contends that the DFA failed to perform its reciprocal obligation to issue
to BCA a Certificate of Acceptance of Phase 1 within 14 working days of operation purportedly
required by Section 14.04 of the Amended BOT Agreement. BCA bewailed that it took almost
three years for the DFA to issue the said Certificate allegedly because every appointee to the
position of DFA Secretary wanted to review the award of the project to BCA. BCA further
alleged that it was the DFAs refusal to approve the location of the DFA Central Facility which
prevented BCA from proceeding with Phase 2 of the MRP/V Project.
Later, the DFA sought the opinion of the Department of Finance (DOF) and the Department of
Justice (DOJ) regarding the appropriate legal actions in connection with BCAs alleged delays in
the completion of the MRP/V Project. In a Letter dated February 21, 2005,14 the DOJ opined that
the DFA should issue a final demand upon BCA to make good on its obligations, specifically on
the warranties and responsibilities regarding the necessary capitalization and the required
financing to carry out the MRP/V Project. The DOJ used as basis for said recommendation, the
Letter dated April 19, 200415 of DOF Secretary Juanita Amatong to then DFA Secretary Delia
Albert stating, among others, that BCA may not be able to infuse more capital into PPC to use
for the completion of the MRP/V Project.
Thus, on February 22, 2005, DFA sent a letter16 to BCA, through its project company PPC,
invoking BCAs financial warranty under Section 5.02(A) of the Amended BOT Agreement.17
The DFA required BCA to submit (a) proof of adequate capitalization (i.e., full or substantial
134

payment of stock subscriptions); (b) a bank guarantee indicating the availability of a credit
facility of P700 million; and (c) audited financial statements for the years 2001 to 2004.
In reply to DFAs letter, BCA, through PPC, informed the former of its position that its financial
capacity was already passed upon during the prequalification process and that the Amended BOT
Agreement did not call for any additional financial requirements for the implementation of the
MRP/V Project. Nonetheless, BCA submitted its financial statements for the years 2001 and
2002 and requested for additional time within which to comply with the other financial
requirements which the DFA insisted on.18
According to the DFA, BCAs financial warranty is a continuing warranty which requires that it
shall have the necessary capitalization to finance the MRP/V Project in its entirety and not on a
"per phase" basis as BCA contends. Only upon sufficient proof of its financial capability to
complete and implement the whole project will the DFAs obligation to choose and approve the
location of its Central Facility arise. The DFA asserted that its approval of a Central Facility site
was not ministerial and upon its review, BCAs proposed site for the Central Facility was
purportedly unacceptable in terms of security and facilities. Moreover, the DFA allegedly
received conflicting official letters and notices19 from BCA and PPC regarding the true
ownership and control of PPC. The DFA implied that the disputes among the shareholders of
PPC and between PPC and BCA appeared to be part of the reason for the hampered
implementation of the MRP/V Project.
BCA, in turn, submitted various letters and documents to prove its financial capability to
complete the MRP/V Project.20 However, the DFA claimed these documents were unsatisfactory
or of dubious authenticity. Then on August 1, 2005, BCA terminated its Assignment Agreement
with PPC and notified the DFA that it would directly implement the MRP/V Project.21 BCA
further claims that the termination of the Assignment Agreement was upon the instance, or with
the conformity, of the DFA, a claim which the DFA disputed.
On December 9, 2005, the DFA sent a Notice of Termination22 to BCA and PPC due to their
alleged failure to submit proof of financial capability to complete the entire MRP/V Project in
accordance with the financial warranty under Section 5.02(A) of the Amended BOT Agreement.
The Notice states:
After a careful evaluation and consideration of the matter, including the reasons cited in your
letters dated March 3, May 3, and June 20, 2005, and upon the recommendation of the Office of
the Solicitor General (OSG), the Department is of the view that your continuing default in
complying with the requisite bank guarantee and/or credit facility, despite repeated notice and
demand, is legally unjustified.

135

In light of the foregoing considerations and upon the instruction of the Secretary of Foreign
Affairs, the Department hereby formally TERMINATE (sic) the Subject Amended BOT
Agreement dated 5 April 2005 (sic)23 effective 09 December 2005. Further, and as a consequence
of this termination, the Department formally DEMAND (sic) that you pay within ten (10) days
from receipt hereof, liquidated damages equivalent to the corresponding performance security
bond that you had posted for the MRP/V Project.
Please be guided accordingly.
On December 14, 2005, BCA sent a letter24 to the DFA demanding that it immediately reconsider
and revoke its previous notice of termination, otherwise, BCA would be compelled to declare the
DFA in default pursuant to the Amended BOT Agreement. When the DFA failed to respond to
said letter, BCA issued its own Notice of Default dated December 22, 200525 against the DFA,
stating that if the default is not remedied within 90 days, BCA will be constrained to terminate
the MRP/V Project and hold the DFA liable for damages.
BCAs request for mutual discussion under Section 19.01 of the Amended BOT Agreement26 was
purportedly ignored by the DFA and left the dispute unresolved through amicable means within
90 days. Consequently, BCA filed its Request for Arbitration dated April 7, 200627 with the
Philippine Dispute Resolution Center, Inc. (PDRCI), pursuant to Section 19.02 of the Amended
BOT Agreement which provides:
Section 19.02 Failure to Settle Amicably If the Dispute cannot be settled amicably within
ninety (90) days by mutual discussion as contemplated under Section 19.01 herein, the Dispute
shall be settled with finality by an arbitrage tribunal operating under International Law,
hereinafter referred to as the "Tribunal", under the UNCITRAL Arbitration Rules contained in
Resolution 31/98 adopted by the United Nations General Assembly on December 15, 1976, and
entitled "Arbitration Rules on the United Nations Commission on the International Trade Law".
The DFA and the BCA undertake to abide by and implement the arbitration award. The place of
arbitration shall be Pasay City, Philippines, or such other place as may mutually be agreed upon
by both parties. The arbitration proceeding shall be conducted in the English language.28
As alleged in BCAs Request for Arbitration, PDRCI is a non-stock, non-profit organization
composed of independent arbitrators who operate under its own Administrative Guidelines and
Rules of Arbitration as well as under the United Nations Commission on the International Trade
Law (UNCITRAL) Model Law on International Commercial Arbitration and other applicable
laws and rules. According to BCA, PDRCI can act as an arbitration center from whose pool of
accredited arbitrators both the DFA and BCA may select their own nominee to become a member
of the arbitral tribunal which will render the arbitration award.
BCAs Request for Arbitration filed with the PDRCI sought the following reliefs:
136

1. A judgment nullifying and setting aside the Notice of Termination dated December 9,
2005 of Respondent [DFA], including its demand to Claimant [BCA] to pay liquidated
damages equivalent to the corresponding performance security bond posted by Claimant
[BCA];
2. A judgment (a) confirming the Notice of Default dated December 22, 2005 issued by
Claimant [BCA] to Respondent [DFA]; and (b) ordering Respondent [DFA] to perform
its obligation under the Amended BOT Agreement dated April 5, 2002 by approving the
site of the Central Facility at the Star Mall Complex on Shaw Boulevard, Mandaluyong
City, within five days from receipt of the Arbitral Award; and
3. A judgment ordering respondent [DFA] to pay damages to Claimant [BCA], reasonably
estimated at P50,000,000.00 as of this date, representing lost business opportunities;
financing fees, costs and commissions; travel expenses; legal fees and expenses; and
costs of arbitration, including the fees of the arbitrator/s.29
PDRCI, through a letter dated April 26, 2006,30 invited the DFA to submit its Answer to the
Request for Arbitration within 30 days from receipt of said letter and also requested both the
DFA and BCA to nominate their chosen arbitrator within the same period of time.
Initially, the DFA, through a letter dated May 22, 2006,31 requested for an extension of time to
file its answer, "without prejudice to jurisdictional and other defenses and objections available to
it under the law." Subsequently, however, in a letter dated May 29, 2006,32 the DFA declined the
request for arbitration before the PDRCI. While it expressed its willingness to resort to
arbitration, the DFA pointed out that under Section 19.02 of the Amended BOT Agreement, there
is no mention of a specific body or institution that was previously authorized by the parties to
settle their dispute. The DFA further claimed that the arbitration of the dispute should be had
before an ad hoc arbitration body, and not before the PDRCI which has as its accredited
arbitrators, two of BCAs counsels of record. Likewise, the DFA insisted that PPC, allegedly an
indispensable party in the instant case, should also participate in the arbitration.
The DFA then sought the opinion of the DOJ on the Notice of Termination dated December 9,
2005 that it sent to BCA with regard to the MRP/V Project.
In DOJ Opinion No. 35 (2006) dated May 31, 2006,33 the DOJ concurred with the steps taken by
the DFA, stating that there was basis in law and in fact for the termination of the MRP/V Project.
Moreover, the DOJ recommended the immediate implementation of the project (presumably by a
different contractor) at the soonest possible time.
Thereafter, the DFA and the BSP entered into a Memorandum of Agreement for the latter to
provide the former passports compliant with international standards. The BSP then solicited bids
137

for the supply, delivery, installation and commissioning of a system for the production of
Electronic Passport Booklets or e-Passports.34
For BCA, the BSPs invitation to bid for the supply and purchase of e-Passports (the e-Passport
Project) would only further delay the arbitration it requested from the DFA. Moreover, this new
e-Passport Project by the BSP and the DFA would render BCAs remedies moot inasmuch as the
e-Passport Project would then be replacing the MRP/V Project which BCA was carrying out for
the DFA.
Thus, BCA filed a Petition for Interim Relief35 under Section 28 of the Alternative Dispute
Resolution Act of 2004 (R.A. No. 9285),36 with the Regional Trial Court (RTC) of Pasig City,
Branch 71, presided over by respondent Judge Falcon. In that RTC petition, BCA prayed for the
following:
WHEREFORE, BCA respectfully prays that this Honorable Court, before the constitution of the
arbitral tribunal in PDRCI Case No. 30-2006/BGF, grant petitioner interim relief in the following
manner:
(a) upon filing of this Petition, immediately issue an order temporarily restraining
Respondents [DFA and BSP], their agents, representatives, awardees, suppliers and
assigns (i) from awarding a new contract to implement the Project, or any similar
electronic passport or visa project; or (ii) if such contract has been awarded, from
implementing such Project or similar projects until further orders from this Honorable
Court;
(b) after notice and hearing, issue a writ of preliminary injunction ordering Respondents
[DFA and BSP], their agents, representatives, awardees, suppliers and assigns to desist (i)
from awarding a new contract to implement the Project or any similar electronic passport
or visa project; or (ii) if such contract has been awarded, from implementing such Project
or similar projects, and to maintain the status quo ante pending the resolution on the
merits of BCAs Request for Arbitration; and
(c) render judgment affirming the interim relief granted to BCA until the dispute between
the parties shall have been resolved with finality.
BCA also prays for such other relief, just and equitable under the premises.37
BCA alleged, in support for its application for a Temporary Restraining Order (TRO), that unless
the DFA and the BSP were immediately restrained, they would proceed to undertake the project
together with a third party to defeat the reliefs BCA sought in its Request for Arbitration, thus

138

causing BCA to suffer grave and irreparable injury from the loss of substantial investments in
connection with the implementation of the MRP/V Project.
Thereafter, the DFA filed an Opposition (to the Application for Temporary Restraining Order
and/or Writ of Preliminary Injunction) dated January 18, 2007,38 alleging that BCA has no cause
of action against it as the contract between them is for machine readable passports and visas
which is not the same as the contract it has with the BSP for the supply of electronic passports.
The DFA also pointed out that the Filipino people and the governments international standing
would suffer great damage if a TRO would be issued to stop the e-Passport Project. The DFA
mainly anchored its opposition on Republic Act No. 8975, which prohibits trial courts from
issuing a TRO, preliminary injunction or mandatory injunction against the bidding or awarding
of a contract or project of the national government.
On January 23, 2007, after summarily hearing the parties oral arguments on BCAs application
for the issuance of a TRO, the trial court ordered the issuance of a TRO restraining the DFA and
the BSP, their agents, representatives, awardees, suppliers and assigns from awarding a new
contract to implement the Project or any similar electronic passport or visa project, or if such
contract has been awarded, from implementing such or similar projects.39 The trial court also set
for hearing BCAs application for preliminary injunction.
Consequently, the DFA filed a Motion for Reconsideration40 of the January 23, 2007 Order. The
BSP, in turn, also sought to lift the TRO and to dismiss the petition. In its Urgent Omnibus
Motion dated February 1, 2007,41 the BSP asserted that BCA is not entitled to an injunction, as it
does not have a clear right which ought to be protected, and that the trial court has no jurisdiction
to enjoin the implementation of the e-Passport Project which, the BSP alleged, is a national
government project under Republic Act No. 8975.
In the hearings set for BCAs application for preliminary injunction, BCA presented as witnesses,
Mr. Bonifacio Sumbilla, its President, Mr. Celestino Mercader, Jr. from the Independent
Verification and Validation Contractor commissioned by the DFA under the Amended BOT
Agreement, and DFA Assistant Secretary Domingo Lucenario, Jr. as adverse party witness.
The DFA and the BSP did not present any witness during the hearings for BCAs application for
preliminary injunction. According to the DFA and the BSP, the trial court did not have any
jurisdiction over the case considering that BCA did not pay the correct docket fees and that only
the Supreme Court could issue a TRO on the bidding for a national government project like the
e-Passport Project pursuant to the provisions of Republic Act No. 8975. Under Section 3 of
Republic Act No. 8975, the RTC could only issue a TRO against a national government project if
it involves a matter of extreme urgency involving a constitutional issue, such that unless a TRO
is issued, grave injustice and irreparable injury will arise.

139

Thereafter, BCA filed an Omnibus Comment [on Opposition and Supplemental Opposition (To
the Application for Temporary Restraining Order and/or Writ of Preliminary Injunction)] and
Opposition [to Motion for Reconsideration (To the Temporary Restraining Order dated January
23, 2007)] and Urgent Omnibus Motion [(i) To Lift Temporary Restraining Order; and (ii) To
Dismiss the Petition] dated January 31, 2007.42 The DFA and the BSP filed their separate Replies
(to BCAs Omnibus Comment) dated February 9, 200743 and February 13, 2007,44 respectively.
On February 14, 2007, the trial court issued an Order granting BCAs application for preliminary
injunction, to wit:
WHEREFORE, in view of the above, the court resolves that it has jurisdiction over the instant
petition and to issue the provisional remedy prayed for, and therefore, hereby GRANTS
petitioners [BCAs] application for preliminary injunction. Accordingly, upon posting a bond in
the amount of Ten Million Pesos (P10,000,000.00), let a writ of preliminary injunction issue
ordering respondents [DFA and BSP], their agents, representatives, awardees, suppliers and
assigns to desist (i) from awarding a new contract to implement the project or any similar
electronic passport or visa project or (ii) if such contract has been awarded from implementing
such project or similar projects.
The motion to dismiss is denied for lack of merit. The motions for reconsideration and to lift
temporary restraining Order are now moot and academic by reason of the expiration of the
TRO.45
On February 16, 2007, BCA filed an Amended Petition,46 wherein paragraphs 3.3(b) and 4.3
were modified to add language to the effect that unless petitioners were enjoined from awarding
the e-Passport Project, BCA would be deprived of its constitutionally-protected right to perform
its contractual obligations under the original and amended BOT Agreements without due process
of law. Subsequently, on February 26, 2007, the DFA and the BSP received the Writ of
Preliminary Injunction dated February 23, 2007.
Hence, on March 2, 2007, the DFA and the BSP filed the instant Petition for Certiorari47 and
prohibition under Rule 65 of the Rules of Court with a prayer for the issuance of a temporary
restraining order and/or a writ of preliminary injunction, imputing grave abuse of discretion on
the trial court when it granted interim relief to BCA and issued the assailed Order dated February
14, 2007 and the writ of preliminary injunction dated February 23, 2007.
The DFA and the BSP later filed an Urgent Motion for Issuance of a Temporary Restraining
Order and/or Writ of Preliminary Injunction dated March 5, 2007.48

140

On March 12, 2007, the Court required BCA to file its comment on the said petition within ten
days from notice and granted the Office of the Solicitor Generals urgent motion for issuance of a
TRO and/or writ of preliminary injunction,49 thus:
After deliberating on the petition for certiorari and prohibition with temporary restraining order
and/or writ of preliminary injunction assailing the Order dated 14 February 2007 of the Regional
Trial Court, Branch 71, Pasig City, in Civil Case No. 71079, the Court, without necessarily
giving due course thereto, resolves to require respondents to COMMENT thereon (not to file a
motion to dismiss) within ten (10) days from notice.
The Court further resolves to GRANT the Office of the Solicitor Generals urgent motion for
issuance of a temporary restraining order and/or writ of preliminary injunction dated 05 March
2007 and ISSUE a TEMPORARY RESTRAINING ORDER, as prayed for, enjoining
respondents from implementing the assailed Order dated 14 February 2007 and the Writ of
Preliminary Injunction dated 23 February 2007, issued by respondent Judge Franco T. Falcon in
Civil Case No. 71079 entitled BCA International Corporation vs. Department of Foreign Affairs
and Bangko Sentral ng Pilipinas, and from conducting further proceedings in said case until
further orders from this Court.
BCA filed on April 2, 2007 its Comment with Urgent Motion to Lift TRO,50 to which the DFA
and the BSP filed their Reply dated August 14, 2007.51
In a Resolution dated June 4, 2007,52 the Court denied BCAs motion to lift TRO. BCA filed
another Urgent Omnibus Motion dated August 17, 2007, for the reconsideration of the
Resolution dated June 4, 2007, praying that the TRO issued on March 12, 2007 be lifted and that
the petition be denied.
In a Resolution dated September 10, 2007,53 the Court denied BCAs Urgent Omnibus Motion
and gave due course to the instant petition. The parties were directed to file their respective
memoranda within 30 days from notice of the Courts September 10, 2007 Resolution.
Petitioners DFA and BSP submit the following issues for our consideration:
Issues
I
Whether or not the respondent judge gravely abused his discretion amounting to lack or excess
of jurisdiction when he issued the assailed order, which effectively enjoined the implementation
of the e-passport project -- A national government project under Republic Act No. 8975.
II
141

Whether or not the respondent judge acted with grave abuse of discretion amounting to lack or
excess of jurisdiction in granting respondent BCAs "interim relief" inasmuch as:
(I) Respondent BCA has not established a clear right that can be protected by an
injunction; and
(II) Respondent BCA has not shown that it will sustain grave and irreparable injury that
must be protected by an injunction. On the contrary, it is the Filipino people, who
petitioners protect, that will sustain serious and severe injury by the injunction.54
At the outset, we dispose of the procedural objections of BCA to the petition, to wit: (a)
petitioners did not follow the hierarchy of courts by filing their petition directly with this Court,
without filing a motion for reconsideration with the RTC and without filing a petition first with
the Court of Appeals; (b) the person who verified the petition for the DFA did not have personal
knowledge of the facts of the case and whose appointment to his position was highly irregular;
and (c) the verification by the Assistant Governor and General Counsel of the BSP of only
selected paragraphs of the petition was with the purported intent to mislead this Court.
Although the direct filing of petitions for certiorari with the Supreme Court is discouraged when
litigants may still resort to remedies with the lower courts, we have in the past overlooked the
failure of a party to strictly adhere to the hierarchy of courts on highly meritorious grounds. Most
recently, we relaxed the rule on court hierarchy in the case of Roque, Jr. v. Commission on
Elections,55 wherein we held:
The policy on the hierarchy of courts, which petitioners indeed failed to observe, is not an ironclad rule. For indeed the Court has full discretionary power to take cognizance and assume
jurisdiction of special civil actions for certiorari and mandamus filed directly with it for
exceptionally compelling reasons or if warranted by the nature of the issues clearly and
specifically raised in the petition.56 (Emphases ours.)
The Court deems it proper to adopt a similarly liberal attitude in the present case in consideration
of the transcendental importance of an issue raised herein. This is the first time that the Court is
confronted with the question of whether an information and communication technology project,
which does not conform to our traditional notion of the term "infrastructure," is covered by the
prohibition on the issuance of court injunctions found in Republic Act No. 8975, which is
entitled "An Act to Ensure the Expeditious Implementation and Completion of Government
Infrastructure Projects by Prohibiting Lower Courts from Issuing Temporary Restraining Orders,
Preliminary Injunctions or Preliminary Mandatory Injunctions, Providing Penalties for Violations
Thereof, and for Other Purposes." Taking into account the current trend of computerization and
modernization of administrative and service systems of government offices, departments and

142

agencies, the resolution of this issue for the guidance of the bench and bar, as well as the general
public, is both timely and imperative.
Anent BCAs claim that Mr. Edsel T. Custodio (who verified the Petition on behalf of the DFA)
did not have personal knowledge of the facts of the case and was appointed to his position as
Acting Secretary under purportedly irregular circumstances, we find that BCA failed to
sufficiently prove such allegations. In any event, we have previously held that "[d]epending on
the nature of the allegations in the petition, the verification may be based either purely on
personal knowledge, or entirely on authentic records, or on both sources."57 The alleged lack of
personal knowledge of Mr. Custodio (which, as we already stated, BCA failed to prove) would
not necessarily render the verification defective for he could have verified the petition purely on
the basis of authentic records.
As for the assertion that the partial verification of Assistant Governor and General Counsel Juan
de Zuniga, Jr. was for the purpose of misleading this Court, BCA likewise failed to adduce
evidence on this point. Good faith is always presumed. Paragraph 3 of Mr. Zunigas verification
indicates that his partial verification is due to the fact that he is verifying only the allegations in
the petition peculiar to the BSP. We see no reason to doubt that this is the true reason for his
partial or selective verification.
In sum, BCA failed to successfully rebut the presumption that the official acts (of Mr. Custodio
and Mr. Zuniga) were done in good faith and in the regular performance of official duty.58 Even
assuming the verifications of the petition suffered from some defect, we have time and again
ruled that "[t]he ends of justice are better served when cases are determined on the merits
after all parties are given full opportunity to ventilate their causes and defenses rather than on
technicality or some procedural imperfections."59 In other words, the Court may suspend or even
disregard rules when the demands of justice so require.60
We now come to the substantive issues involved in this case.
On whether the trial court had jurisdiction to issue a writ of preliminary injunction in the present
case
In their petition, the DFA and the BSP argue that respondent Judge Falcon gravely abused his
discretion amounting to lack or excess of jurisdiction when he issued the assailed orders, which
effectively enjoined the bidding and/or implementation of the e-Passport Project. According to
petitioners, this violated the clear prohibition under Republic Act No. 8975 regarding the
issuance of TROs and preliminary injunctions against national government projects, such as the
e-Passport Project.

143

The prohibition invoked by petitioners is found in Section 3 of Republic Act No. 8975, which
reads:
Section 3. Prohibition on the Issuance of Temporary Restraining Orders, Preliminary Injunctions
and Preliminary Mandatory Injunctions. No court, except the Supreme Court, shall issue any
temporary restraining order, preliminary injunction or preliminary mandatory injunction against
the government, or any of its subdivisions, officials or any person or entity, whether public or
private, acting under the governments direction, to restrain, prohibit or compel the following
acts:
(a) Acquisition, clearance and development of the right-of-way and/or site or location of
any national government project;
(b) Bidding or awarding of contract/project of the national government as defined under
Section 2 hereof;
(c) Commencement, prosecution, execution, implementation, operation of any such
contract or project;
(d) Termination or rescission of any such contract/project; and
(e) The undertaking or authorization of any other lawful activity necessary for such
contract/project.
This prohibition shall apply in all cases, disputes or controversies instituted by a private party,
including but not limited to cases filed by bidders or those claiming to have rights through such
bidders involving such contract/project. This prohibition shall not apply when the matter is of
extreme urgency involving a constitutional issue, such that unless a temporary restraining order
is issued, grave injustice and irreparable injury will arise. The applicant shall file a bond, in an
amount to be fixed by the court, which bond shall accrue in favor of the government if the court
should finally decide that the applicant was not entitled to the relief sought.
If after due hearing the court finds that the award of the contract is null and void, the court may,
if appropriate under the circumstances, award the contract to the qualified and winning bidder or
order a rebidding of the same, without prejudice to any liability that the guilty party may incur
under existing laws.
From the foregoing, it is indubitable that no court, aside from the Supreme Court, may enjoin a
"national government project" unless the matter is one of extreme urgency involving a
constitutional issue such that unless the act complained of is enjoined, grave injustice or
irreparable injury would arise.

144

What then are the "national government projects" over which the lower courts are without
jurisdiction to issue the injunctive relief as mandated by Republic Act No. 8975?
Section 2(a) of Republic Act No. 8975 provides:
Section 2. Definition of Terms.
(a) "National government projects" shall refer to all current and future national government
infrastructure, engineering works and service contracts, including projects undertaken by
government-owned and -controlled corporations, all projects covered by Republic Act No. 6975,
as amended by Republic Act No. 7718, otherwise known as the Build-Operate-and-Transfer Law,
and other related and necessary activities, such as site acquisition, supply and/or installation of
equipment and materials, implementation, construction, completion, operation, maintenance,
improvement, repair and rehabilitation, regardless of the source of funding.
As petitioners themselves pointed out, there are three types of national government projects
enumerated in Section 2(a), to wit:
(a) current and future national government infrastructure projects, engineering works and
service contracts, including projects undertaken by government-owned and controlled
corporations;
(b) all projects covered by R.A. No. 6975, as amended by R.A. No. 7718, or the BuildOperate-and-Transfer ( BOT) Law; and
(c) other related and necessary activities, such as site acquisition, supply and/or
installation of equipment and materials, implementation, construction, completion,
operation, maintenance, improvement repair and rehabilitation, regardless of the source
of funding.
Under Section 2(a) of the BOT Law as amended by Republic Act No. 7718,61 private sector
infrastructure or development projects are those normally financed and operated by the public
sector but which will now be wholly or partly implemented by the private sector, including but
not limited to, power plants, highways, ports, airports, canals, dams, hydropower projects, water
supply, irrigation, telecommunications, railroads and railways, transport systems, land
reclamation projects, industrial estates or townships, housing, government buildings, tourism
projects, markets, slaughterhouses, warehouses, solid waste management, information
technology networks and database infrastructure, education and health facilities, sewerage,
drainage, dredging, and other infrastructure and development projects as may be authorized by
the appropriate agency.

145

In contrast, Republic Act No. 9184,62 also known as the Government Procurement Reform Act,
defines infrastructure projects in Section 5(k) thereof in this manner:
(k) Infrastructure Projects - include the construction, improvement, rehabilitation, demolition,
repair, restoration or maintenance of roads and bridges, railways, airports, seaports,
communication facilities, civil works components of information technology projects, irrigation,
flood control and drainage, water supply, sanitation, sewerage and solid waste management
systems, shore protection, energy/power and electrification facilities, national buildings, school
buildings, hospital buildings and other related construction projects of the government.
(Emphasis supplied.)
In the present petition, the DFA and the BSP contend that the bidding for the supply, delivery,
installation and commissioning of a system for the production of Electronic Passport Booklets, is
a national government project within the definition of Section 2 of Republic Act No. 8975.
Petitioners also point to the Senate deliberations on Senate Bill No. 203863 (later Republic Act
No. 8975) which allegedly show the legislatives intent to expand the scope and definition of
national government projects to cover not only the infrastructure projects enumerated in
Presidential Decree No. 1818, but also future projects that may likewise be considered national
government infrastructure projects, like the e-Passport Project, to wit:
Senator Cayetano. x x x Mr. President, the present bill, the Senate Bill No. 2038, is actually an
improvement of P.D. No. 1818 and definitely not a repudiation of what I have earlier said, as my
good friend clearly stated. But this is really an effort to improve both the scope and definition of
the term "government projects" and to ensure that lower court judges obey and observe this
prohibition on the issuance of TROs on infrastructure projects of the government.
xxxx
Senator Cayetano. That is why, Mr. President, I did try to explain why I would accept the
proposed amendment, meaning the totality of the repeal of P.D. 1818 which is not found in the
original version of the bill, because of my earlier explanation that the definition of the term
government infrastructure project covers all of those enumerated in Section 1 of P.D. No. 1818.
And the reason for that, as we know, is we do not know what else could be considered
government infrastructure project in the next 10 or 20 years.
x x x So, using the Latin maxim of expression unius est exclusion alterius, which means what is
expressly mentioned is tantamount to an express exclusion of the others, that is the reason we did
not include particularly an enumeration of certain activities of the government found in Section 1
of P.D. No. 1818. Because to do that, it may be a good excuse for a brilliant lawyer to say Well,
you know, since it does not cover this particular activity, ergo, the Regional Trial Court may
issue TRO.
146

Using the foregoing discussions to establish that the intent of the framers of the law was to
broaden the scope and definition of national government projects and national infrastructure
projects, the DFA and the BSP submit that the said scope and definition had since evolved to
include the e-Passport Project. They assert that the concept of "infrastructure" must now refer to
any and all elements that provide support, framework, or structure for a given system or
organization, including information technology, such as the e-Passport Project.
Interestingly, petitioners represented to the trial court that the e-Passport Project is a BOT project
but in their petition with this Court, petitioners simply claim that the e-Passport Project is a
national government project under Section 2 of Republic Act No. 8975. This circumstance is
significant, since relying on the claim that the e-Passport Project is a BOT project, the trial court
ruled in this wise:
The prohibition against issuance of TRO and/or writ of preliminary injunction under RA 8975
applies only to national government infrastructure project covered by the BOT Law, (RA 8975,
Sec 3[b] in relation to Sec. 2).
The national government projects covered under the BOT are enumerated under Sec. 2 of
RA6957, as amended, otherwise known as the BOT Law. Notably, it includes "information
technology networks and database infrastructure."
In relation to information technology projects, infrastructure projects refer to the "civil works
components" thereof. (R.A. No. 9184 [2003], Sec. 5[c]{sic}).64
Respondent BSPs request for bid, for the supply, delivery, installation and commissioning of a
system for the production of Electronic Passport Booklets appears to be beyond the scope of the
term "civil works." Respondents did not present evidence to prove otherwise.65 (Emphases ours.)
From the foregoing, it can be gleaned that the trial court accepted BCAs reasoning that,
assuming the e-Passport Project is a project under the BOT Law, Section 2 of the BOT Law must
be read in conjunction with Section 5(c) of Republic Act No. 9184 or the Government
Procurement Reform Act to the effect that only the civil works component of information
technology projects are to be considered "infrastructure." Thus, only said civil works component
of an information technology project cannot be the subject of a TRO or writ of injunction issued
by a lower court.
Although the Court finds that the trial court had jurisdiction to issue the writ of preliminary
injunction, we cannot uphold the theory of BCA and the trial court that the definition of the term
"infrastructure project" in Republic Act No. 9184 should be applied to the BOT Law.

147

Section 5 of Republic Act No. 9184 prefaces the definition of the terms therein, including the
term "infrastructure project," with the following phrase: "For purposes of this Act, the following
terms or words and phrases shall mean or be understood as follows x x x."
This Court has stated that the definition of a term in a statute is not conclusive as to the meaning
of the same term as used elsewhere.66 This is evident when the legislative definition is expressly
made for the purposes of the statute containing such definition.67
There is no legal or rational basis to apply the definition of the term "infrastructure project" in
one statute to another statute enacted years before and which already defined the types of
projects it covers. Rather, a reading of the two statutes involved will readily show that there is a
legislative intent to treat information technology projects differently under the BOT Law and the
Government Procurement Reform Act.
In the BOT Law as amended by Republic Act No. 7718, the national infrastructure and
development projects covered by said law are enumerated in Section 2(a) as follows:
SEC. 2. Definition of Terms. - The following terms used in this Act shall have the meanings
stated below:
(a) Private sector infrastructure or development projects - The general description of
infrastructure or development projects normally financed and operated by the public sector but
which will now be wholly or partly implemented by the private sector, including but not limited
to, power plants, highways, ports, airports, canals, dams, hydropower projects, water supply,
irrigation, telecommunications, railroads and railways, transport systems, land reclamation
projects, industrial estates of townships, housing, government buildings, tourism projects,
markets, slaughterhouses, warehouses, solid waste management, information technology
networks and database infrastructure, education and health facilities, sewerage, drainage,
dredging, and other infrastructure and development projects as may be authorized by the
appropriate agency pursuant to this Act. Such projects shall be undertaken through contractual
arrangements as defined hereunder and such other variations as may be approved by the
President of the Philippines.
For the construction stage of these infrastructure projects, the project proponent may obtain
financing from foreign and/or domestic sources and/or engage the services of a foreign and/or
Filipino contractor: Provided, That, in case an infrastructure or a development facility's operation
requires a public utility franchise, the facility operator must be a Filipino or if a corporation, it
must be duly registered with the Securities and Exchange Commission and owned up to at least
sixty percent (60%) by Filipinos: Provided, further, That in the case of foreign contractors,
Filipino labor shall be employed or hired in the different phases of construction where Filipino
skills are available: Provided, finally, That projects which would have difficulty in sourcing
148

funds may be financed partly from direct government appropriations and/or from Official
Development Assistance (ODA) of foreign governments or institutions not exceeding fifty
percent (50%) of the project cost, and the balance to be provided by the project proponent.
(Emphasis supplied.)
A similar provision appears in the Revised IRR of the BOT Law as amended, to wit:
SECTION 1.3 - DEFINITION OF TERMS
For purposes of these Implementing Rules and Regulations, the terms and phrases hereunder
shall be understood as follows:
xxxx
v. Private Sector Infrastructure or Development Projects - The general description of
infrastructure or Development Projects normally financed, and operated by the public sector but
which will now be wholly or partly financed, constructed and operated by the private sector,
including but not limited to, power plants, highways, ports, airports, canals, dams, hydropower
projects, water supply, irrigation, telecommunications, railroad and railways, transport systems,
land reclamation projects, industrial estates or townships, housing, government buildings,
tourism projects, public markets, slaughterhouses, warehouses, solid waste management,
information technology networks and database infrastructure, education and health facilities,
sewerage, drainage, dredging, and other infrastructure and development projects as may
otherwise be authorized by the appropriate Agency/LGU pursuant to the Act or these Revised
IRR. Such projects shall be undertaken through Contractual Arrangements as defined herein,
including such other variations as may be approved by the President of the Philippines.
xxxx
SECTION 2.2 - ELIGIBLE TYPES OF PROJECTS
The Construction, rehabilitation, improvement, betterment, expansion, modernization, operation,
financing and maintenance of the following types of projects which are normally financed and
operated by the public sector which will now be wholly or partly financed, constructed and
operated by the private sector, including other infrastructure and development projects as may be
authorized by the appropriate agencies, may be proposed under the provisions of the Act and
these Revised IRR, provided however that such projects have a cost recovery component which
covers at least 50% of the Project Cost, or as determined by the Approving Body:
xxxx

149

h. Information technology (IT) and data base infrastructure, including modernization of IT, geospatial resource mapping and cadastral survey for resource accounting and planning.
(Underscoring supplied.)
Undeniably, under the BOT Law, wherein the projects are to be privately funded, the entire
information technology project, including the civil works component and the technological
aspect thereof, is considered an infrastructure or development project and treated similarly as
traditional "infrastructure" projects. All the rules applicable to traditional infrastructure projects
are also applicable to information technology projects. In fact, the MRP/V Project awarded to
BCA under the BOT Law appears to include both civil works (i.e., site preparation of the Central
Facility, regional DFA offices and foreign service posts) and non-civil works aspects (i.e.,
development, installation and maintenance in the Philippines and foreign service posts of a
computerized passport and visa issuance system, including creation of databases, storage and
retrieval systems, training of personnel and provision of consumables).
In contrast, under Republic Act No. 9184 or the Government Procurement Reform Act, which
contemplates projects to be funded by public funds, the term "infrastructure project" was limited
to only the "civil works component" of information technology projects. The non-civil works
component of information technology projects would be treated as an acquisition of goods or
consulting services as the case may be.
This limited definition of "infrastructure project" in relation to information technology projects
under Republic Act No. 9184 is significant since the IRR of Republic Act No. 9184 has some
provisions that are particular to infrastructure projects and other provisions that are applicable
only to procurement of goods or consulting services.68
Implicitly, the civil works component of information technology projects are subject to the
provisions on infrastructure projects while the technological and other components would be
covered by the provisions on procurement of goods or consulting services as the circumstances
may warrant.
When Congress adopted a limited definition of what is to be considered "infrastructure" in
relation to information technology projects under the Government Procurement Reform Act,
legislators are presumed to have taken into account previous laws concerning infrastructure
projects (the BOT Law and Republic Act No. 8975) and deliberately adopted the limited
definition. We can further presume that Congress had written into law a different treatment for
information technology projects financed by public funds vis-a-vis privately funded projects for
a valid legislative purpose.

150

The idea that the definitions of terms found in the Government Procurement Reform Act were
not meant to be applied to projects under the BOT Law is further reinforced by the following
provision in the IRR of the Government Procurement Reform Act:
Section 1. Purpose and General Coverage
This Implementing Rules and Regulations (IRR) Part A, hereinafter called "IRR-A," is
promulgated pursuant to Section 75 of Republic Act No. 9184 (R.A. 9184), otherwise known as
the "Government Procurement Reform Act" (GPRA), for the purpose of prescribing the
necessary rules and regulations for the modernization, standardization, and regulation of the
procurement activities of the government. This IRR-A shall cover all fully domestically-funded
procurement activities from procurement planning up to contract implementation and
termination, except for the following:
a) Acquisition of real property which shall be governed by Republic Act No. 8974 (R.A.
8974), entitled "An Act to Facilitate the Acquisition of Right-of-Way Site or Location for
National Government Infrastructure Projects and for Other Purposes," and other
applicable laws; and
b) Private sector infrastructure or development projects and other procurement covered
by Republic Act No. 7718 (R.A. 7718), entitled "An Act Authorizing the Financing,
Construction, Operation and Maintenance of Infrastructure Projects by the Private Sector,
and for Other Purposes," as amended: Provided, however, That for the portions financed
by the Government, the provisions of this IRR-A shall apply.
The IRR-B for foreign-funded procurement activities shall be the subject of a subsequent
issuance. (Emphases supplied.)
The foregoing provision in the IRR can be taken as an administrative interpretation that the
provisions of Republic Act No. 9184 are inapplicable to a BOT project except only insofar as
such portions of the BOT project that are financed by the government.
Taking into account the different treatment of information technology projects under the BOT
Law and the Government Procurement Reform Act, petitioners contention the trial court had no
jurisdiction to issue a writ of preliminary injunction in the instant case would have been correct if
the e-Passport Project was a project under the BOT Law as they represented to the trial court.
However, petitioners presented no proof that the e-Passport Project was a BOT project. On the
contrary, evidence adduced by both sides tended to show that the e-Passport Project was a
procurement contract under Republic Act No. 9184.

151

The BSPs on-line request for expression of interest and to bid for the e-Passport Project69 from
the BSP website and the newspaper clipping70 of the same request expressly stated that "[t]he two
stage bidding procedure under Section 30.4 of the Implementing Rules and Regulation (sic) PartA of Republic Act No. 9184 relative to the bidding and award of the contract shall apply." During
the testimony of DFA Assistant Secretary Domingo Lucenario, Jr. before the trial court, he
admitted that the e-Passport Project is a BSP procurement project and that it is the "BSP that will
pay the suppliers."71 In petitioners Manifestation dated July 29, 200872 and the Erratum73 thereto,
petitioners informed the Court that a contract "for the supply of a complete package of systems
design, technology, hardware, software, and peripherals, maintenance and technical support,
ecovers and datapage security laminates for the centralized production and personalization of
Machine Readable Electronic Passport" was awarded to Francois Charles Oberthur Fiduciaire. In
the Notice of Award dated July 2, 200874 attached to petitioners pleading, it was stated that the
failure of the contractor/supplier to submit the required performance bond would be sufficient
ground for the imposition of administrative penalty under Section 69 of the IRR-A of Republic
Act No. 9184.
Being a government procurement contract under Republic Act No. 9184, only the civil works
component of the e-Passport Project would be considered an infrastructure project that may not
be the subject of a lower court-issued writ of injunction under Republic Act No. 8975.
Could the e-Passport Project be considered as "engineering works or a service contract" or as
"related and necessary activities" under Republic Act No. 8975 which may not be enjoined?
We hold in the negative. Under Republic Act No. 8975, a "service contract" refers to
"infrastructure contracts entered into by any department, office or agency of the national
government with private entities and nongovernment organizations for services related or
incidental to the functions and operations of the department, office or agency concerned." On the
other hand, the phrase "other related and necessary activities" obviously refers to activities
related to a government infrastructure, engineering works, service contract or project under the
BOT Law. In other words, to be considered a service contract or related activity, petitioners must
show that the e-Passport Project is an infrastructure project or necessarily related to an
infrastructure project. This, petitioners failed to do for they saw fit not to present any evidence on
the details of the e-Passport Project before the trial court and this Court. There is nothing on
record to indicate that the e-Passport Project has a civil works component or is necessarily
related to an infrastructure project.
Indeed, the reference to Section 30.475 of the IRR of Republic Act No. 9184 (a provision specific
to the procurement of goods) in the BSPs request for interest and to bid confirms that the ePassport Project is a procurement of goods and not an infrastructure project. Thus, within the
context of Republic Act No. 9184 which is the governing law for the e-Passport Project the
said Project is not an infrastructure project that is protected from lower court issued injunctions
152

under Republic Act No. 8975, which, to reiterate, has for its purpose the expeditious and efficient
implementation and completion of government infrastructure projects.
We note that under Section 28, Republic Act No. 9285 or the Alternative Dispute Resolution Act
of 2004,76 the grant of an interim measure of protection by the proper court before the
constitution of an arbitral tribunal is allowed:
Sec. 28. Grant of Interim Measure of Protection. (a) It is not incompatible with an arbitration
agreement for a party to request, before constitution of the tribunal, from a Court an interim
measure of protection and for the Court to grant such measure. After constitution of the arbitral
tribunal and during arbitral proceedings, a request for an interim measure of protection, or
modification thereof, may be made with the arbitral tribunal or to the extent that the arbitral
tribunal has no power to act or is unable to act effectively, the request may be made with the
Court. The arbitral tribunal is deemed constituted when the sole arbitrator or the third arbitrator,
who has been nominated, has accepted the nomination and written communication of said
nomination and acceptance has been received by the party making the request.
(a) The following rules on interim or provisional relief shall be observed:
(1) Any party may request that provisional relief be granted against the adverse party.
(2) Such relief may be granted:
(i) to prevent irreparable loss or injury;
(ii) to provide security for the performance of any obligation;
(iii) to produce or preserve any evidence; or
(iv) to compel any other appropriate act or omission.
(3) The order granting provisional relief may be conditioned upon the provision of
security or any act or omission specified in the order.
(4) Interim or provisional relief is requested by written application transmitted by
reasonable means to the Court or arbitral tribunal as the case may be and the party against
whom the relief is sought, describing in appropriate detail the precise relief, the party
against whom the relief is requested, the grounds for the relief, and the evidence
supporting the request.
(5) The order shall be binding upon the parties.

153

(6) Either party may apply with the Court for assistance in implementing or enforcing an
interim measure ordered by an arbitral tribunal.
(7) A party who does not comply with the order shall be liable for all damages resulting
from noncompliance, including all expenses and reasonable attorneys fees, paid in
obtaining the orders judicial enforcement.
Section 3(h) of the same statute provides that the "Court" as referred to in Article 6 of the Model
Law shall mean a Regional Trial Court.
Republic Act No. 9285 is a general law applicable to all matters and controversies to be resolved
through alternative dispute resolution methods. This law allows a Regional Trial Court to grant
interim or provisional relief, including preliminary injunction, to parties in an arbitration case
prior to the constitution of the arbitral tribunal. This general statute, however, must give way to a
special law governing national government projects, Republic Act No. 8975 which prohibits
courts, except the Supreme Court, from issuing TROs and writs of preliminary injunction in
cases involving national government projects.
However, as discussed above, the prohibition in Republic Act No. 8975 is inoperative in this
case, since petitioners failed to prove that the e-Passport Project is national government project
as defined therein. Thus, the trial court had jurisdiction to issue a writ of preliminary injunction
against the e-Passport Project.
On whether the trial courts issuance of a writ of injunction was proper
Given the above ruling that the trial court had jurisdiction to issue a writ of injunction and going
to the second issue raised by petitioners, we answer the question: Was the trial courts issuance of
a writ of injunction warranted under the circumstances of this case?
Petitioners attack on the propriety of the trial courts issuance of a writ of injunction is twopronged: (a) BCA purportedly has no clear right to the injunctive relief sought; and (b) BCA will
suffer no grave and irreparable injury even if the injunctive relief were not granted.
To support their claim that BCA has no clear right to injunctive relief, petitioners mainly allege
that the MRP/V Project and the e-Passport Project are not the same project. Moreover, the
MRP/V Project purportedly involves a technology (the 2D optical bar code) that has been
rendered obsolete by the latest ICAO developments while the e-Passport Project will comply
with the latest ICAO standards (the contactless integrated circuit). Parenthetically, and not as a
main argument, petitioners imply that BCA has no clear contractual right under the Amended
BOT Agreement since BCA had previously assigned all its rights and obligations under the said
Agreement to PPC.
154

BCA, on the other hand, claims that the Amended BOT Agreement also contemplated the supply
and/or delivery of e-Passports with the integrated circuit technology in the future and not only
the machine readable passport with the 2D optical bar code technology. Also, it is BCAs
assertion that the integrated circuit technology is only optional under the ICAO issuances. On the
matter of its assignment of its rights to PPC, BCA counters that it had already terminated
(purportedly at DFAs request) the assignment agreement in favor of PPC and that even assuming
the termination was not valid, the Amended BOT Agreement expressly stated that BCA shall
remain solidarily liable with its assignee, PPC.
Most of these factual allegations and counter-allegations already touch upon the merits of the
main controversy between the DFA and BCA, i.e., the validity and propriety of the termination of
the Amended BOT Agreement (the MRP/V Project) between the DFA and BCA. The Court
deems it best to refrain from ruling on these matters since they should be litigated in the
appropriate arbitration or court proceedings between or among the concerned parties.
One preliminary point, however, that must be settled here is whether BCA retains a right to seek
relief against the DFA under the Amended BOT Agreement in view of BCAs previous
assignment of its rights to PPC. Without preempting any factual finding that the appropriate
court or arbitral tribunal on the matter of the validity of the assignment agreement with PPC or
its termination, we agree with BCA that it remained a party to the Amended BOT Agreement,
notwithstanding the execution of the assignment agreement in favor of PPC, for it was stipulated
in the Amended BOT Agreement that BCA would be solidarily liable with its assignee. For
convenient reference, we reproduce the relevant provision of the Amended BOT Agreement here:
Section 20.15. It is clearly and expressly understood that BCA may assign, cede and transfer all
of its rights and obligations under this Amended BOT Agreement to PPC [Philippine Passport
Corporation], as fully as if PPC is the original signatory to this Amended BOT Agreement,
provided however that BCA shall nonetheless be jointly and severally liable with PPC for
the performance of all the obligations and liabilities under this Amended BOT Agreement.
(Emphasis supplied.)
Furthermore, a review of the records shows that the DFA continued to address its correspondence
regarding the MRP/V Project to both BCA and PPC, even after the execution of the assignment
agreement. Indeed, the DFAs Notice of Termination dated December 9, 2005 was addressed to
Mr. Bonifacio Sumbilla as President of both BCA and PPC and referred to the Amended BOT
Agreement "executed between the Department of Foreign Affairs (DFA), on one hand, and the
BCA International Corporation and/or the Philippine Passport Corporation (BCA/PPC)." At the
very least, the DFA is estopped from questioning the personality of BCA to bring suit in relation
to the Amended BOT Agreement since the DFA continued to deal with both BCA and PPC even
after the signing of the assignment agreement. In any event, if the DFA truly believes that PPC is
an indispensable party to the action, the DFA may take necessary steps to implead PPC but this
155

should not prejudice the right of BCA to file suit or to seek relief for causes of action it may have
against the DFA or the BSP, for undertaking the e-Passport Project on behalf of the DFA.
With respect to petitioners contention that BCA will suffer no grave and irreparable injury so as
to justify the grant of injunctive relief, the Court finds that this particular argument merits
consideration.
The BOT Law as amended by Republic Act No. 7718, provides:
SEC. 7. Contract Termination. - In the event that a project is revoked, cancelled or terminated by
the Government through no fault of the project proponent or by mutual agreement, the
Government shall compensate the said project proponent for its actual expenses incurred in the
project plus a reasonable rate of return thereon not exceeding that stated in the contract as of the
date of such revocation, cancellation or termination: Provided, That the interest of the
Government in this instances shall be duly insured with the Government Service Insurance
System [GSIS] or any other insurance entity duly accredited by the Office of the Insurance
Commissioner: Provided, finally, That the cost of the insurance coverage shall be included in the
terms and conditions of the bidding referred to above.
In the event that the government defaults on certain major obligations in the contract and such
failure is not remediable or if remediable shall remain unremedied for an unreasonable length of
time, the project proponent/contractor may, by prior notice to the concerned national government
agency or local government unit specifying the turn-over date, terminate the contract. The project
proponent/contractor shall be reasonably compensated by the Government for equivalent or
proportionate contract cost as defined in the contract. (Emphases supplied.)
In addition, the Amended BOT Agreement, which is the law between and among the parties to it,
pertinently provides:
Section 17.01 Default In case a party commits an act constituting an event of default, the
non-defaulting party may terminate this Amended BOT Agreement by serving a written
notice to the defaulting party specifying the grounds for termination and giving the defaulting
party a period of ninety (90) days within which to rectify the default. If the default is not
remedied within this period to the satisfaction of the non-defaulting party, then the latter will
serve upon the former a written notice of termination indicating the effective date of termination.
Section 17.02 Proponents Default If this Amended BOT Agreement is terminated by reason
of the BCAs default, the DFA shall have the following options:
A. Allow the BCAs unpaid creditors who hold a lien on the MRP/V Facility to
foreclose on the MRP/V Facility. The right of the BCAs unpaid creditors to foreclose on
156

the MRP/V Facility shall be valid for the duration of the effectivity of this Amended BOT
Agreement; or,
B. Allow the BCAs unpaid creditors who hold a lien on the MRP/V Facility to
designate a substitute BCA for the MRP/V Project, provided the designated substitute
BCA is qualified under existing laws and acceptable to the DFA. This substitute BCA
shall hereinafter be referred to as the "Substitute BCA." The Substitute BCA shall assume
all the BCAs rights and privileges, as well as the obligations, duties and responsibilities
hereunder; provided, however, that the DFA shall at all times and its sole option, have the
right to invoke and exercise any other remedy which may be available to the DFA under
any applicable laws, rules and/or regulations which may be in effect at any time and from
time to time. The DFA shall cooperate with the creditors with a view to facilitating the
choice of a Substitute BCA, who shall take-over the operation, maintenance and
management of the MRP/V Project, within three (3) months from the BCAs receipt of
the notice of termination from the DFA. The Substituted BCA shall have all the rights and
obligations of the previous BCA as contained in this Amended BOT Agreement; or
C. Take-over the MRP/V Facility and assume all attendant liabilities thereof.
D. In all cases of termination due to the default of the BCA, it shall pay DFA
liquidated damages equivalent to the applicable the (sic) Performance Security.
Section 17.03 DFAs Default If this Amended BOT Agreement is terminated by the BCA by
reason of the DFAs Default, the DFA shall:
A. Be obligated to take over the MRP/V Facility on an "as is, where is" basis, and shall
forthwith assume attendant liabilities thereof; and
B. Pay liquidated damages to the BCA equivalent to the following amounts, which may
be charged to the insurance proceeds referred to in Article 12:
(1) In the event of termination prior to completion of the implementation of
the MRP/V Project, damages shall be paid equivalent to the value of
completed implementation, minus the aggregate amount of the attendant
liabilities assumed by the DFA, plus ten percent (10%) thereof. The amount of
such compensation shall be determined as of the date of the notice of termination
and shall become due and demandable ninety (90) days after the date of this
notice of termination. Under this Amended BOT Agreement, the term "Value of
the Completed Implementation" shall mean the aggregate of all reasonable costs
and expenses incurred by the BCA in connection with, in relation to and/or by
reason of the MRP/V Project, excluding all interest and capitalized interest, as
157

certified by a reputable and independent accounting firm to be appointed by the

BCA and subject to the approval by the DFA, such approval shall not be
unreasonably withheld.
(2) In the event of termination after completion of design, development, and
installation of the MRP/V Project, just compensation shall be paid equivalent
to the present value of the net income which the BCA expects to earn or
realize during the unexpired or remaining term of this Amended BOT
Agreement using the internal rate of return on equity (IRRe) defined in the
financial projections of the BCA and agreed upon by the parties, which is attached
hereto and made as an integral part of this Amended BOT Agreement as Schedule
"1". (Emphases supplied.)
The validity of the DFAs termination of the Amended BOT Agreement and the determination of
the party or parties in default are issues properly threshed out in arbitration proceedings as
provided for by the agreement itself. However, even if we hypothetically accept BCAs
contention that the DFA terminated the Amended BOT Agreement without any default or
wrongdoing on BCAs part, it is not indubitable that BCA is entitled to injunctive relief.
The BOT Law expressly allows the government to terminate a BOT agreement, even without
fault on the part of the project proponent, subject to the payment of the actual expenses incurred
by the proponent plus a reasonable rate of return.
Under the BOT Law and the Amended BOT Agreement, in the event of default on the part of the
government (in this case, the DFA) or on the part of the proponent, the non-defaulting party is
allowed to terminate the agreement, again subject to proper compensation in the manner set forth
in the agreement.
Time and again, this Court has held that to be entitled to injunctive relief the party seeking such
relief must be able to show grave, irreparable injury that is not capable of compensation.
In Lopez v. Court of Appeals, 77 we held:
Generally, injunction is a preservative remedy for the protection of one's substantive right or
interest. It is not a cause of action in itself but merely a provisional remedy, an adjunct to a main
suit. It is resorted to only when there is a pressing necessity to avoid injurious consequences
which cannot be remedied under any standard compensation. The application of the injunctive
writ rests upon the existence of an emergency or of a special reason before the main case can be
regularly heard. The essential conditions for granting such temporary injunctive relief are that the
complaint alleges facts which appear to be sufficient to constitute a proper basis for injunction
and that on the entire showing from the contending parties, the injunction is reasonably
158

necessary to protect the legal rights of the plaintiff pending the litigation. Two requisites are
necessary if a preliminary injunction is to issue, namely, the existence of a right to be protected
and the facts against which the injunction is to be directed are violative of said right. In
particular, for a writ of preliminary injunction to issue, the existence of the right and the violation
must appear in the allegation of the complaint and a preliminary injunction is proper only when
the plaintiff (private respondent herein) appears to be entitled to the relief demanded in his
complaint. (Emphases supplied.)
We reiterated this point in Transfield Philippines, Inc. v. Luzon Hydro Corporation,78 where we
likewise opined:
Before a writ of preliminary injunction may be issued, there must be a clear showing by the
complaint that there exists a right to be protected and that the acts against which the writ is to be
directed are violative of the said right. It must be shown that the invasion of the right sought to
be protected is material and substantial, that the right of complainant is clear and unmistakable
and that there is an urgent and paramount necessity for the writ to prevent serious damage.
Moreover, an injunctive remedy may only be resorted to when there is a pressing necessity to
avoid injurious consequences which cannot be remedied under any standard compensation.
(Emphasis supplied.)
As the Court explained previously in Philippine Airlines, Inc. v. National Labor Relations
Commission79:
An injury is considered irreparable if it is of such constant and frequent recurrence that no fair
and reasonable redress can be had therefor in a court of law, or where there is no standard by
which their amount can be measured with reasonable accuracy, that is, it is not susceptible of
mathematical computation. It is considered irreparable injury when it cannot be adequately
compensated in damages due to the nature of the injury itself or the nature of the right or
property injured or when there exists no certain pecuniary standard for the measurement of
damages. (Emphases supplied.)
It is still contentious whether this is a case of termination by the DFA alone or both the DFA and
BCA. The DFA contends that BCA, by sending its own Notice of Default, likewise terminated or
"abandoned" the Amended BOT Agreement. Still, whether this is a termination by the DFA alone
without fault on the part of BCA or a termination due to default on the part of either party, the
BOT Law and the Amended BOT Agreement lay down the measure of compensation to be paid
under the appropriate circumstances.
Significantly, in BCAs Request for Arbitration with the PDRCI, it prayed for, among others, "a
judgment ordering respondent [DFA] to pay damages to Claimant [BCA], reasonably estimated
at P50,000,000.00 as of [the date of the Request for Arbitration], representing lost business
159

opportunities; financing fees, costs and commissions; travel expenses; legal fees and expenses;
and costs of arbitration, including the fees of the arbitrator/s."80 All the purported damages that
BCA claims to have suffered by virtue of the DFAs termination of the Amended BOT
Agreement are plainly determinable in pecuniary terms and can be "reasonably estimated"
according to BCAs own words.
Indeed, the right of BCA, a party which may or may not have been in default on its BOT
contract, to have the termination of its BOT contract reversed is not guaranteed by the BOT Law.
Even assuming BCAs innocence of any breach of contract, all the law provides is that BCA
should be adequately compensated for its losses in case of contract termination by the
government.
There is one point that none of the parties has highlighted but is worthy of discussion. In seeking
to enjoin the government from awarding or implementing a machine readable passport project or
any similar electronic passport or visa project and praying for the maintenance of the status quo
ante pending the resolution on the merits of BCAs Request for Arbitration, BCA effectively
seeks to enjoin the termination of the Amended BOT Agreement for the MRP/V Project.
There is no doubt that the MRP/V Project is a project covered by the BOT Law and, in turn,
considered a "national government project" under Republic Act No. 8795. Under Section 3(d) of
that statute, trial courts are prohibited from issuing a TRO or writ of preliminary injunction
against the government to restrain or prohibit the termination or rescission of any such national
government project/contract.
The rationale for this provision is easy to understand. For if a project proponent that the
government believes to be in default is allowed to enjoin the termination of its contract on the
ground that it is contesting the validity of said termination, then the government will be unable to
enter into a new contract with any other party while the controversy is pending litigation.
Obviously, a courts grant of injunctive relief in such an instance is prejudicial to public interest
since government would be indefinitely hampered in its duty to provide vital public goods and
services in order to preserve the private proprietary rights of the project proponent. On the other
hand, should it turn out that the project proponent was not at fault, the BOT Law itself
presupposes that the project proponent can be adequately compensated for the termination of the
contract. Although BCA did not specifically pray for the trial court to enjoin the termination of
the Amended BOT Agreement and thus, there is no direct violation of Republic Act No. 8795, a
grant of injunctive relief as prayed for by BCA will indirectly contravene the same statute.
Verily, there is valid reason for the law to deny preliminary injunctive relief to those who seek to
contest the governments termination of a national government contract. The only circumstance
under which a court may grant injunctive relief is the existence of a matter of extreme urgency

160

involving a constitutional issue, such that unless a TRO or injunctive writ is issued, grave
injustice and irreparable injury will result.
Now, BCA likewise claims that unless it is granted injunctive relief, it would suffer grave and
irreparable injury since the bidding out and award of the e-Passport Project would be tantamount
to a violation of its right against deprivation of property without due process of law under Article
III, Section 1 of the Constitution. We are unconvinced.1avvphi1
Article III, Section 1 of the Constitution provides "[n]o person shall be deprived of life, liberty,
or property without due process of law, nor shall any person be denied the equal protection of the
laws." Ordinarily, this constitutional provision has been applied to the exercise by the State of its
sovereign powers such as, its legislative power,81 police power,82 or its power of eminent
domain.83
In the instant case, the State action being assailed is the DFAs termination of the Amended BOT
Agreement with BCA. Although the said agreement involves a public service that the DFA is
mandated to provide and, therefore, is imbued with public interest, the relationship of DFA to
BCA is primarily contractual and their dispute involves the adjudication of contractual rights.
The propriety of the DFAs acts, in relation to the termination of the Amended BOT Agreement,
should be gauged against the provisions of the contract itself and the applicable statutes to such
contract. These contractual and statutory provisions outline what constitutes due process in the
present case. In all, BCA failed to demonstrate that there is a constitutional issue involved in this
case, much less a constitutional issue of extreme urgency.
As for the DFAs purported failure to appropriate sufficient amounts in its budget to pay for
liquidated damages to BCA, this argument does not support BCAs position that it will suffer
grave and irreparable injury if it is denied injunctive relief. The DFAs liability to BCA for
damages is contingent on BCA proving that it is entitled to such damages in the proper
proceedings. The DFA has no obligation to set aside funds to pay for liquidated damages, or any
other kind of damages, to BCA until there is a final and executory judgment in favor of BCA. It
is illogical and impractical for the DFA to set aside a significant portion of its budget for an event
that may never happen when such idle funds should be spent on providing necessary services to
the populace. For if it turns out at the end of the arbitration proceedings that it is BCA alone that
is in default, it would be the one liable for liquidated damages to the DFA under the terms of the
Amended BOT Agreement.
With respect to BCAs allegation that the e-Passport Project is grossly disadvantageous to the
Filipino people since it is the government that will be spending for the project unlike the MRP/V
Project which would have been privately funded, the same is immaterial to the issue at hand. If it
is true that the award of the e-Passport Project is inimical to the public good or tainted with some
anomaly, it is indeed a cause for grave concern but it is a matter that must be investigated and
161

litigated in the proper forum. It has no bearing on the issue of whether BCA would suffer grave
and irreparable injury such that it is entitled to injunctive relief from the courts.
In all, we agree with petitioners DFA and BSP that the trial courts issuance of a writ of
preliminary injunction, despite the lack of sufficient legal justification for the same, is
tantamount to grave abuse of discretion.
To be very clear, the present decision touches only on the twin issues of (a) the jurisdiction of the
trial court to issue a writ of preliminary injunction as an interim relief under the factual milieu of
this case; and (b) the entitlement of BCA to injunctive relief. The merits of the DFA and BCAs
dispute regarding the termination of the Amended BOT Agreement must be threshed out in the
proper arbitration proceedings. The civil case pending before the trial court is purely for the grant
of interim relief since the main case is to be the subject of arbitration proceedings.
BCAs petition for interim relief before the trial court is essentially a petition for a provisional
remedy (i.e., preliminary injunction) ancillary to its Request for Arbitration in PDRCI Case No.
30-2006/BGF. BCA specifically prayed that the trial court grant it interim relief pending the
constitution of the arbitral tribunal in the said PDRCI case. Unfortunately, during the pendency
of this case, PDRCI Case No. 30-2006/BGF was dismissed by the PDRCI for lack of
jurisdiction, in view of the lack of agreement between the parties to arbitrate before the PDRCI.84
In Philippine National Bank v. Ritratto Group, Inc.,85 we held:
A writ of preliminary injunction is an ancillary or preventive remedy that may only be resorted to
by a litigant to protect or preserve his rights or interests and for no other purpose during the
pendency of the principal action. The dismissal of the principal action thus results in the denial of
the prayer for the issuance of the writ. x x x. (Emphasis supplied.)
In view of intervening circumstances, BCA can no longer be granted injunctive relief and the
civil case before the trial court should be accordingly dismissed. However, this is without
prejudice to the parties litigating the main controversy in arbitration proceedings, in accordance
with the provisions of the Amended BOT Agreement, which should proceed with dispatch.
It does not escape the attention of the Court that the delay in the submission of this controversy
to arbitration was caused by the ambiguity in Section 19.02 of the Amended BOT Agreement
regarding the proper body to which a dispute between the parties may be submitted and the
failure of the parties to agree on such an arbitral tribunal. However, this Court cannot allow this
impasse to continue indefinitely. The parties involved must sit down together in good faith and
finally come to an understanding regarding the constitution of an arbitral tribunal mutually
acceptable to them.

162

WHEREFORE, the instant petition is hereby GRANTED. The assailed Order dated February 14,
2007 of the Regional Trial Court of Pasig in Civil Case No. 71079 and the Writ of Preliminary
Injunction dated February 23, 2007 are REVERSED and SET ASIDE. Furthermore, Civil Case
No. 71079 is hereby DISMISSED.
No pronouncement as to costs.
SO ORDERED.

163