CIVIL PROCEDURE - JURISDICTION|1

SECOND DIVISION
G.R. No. 131282

January 4, 2002

GABRIEL L. DUERO, petitioner,

vs.
HON.COURT OF APPEALS, and BERNARDO A. ERADEL, respondents.
QUISUMBING, J.:
This petition for certiorari assails the Decisionl dated September 17, 1997, of the Court of Appeals in CA-G.R. No. SP
No.. 2340- UDK, entitled Bernardo Eradel vs. Non. Ermelino G. Andal, setting aside all proceedings in Civil Case
No.1075, Gabriel L. Duero vs. Bernardo Eradel, before the Branch 27 of the Regional Trial Court of Tandag, Surigao del
Sur .
The pertinent facts are as follow.
Sometime in 1988, according to petitioner, private respondent Bemardo Eradel 2 entered and occupied petitioner's land
covered by Tax Declaration No. A-16-13-302, located in Baras, San Miguel, Surigao del Sur. As shown in the tax
declaration, the land had an assessed value of P5,240. When petitioner politely informed private respondent that the land
was his and requested the latter to vacate the land, private respondent refused, but instead threatened him with bodily
harm. Despite repeated demands, private respondent remained steadfast in his refusal to leave the land.
On June 16, 1995, petitioner filed before the RTC a complaint for Recovery of Possession and Ownership with Damages
and Attorney's Fees against private respondent and two others, namely, Apolinario and Inocencio Ruena. Petitioner
appended to the complaint the aforementioned tax declaration. The counsel of the Ruenas asked for extension to file their
Answer and was given until July 18, 1995. Meanwhile, petitioner and the, Ruenas executed a compromise agreement,
which became the trial court's basis for a partial judgment rendered on January 12, 1996. In this agreement, the Ruenas
through their counsel, Atty. Eusebio Avila, entered into a Compromise Agreement with herein petitioner, Gabriel
Duero. Inter alia, the agreement stated that the Ruenas recognized and bound themselves to respect the ownership and
possession of Duero.3 Herein private respondent Eradel was not a party to the agreement, and he was declared in default
for failure to file his answer to the complaint.4

Meanwhile, RED Conflict Case No.1029, an administrative case between petitioner and applicant-contestants Romeo,
Artemio and Jury Laurente, remained pending with the Office of the Regional Director of the Department of
Environment and Natural Resources in Davao City. Eventually, it was forwarded to the DENR Regional Office in
Prosperidad, Agusan del Sur .
On July 24, 1996, private respondent filed before the RTC a Petition for Relief from Judgment, reiterating the same
allegation in his Motion for New Trial. He averred that unless there is a determination on who owned the land, he could
not be made to vacate the land. He also averred that the judgment of the trial court was void inasmuch as the heirs of
Artemio Laurente, Sr., who are indispensable parties, were not impleaded.
On September 24, 1996, Josephine, Ana Soledad and Virginia, all surnamed Laurente, grandchildren of Artemio who
were claiming ownership of the land, filed a Motion for Intervention. The RTC denied the motion.
On October 8, 1996, the trial court issued an order denying the Petition for Relief from Judgment. In a Motion for
Reconsideration of said order, private respondent alleged that the RTC had no jurisdiction over the case, since the value
of the land was only P5,240 and therefore it was under the jurisdiction of the municipal trial court. On November 22,
1996, the RTC denied the motion for reconsideration.
On January 22, 1997, petitioner filed a Motion for Execution, which the RTC granted on January 28. On February 18,
1997, Entry of Judgment was made of record and a writ of execution was issued by the RTC on February 27,1997. On
March 12,1997, private respondent filed his petition for certiorari before the Court of Appeals.
The Court of Appeals gave due course to the petition, maintaining that private respondent is not estopped from assailing
the jurisdiction 'of the RTC, Branch 27 in Tandag, Surigao del Sur, when private respondent filed with said court his
Motion for Reconsideration And/Or Annulment of Judgment. The Court of Appeals decreed as follows:
IN THE LIGHT OF ALL THE FOREGOING, the Petition is GRANTED. All proceedings in "Gabriel L.
Duero vs. Bernardo Eradel, et. al. Civil Case 1075" filed in the Court a quo, including its Decision, Annex
"E" of the petition, and its Orders and Writ of Execution and the turn over of the property to the Private
Respondent by the Sheriff of the Court a quo, are declared null and void and hereby SET ASIDE, No
pronouncement as to costs.
SO ORDERED.6

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

Petitioner now comes before this Court, alleging that the Court of Appeals acted with grave abuse of discretion
amounting to lack or in excess of jurisdiction when it held that:
I.

On June 10, 1996, private respondent filed a Motion for New Trial, alleging that he has been occupying the land as a
tenant of Artemio Laurente, Sr., since 1958. He explained that he turned over the complaint and summons to Laurente in
the honest belief that as landlord, the latter had a better right to the land and was responsible to defend any adverse claim
on it. However, the trial court denied the motion for new trial.1wphi1.nt

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

CIVIL PROCEDURE - JURISDICTION|2

...PRIVATE RESPONDENT WAS NOT THEREBY ESTOPPED FROM QUESTIONING THE
JURISDICTION OF THE LOWER COURT EVEN AFTER IT SUCCESSFULLY SOUGHT AFFIRMATIVE
RELIEF THEREFROM.
III
...THE FAlLURE OF PRIVATE RESPONDENT TO FILE HIS ANSWER IS JUSTIFIED. 7
The main issue before us is whether the Court of Appeals gravely abused its discretion when it held that the municipal
trial court had jurisdiction, and that private respondent was not estopped from assailing the jurisdiction of the RTC after
he had filed several motions before it. The secondary issue is whether the Court of appeals erred in holding that private
respondent's failure to file an answer to the complaint was justified.
At the outset, however, we note that petitioner through counsel submitted to this Court pleadings that contain inaccurate
statements. Thus, on page 5 of his petition, 8 we find that to bolster the claim that the appellate court erred in holding that
the RTC had no jurisdiction, petitioner pointed to Annex E9 of his petition which supposedly is the Certification issued by
the Municipal Treasurer of San Miguel, Surigao, specifically containing the notation, "Note: Subject for General
Revision Effective 1994." But it appears that Annex E of his petition is not a Certification but a xerox copy of a
Declaration of Real Property. Nowhere does the document contain a notation, "Note: Subject for General Revision
Effective 1994." Petitioner also asked this Court to refer to Annex F,10 where he said the zonal value of the disputed land
was P1.40 per sq.m., thus placing the computed value of the land at the time the complaint was filed before the RTC at
P57,113.98, hence beyond the jurisdiction of the municipal court and within the jurisdiction of the regional trial court.
However, we find that these annexes are both merely xerox copies. They are obviously without evidentiary weight or
value.
Coming now to the principal issue, petitioner contends that respondent appellate court acted with grave abuse of
discretion. By "grave abuse of discretion" is meant such capricious and whimsical exercise of judgment which is
equivalent to an excess or a lack of jurisdiction. The abuse of discretion must be so patent and gross as to amount to an
evasion of a positive duty or a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law as
where the power is exercised in an arbitrary and despotic manner by reason of passion or hostility. 11 But here we find that
in its decision holding that the municipal court has jurisdiction over the case and that private respondent was not
estopped from questioning the jurisdiction of the RTC, respondent Court of Appeals discussed the facts on which its
decision is grounded as well as the law and jurisprudence on the matter.12 Its action was neither whimsical nor capricious.
Was private respondent estopped from questioning the jurisdiction of the RTC? In this case, we are in agreement with the
Court of Appeals that he was not. While participation in all stages of a case before the trial court, including invocation of
its authority in asking for affirmative relief, effectively bars a party by estoppel from challenging the court's
jurisdiction,13 we note that estoppel has become an equitable defense that is both substantive and remedial and its
successful invocation can bar a right and not merely its equitable enforcement. 14 Hence, estoppel ought to be applied with
caution. For estoppel to apply, the action giving rise thereto must be unequivocal and intentional because, if misapplied,
estoppel may become a tool of injustice.15
In the present case, private respondent questions the jurisdiction of RTC in Tandag, Surigao del Sur, on legal grounds.
Recall that it was petitioner who filed the complaint against private respondent and two other parties before the said
court,16 believing that the RTC had jurisdiction over his complaint. But by then, Republic Act 7691 17 amending BP 129
had become effective, such that jurisdiction already belongs not to the RTC but to the MTC pursuant to said amendment.

Private respondent, an unschooled farmer, in the mistaken belief that since he was merely a tenant of the late Artemio
Laurente Sr., his landlord, gave the summons to a Hipolito Laurente, one of the surviving heirs of Artemio Sr., who did
not do anything about the summons. For failure to answer the complaint, private respondent was declared in default. He
then filed a Motion for New Trial in the same court and explained that he defaulted because of his belief that the suit
ought to be answered by his landlord. In that motion he stated that he had by then the evidence to prove that he had a
better right than petitioner over the land because of his long, continuous and uninterrupted possession as bonafide tenant-lessee of the land.18But his motion was denied. He tried an alternative recourse. He filed before the RTC a
Motion for Relief from Judgment. Again, the same court denied his motion, hence he moved for reconsideration of the
denial. In his Motion for Reconsideration, he raised for the first time the RTC's lack of jurisdiction. This motion was
again denied. Note that private respondent raised the issue of lack of jurisdiction, not when the case was already on
appeal, but when the case, was still before the RTC that ruled him in default, denied his motion for new trial as well as
for relief from judgment, and denied likewise his two motions for reconsideration. After the RTC still refused to
reconsider the denial of private respondent's motion for relief from judgment, it went on to issue the order for entry of
judgment and a writ of execution.
Under these circumstances, we could not fault the Court of Appeals in overruling the RTC and in holding that private
respondent was not estopped from questioning the jurisdiction of the regional trial court. The fundamental rule is that, the
lack of jurisdiction of the court over an action cannot be waived by the parties, or even cured by their silence,
acquiescence or even by their express consent. 19 Further, a party may assail the jurisdiction of the court over the action at
any stage of the proceedings and even on appeal. 20 The appellate court did not err in saying that the RTC should have
declared itself barren of jurisdiction over the action. Even if private respondent actively participated in the proceedings
before said court, the doctrine of estoppel cannot still be properly invoked against him because the question of lack of
jurisdiction may be raised at anytime and at any stage of the action. 21Precedents tell us that as a general rule, the
jurisdiction of a court is not a question of acquiescence as a matter of fact, but an issue of conferment as a matter of
law.22 Also, neither waiver nor estoppel shall apply to confer jurisdiction upon a court, barring highly meritorious and
exceptional circumstances.23 The Court of Appeals found support for its ruling in our decision in Javier vs. Court of
Appeals, thus:
x x x The point simply is that when a party commits error in filing his suit or proceeding in a court that lacks
jurisdiction to take cognizance of the same, such act may not at once be deemed sufficient basis of estoppel. It
could have been the result of an honest mistake, or of divergent interpretations of doubtful legal provisions. If
any fault is to be imputed to a party taking such course of action, part of the blame should be placed on
the court which shall entertain the suit, thereby lulling the parties into believing that they pursued their
remedies in the correct forum. Under the rules, it is the duty of the court to dismiss an action 'whenever it
appears that the court has no jurisdiction over the subject matter.' (Sec. 2, Rule 9, Rules of Court) Should the
Court render a judgment without jurisdiction, such judgment may be impeached or annulled for lack of
jurisdiction (Sec. 30, Rule 132, Ibid), within ten (10) years from the finality of the same. [Emphasis ours.] 24
Indeed, "...the trial court was duty-bound to take judicial notice of the parameters of its jurisdiction and its failure to do
so, makes its decision a 'lawless' thing." 25
Since a decision of a court without jurisdiction is null and void, it could logically never become final and executory,
hence appeal therefrom by writ of error would be out of the question. Resort by private respondent to a petition for
certiorari before the Court of Appeals was in order .

CIVIL PROCEDURE - JURISDICTION|3

In holding that estoppel did not prevent private respondent from questioning the RTC's jurisdiction, the appellate court
reiterated the doctrine that estoppel must be applied only in exceptional cases, as its misapplication could result in a
miscarriage of justice. Here, we find that petitioner, who claims ownership of a parcel of land, filed his complaint before
a court without appropriate jurisdiction. Defendant, a farmer whose tenancy status is still pending before the proper
administrative agency concerned, could have moved for dismissal of the case on jurisdictional grounds. But the farmer as
defendant therein could not be expected to know the nuances of jurisdiction and related issues. This farmer, who is now
the private respondent, ought not to be penalized when he claims that he made an honest mistake when he initially
submitted his motions before the RTC, before he realized that the controversy was outside the RTC's cognizance but
within the jurisdiction of the municipal trial court. To hold him in estoppel as the RTC did would amount to foreclosing
his avenue to obtain a proper resolution of his case. Furthermore, if the RTC's order were to be sustained, he would be
evicted from the land prematurely, while RED Conflict Case No.1029 would remain unresolved. Such eviction on a
technicality if allowed could result in an injustice, if it is later found that he has a legal right to till the land he now
occupies as tenant-lessee.1wphi1.nt
Having determined that there was no grave abuse of discretion by the appellate court in ruling that private respondent
was not estopped from questioning the jurisdiction of the RTC, we need not tarry to consider in detail the second issue.
Suffice it to say that, given the circumstances in this case, no error was committed on this score by respondent appellate
court. Since the RTC had no jurisdiction over the case, private respondent had justifiable reason in law not to file an
answer, aside from the fact that he believed the suit was properly his landlord's concern.
WHEREFORE, the petition is DISMISSED. The assailed decision of the Court of Appeals is AFFIRMED. The
decision of the Regional Trial Court in Civil Case No.1075 entitled Gabriel L. Duero vs. Bernardo Eradel, its Order that
private respondent turn over the disputed land to petitioner, and the Writ of Execution it issued, are ANNULLED and
SET ASIDE. Costs against petitioner .
SO ORDERED.
Bellosillo, Mendoza, De Leon, Jr., JJ., concur. Buena, J., on official leave.

CIVIL PROCEDURE - JURISDICTION|4

SECOND DIVISION
G.R. No. 129638

December 8, 2003

ANTONIO T. DONATO, petitioner,

vs.
COURT OF APPEALS, FILOMENO ARCEPE, TIMOTEO BARCELONA, IGNACIO BENDOL, THELMA P.
BULICANO, ROSALINDA CAPARAS, ROSITA DE COSTO, FELIZA DE GUZMAN, LETICIA DE LOS
REYES, ROGELIO GADDI, PAULINO GAJARDO, GERONIMO IMPERIAL, HOMER IMPERIAL, ELVIRA
LESLIE, CEFERINO LUGANA, HECTOR PIMENTEL, NIMFA PIMENTEL, AURELIO G. ROCERO,
ILUMINADA TARA, JUANITO VALLESPIN, and NARCISO YABUT, respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Before us is a "petition for review on certiorari" filed on July 17, 1997 which should be a petition for certiorari under
Rule 65 of the Rules of Court. It assails the Resolutions 1 dated March 21, 1997 and June 23, 1997 issued by the Court of
Appeals in CA-G.R. SP No. 41394.2
The factual background of the case is as follows:
Petitioner Antonio T. Donato is the registered owner of a real property located at Ciriaco Tuason Street, San Andres,
Manila, covered by Transfer Certificate of Title No. 131793 issued by the Register of Deeds of the City of Manila on
November 24, 1978. On June 7, 1994, petitioner filed a complaint before the Metropolitan Trial Court (Branch 26) of
Manila (MeTC) for forcible entry and unlawful detainer against 43 named defendants and "all unknown occupants" of
the subject property.3
Petitioner alleges that: private respondents had oral contracts of lease that expired at the end of each month but were
impliedly renewed under the same terms by mere acquiescence or tolerance; sometime in 1992, they stopped paying rent;
on April 7, 1994, petitioner sent them a written demand to vacate; the non-compliance with said demand letter
constrained him to file the ejectment case against them. 4
Of the 43 named defendants, only 20 (private respondents, 5 for brevity) filed a consolidated Answer dated June 29, 1994
wherein they denied non-payment of rentals. They contend that they cannot be evicted because the Urban Land Reform
Law guarantees security of tenure and priority right to purchase the subject property; and that there was a negotiation for
the purchase of the lots occupied by them but when the negotiation reached a passive stage, they decided to continue
payment of rentals and tendered payment to petitioners counsel and thereafter initiated a petition for consignation of the
rentals in Civil Case No. 144049 while they await the outcome of the negotiation to purchase.
Following trial under the Rule on Summary Procedure, the MeTC rendered judgment on September 19, 1994 against the
23 non-answering defendants, ordering them to vacate the premises occupied by each of them, and to pay jointly and
severally P10,000.00 per month from the date they last paid their rent until the date they actually vacate, plus interest
thereon at the legal rate allowed by law, as well as P10,000.00 as attorneys fees and the costs of the suit. As to the 20

private respondents, the MeTC issued a separate judgment 6 on the same day sustaining their rights under the Land
Reform Law, declaring petitioners cause of action as not duly warranted by the facts and circumstances of the case and
dismissing the case without prejudice.
Not satisfied with the judgment dismissing the complaint as against the private respondents, petitioner appealed to the
Regional Trial Court (Branch 47) of Manila (RTC). 7 In a Decision8 dated July 5, 1996, the RTC sustained the decision of
the MeTC.
Undaunted, petitioner filed a petition for review with the Court of Appeals (CA for brevity), docketed as CA-G.R. SP No.
41394. In a Resolution dated March 21, 1997, the CA dismissed the petition on two grounds: (a) the certification of nonforum shopping was signed by petitioners counsel and not by petitioner himself, in violation of Revised Circular No. 2891;9 and, (b) the only annex to the petition is a certified copy of the questioned decision but copies of the pleadings and
other material portions of the record as would support the allegations of the petition are not annexed, contrary to Section
3, paragraph b, Rule 6 of the Revised Internal Rules of the Court of Appeals (RIRCA). 10
On April 17, 1997, petitioner filed a Motion for Reconsideration, 11 attaching thereto a photocopy of the certification of
non-forum shopping duly signed by petitioner himself 12 and the relevant records of the MeTC and the RTC. 13 Five days
later, or on April 22, 1997, petitioner filed a Supplement 14 to his motion for reconsideration submitting the duly
authenticated original of the certification of non-forum shopping signed by petitioner.15
In a Resolution16 dated June 23, 1997 the CA denied petitioners motion for reconsideration and its supplement, ruling
that "petitioners subsequent compliance did not cure the defect in the instant petition." 17
Hence, the present petition anchored on the following grounds:
I.
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN DISMISSING THE PETITION BASED ON HYPERTECHNICAL GROUNDS BECAUSE:
A. PETITIONER HAS SUBSTANTIALLY COMPLIED WITH SUPREME COURT CIRCULAR NO. 28-91.
MORE, PETITIONER SUBSEQUENTLY SUBMITTED DURING THE PENDENCY OF THE
PROCEEDINGS A DULY AUTHENTICATED CERTIFICATE OF NON-FORUM SHOPPING WHICH HE
HIMSELF SIGNED AND EXECUTED IN THE UNITED STATES.
B. PETITIONER HAS SUBSTANTIALLY COMPLIED WITH SECTION 3, RULE 6 OF THE REVISED
INTERNAL RULES OF THE COURT OF APPEALS. MORE, PETITIONER SUBSEQUENTLY
SUBMITTED DURING THE PENDENCY OF THE PROCEEDINGS COPIES OF THE RELEVANT
DOCUMENTS IN THE CASES BELOW.
C. PETITIONER HAS A MERITORIOUS APPEAL, AND HE STANDS TO LOSE SUBSTANTIAL
PROPERTY IF THE APPEAL IS NOT GIVEN DUE COURSE. THE RULES OF PROCEDURE MUST BE
LIBERALLY CONSTRUED TO DO SUBSTANTIAL JUSTICE.

CIVIL PROCEDURE - JURISDICTION|5

II.

IV.

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT RULING THAT ALL THE ELEMENTS OF
UNLAWFUL DETAINER ARE PRESENT IN THE CASE AT BAR.

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT RESPONDENTS SHOULD
PAY PETITIONER A REASONABLE COMPENSATION FOR THEIR USE AND OCCUPANCY OF THE SUBJECT
PROPERTY IN THE AMOUNT OF AT LEAST P10,000.00 PER MONTH FROM THE DATE THEY LAST PAID
RENT UNTIL THE TIME THEY ACTUALLY VACATE THE SAME, WITH LEGAL INTEREST AT THE
MAXIMUM RATE ALLOWED BY LAW UNTIL PAID.

III.
RESPONDENT COURT OF APPEALS ERRED IN NOT RULING THAT THE RTC MANILA, BRANCH 47,
COMMITTED REVERSIBLE ERROR IN AFFIRMING THE FINDING OF MTC MANILA, BRANCH 26, THAT
PRIVATE RESPONDENTS CANNOT BE EJECTED FROM THE SUBJECT PROPERTY WITHOUT VIOLATING
THEIR SECURITY OF TENURE EVEN IF THE TERM OF THE LEASE IS MONTH-TO-MONTH WHICH EXPIRES
AT THE END OF EACH MONTH. IN THIS REGARD,
A. RESPONDENT COURT OF APPEALS SHOULD HAVE RULED THAT THE RTC MANILA
COMMITTED REVERSIBLE ERROR IN NOT RULING THAT TENANTS UNDER P.D. 1517 MAY BE
EVICTED FOR NON-PAYMENT OF RENT, TERMINATION OF LEASE OR OTHER GROUNDS FOR
EJECTMENT.
B. RESPONDENT COURT OF APPEALS SHOULD HAVE RULED THAT THE RTC MANILA
COMMITTED REVERSIBLE ERROR IN NOT RULING THAT THE ALLEGED "PRIORITY RIGHT TO
BUY THE LOT THEY OCCUPY" DOES NOT APPLY WHERE THE LANDOWNER DOES NOT INTEND
TO SELL THE SUBJECT PROPERTY, AS IN THE CASE AT BAR.
C. RESPONDENT COURT OF APPEALS SHOULD HAVE RULED THAT THE RTC MANILA
COMMITTED REVERSIBLE ERROR IN RULING THAT THE SUBJECT PROPERTY IS LOCATED
WITHIN A ZONAL IMPROVEMENT AREA OR APD.
D. RESPONDENT COURT OF APPEALS SHOULD HAVE RULED THAT THE RTC MANILA
COMMITTED REVERSIBLE ERROR IN NOT RULING THAT PRIVATE RESPONDENTS NONCOMPLIANCE WITH THE CONDITIONS UNDER THE LAW RESULT IN THE WAIVER OF
PROTECTION AGAINST EVICTION.
E. RESPONDENT COURT OF APPEALS SHOULD HAVE RULED THAT THE RTC MANILA
COMMITTED REVERSIBLE ERROR IN NOT RULING THAT PRIVATE RESPONDENTS CANNOT BE
ENTITLED TO PROTECTION UNDER P.D. 2016 SINCE THE GOVERNMENT HAS NO INTENTION OF
ACQUIRING THE SUBJECT PROPERTY.
F. RESPONDENT COURT OF APPEALS SHOULD HAVE RULED THAT THE RTC MANILA
COMMITTED REVERSIBLE ERROR IN FINDING THAT THERE IS AN ON-GOING NEGOTIATION
FOR THE SALE OF THE SUBJECT PROPERTY AND THAT IT RENDERS THE EVICTION OF PRIVATE
RESPONDENTS PREMATURE.
G. RESPONDENT COURT OF APPEALS SHOULD HAVE RULED THAT THE RTC MANILA
COMMITTED REVERSIBLE ERROR IN NOT RULING THAT THE ALLEGED CASE FOR
CONSIGNATION DOES NOT BAR THE EVICTION OF PRIVATE RESPONDENTS.

V.
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT RESPONDENTS SHOULD
PAY PETITIONER ATTORNEYS FEES AND EXPENSES OF LITIGATION OF AT LEASTP20,000.00, PLUS
COSTS.18
Petitioner submits that a relaxation of the rigid rules of technical procedure is called for in view of the attendant
circumstances showing that the objectives of the rule on certification of non-forum shopping and the rule requiring
material portions of the record be attached to the petition have not been glaringly violated and, more importantly, the
petition is meritorious.
The proper recourse of an aggrieved party from a decision of the CA is a petition for review on certiorari under Rule 45
of the Rules of Court. However, if the error, subject of the recourse, is one of jurisdiction, or the act complained of was
perpetrated by a court with grave abuse of discretion amounting to lack or excess of jurisdiction, the proper remedy
available to the aggrieved party is a petition for certiorari under Rule 65 of the said Rules. As enunciated by the Court
in Fortich vs. Corona:19
Anent the first issue, in order to determine whether the recourse of petitioners is proper or not, it is necessary to draw a
line between an error of judgment and an error of jurisdiction. An error of judgment is one which the court may commit
in the exercise of its jurisdiction, and which error is reviewable only by an appeal. On the other hand, an error of
jurisdiction is one where the act complained of was issued by the court, officer or a quasi-judicial body without or in
excess of jurisdiction, or with grave abuse of discretion which is tantamount to lack or in excess of jurisdiction. This
error is correctible only by the extraordinary writ of certiorari. 20 (Emphasis supplied).
Inasmuch as the present petition principally assails the dismissal of the petition on ground of procedural flaws involving
the jurisdiction of the court a quo to entertain the petition, it falls within the ambit of a special civil action for certiorari
under Rule 65 of the Rules of Court.
At the time the instant petition for certiorari was filed, i.e., on July 17, 1997, the prevailing rule is the newly promulgated
1997 Rules of Civil Procedure. However, considering that the CA Resolution being assailed was rendered on March 21,
1997, the applicable rule is the three-month reglementary period, established by jurisprudence. 21 Petitioner received
notice of the assailed CA Resolution dismissing his petition for review on April 4, 1997. He filed his motion
reconsideration on April 17, 1997, using up only thirteen days of the 90-day period. Petitioner received the CA
Resolution denying his motion on July 3, 1997 and fourteen days later, or on July 17, 1997, he filed a motion for 30-day
extension of time to file a "petition for review" which was granted by us; and petitioner duly filed his petition on August
15, 1997, which is well-within the period of extension granted to him.

CIVIL PROCEDURE - JURISDICTION|6

We now go to the merits of the case.

Truly, in dismissing the petition for review, the CA had committed grave abuse of discretion amounting to lack of
jurisdiction in putting a premium on technicalities at the expense of a just resolution of the case.

We find the instant petition partly meritorious.

The requirement regarding the need for a certification of non-forum shopping in cases filed before the CA and the
corresponding sanction for non-compliance thereto are found in the then prevailing Revised Circular No. 28-91. 22It
provides that the petitioner himself must make the certification against forum shopping and a violation thereof shall be a
cause for the summary dismissal of the multiple petition or complaint. The rationale for the rule of personal execution of
the certification by the petitioner himself is that it is only the petitioner who has actual knowledge of whether or not he
has initiated similar actions or proceedings in other courts or tribunals; even counsel of record may be unaware of such
fact.23 The Court has ruled that with respect to the contents of the certification, the rule on substantial compliance may be
availed of. This is so because the requirement of strict compliance with the rule regarding the certification of non-forum
shopping simply underscores its mandatory nature in that the certification cannot be altogether dispensed with or its
requirements completely disregarded, but it does not thereby interdict substantial compliance with its provisions under
justifiable circumstances.24
The petition for review filed before the CA contains a certification against forum shopping but said certification was
signed by petitioners counsel. In submitting the certification of non-forum shopping duly signed by himself in his
motion for reconsideration,25 petitioner has aptly drawn the Courts attention to the physical impossibility of filing the
petition for review within the 15-day reglementary period to appeal considering that he is a resident of 1125 South
Jefferson Street, Roanoke, Virginia, U.S.A. were he to personally accomplish and sign the certification.
We fully agree with petitioner that it was physically impossible for the petition to have been prepared and sent to the
petitioner in the United States, for him to travel from Virginia, U.S.A. to the nearest Philippine Consulate in Washington,
D.C., U.S.A., in order to sign the certification before the Philippine Consul, and for him to send back the petition to the
Philippines within the 15-day reglementary period. Thus, we find that petitioner has adequately explained his failure to
personally sign the certification which justifies relaxation of the rule.
We have stressed that the rules on forum shopping, which were precisely designed to promote and facilitate the orderly
administration of justice, should not be interpreted with such absolute literalness as to subvert its own ultimate and
legitimate objective26 which is simply to prohibit and penalize the evils of forum-shopping. 27 The subsequent filing of the
certification duly signed by the petitioner himself should thus be deemed substantial compliance, pro hac vice.
In like manner, the failure of the petitioner to comply with Section 3, paragraph b, Rule 6 of the RIRCA, that is, to
append to his petition copies of the pleadings and other material portions of the records as would support the petition,
does not justify the outright dismissal of the petition. It must be emphasized that the RIRCA gives the appellate court a
certain leeway to require parties to submit additional documents as may be necessary in the interest of substantial justice.
Under Section 3, paragraph d of Rule 3 of the RIRCA, 28 the CA may require the parties to complete the annexes as the
court deems necessary, and if the petition is given due course, the CA may require the elevation of a complete record of
the case as provided for under Section 3(d)(5) of Rule 6 of the RIRCA. 29 At any rate, petitioner attached copies of the
pleadings and other material portions of the records below with his motion for reconsideration. 30 In Jaro vs. Court of
Appeals,31 the Court reiterated the doctrine laid down inCusi-Hernandez vs. Diaz32 and Piglas-Kamao vs. National Labor
Relations Commission33 that subsequent submission of the missing documents with the motion for reconsideration
amounts to substantial compliance which calls for the relaxation of the rules of procedure. We find no cogent reason to
depart from this doctrine.

Needless to stress, "a litigation is not a game of technicalities." 34 When technicality deserts its function of being an aid to
justice, the Court is justified in exempting from its operations a particular case. 35 Technical rules of procedure should be
used to promote, not frustrate justice. While the swift unclogging of court dockets is a laudable objective, granting
substantial justice is an even more urgent ideal. 36
The Courts pronouncement in Republic vs. Court of Appeals37 is worth echoing: "cases should be determined on the
merits, after full opportunity to all parties for ventilation of their causes and defenses, rather than on technicality or some
procedural imperfections. In that way, the ends of justice would be better served." 38 Thus, what should guide judicial
action is that a party litigant is given the fullest opportunity to establish the merits of his action or defense rather than for
him to lose life, honor or property on mere technicalities. 39 This guideline is especially true when the petitioner has
satisfactorily explained the lapse and fulfilled the requirements in his motion for reconsideration, 40 as in this case.
In addition, petitioner prays that we decide the present petition on the merits without need of remanding the case to the
CA. He insists that all the elements of unlawful detainer are present in the case. He further argues that the alleged
"priority right to buy the lot they occupy" does not apply where the landowner does not intend to sell the subject
property, as in the case; that respondents cannot be entitled to protection under P.D. No. 2016 since the government has
no intention of acquiring the subject property, nor is the subject property located within a zonal improvement area; and,
that assuming that there is a negotiation for the sale of the subject property or a pending case for consignation of rentals,
these do not bar the eviction of respondents.
We are not persuaded. We shall refrain from ruling on the foregoing issues in the present petition for
certiorari.1wphi1The issues involved are factual issues which inevitably require the weighing of evidence. These are
matters that are beyond the province of this Court in a special civil action for certiorari. These issues are best addressed
to the CA in the petition for review filed before it. As an appellate court, it is empowered to require parties to submit
additional documents, as it may find necessary, or to receive evidence, to promote the ends of justice, pursuant to the last
paragraph of Section 9, B.P. Blg. 129, otherwise known as The Judiciary Reorganization Act of 1980, to wit:
The Intermediate Appellate Court shall have the power to try cases and conduct hearings, receive evidence and perform
any and all acts necessary to resolve factual issues raised in cases falling within its original and appellate jurisdiction,
including the power to grant and conduct new trials or further proceedings.
WHEREFORE, the petition is PARTLY GRANTED. The Resolutions dated March 21, 1997 and June 23, 1997 of the
Court of Appeals in CA-G.R. SP No. 41394 are REVERSED and SET ASIDE. The case is REMANDED to the Court of
Appeals for further proceedings in CA-G.R. No. 41394, entitled, "Antonio T. Donato vs. Hon. Judge of the Regional
Trial Court of Manila, Branch 47, Filomeno Arcepe, et al."
SO ORDERED.
Puno, (Chairman), Quisumbing, Callejo, Sr., and Tinga, JJ., concur.

CIVIL PROCEDURE - JURISDICTION|7

THIRD DIVISION
G.R. No. 144025

favor both Lot 19 which was earlier mortgaged by him and subsequently foreclosed by SSS, as well as Lot 18 where his
house is presently standing.

December 27, 2002

SPS. RENE GONZAGA and LERIO GONZAGA, petitioners,

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

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

CIVIL PROCEDURE - JURISDICTION|8

Tijam has been reiterated in many succeeding cases. Thus, in Orosa vs. Court of Appeals;7 Ang Ping vs. Court of
Appeals;8 Salva vs. Court of Appeals;9 National Steel Corporation vs. Court of Appeals;10 Province of Bulacan vs. Court
of Appeals;11 PNOC Shipping and Transport Corporation vs. Court of Appeals,12 this Court affirmed the rule that a partys
active participation in all stages of the case before the trial court, which includes invoking the courts authority to grant
affirmative relief, effectively estops such party from later challenging that same courts jurisdiction.

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

In the case at bar, it was petitioners themselves who invoked the jurisdiction of the court a quo by instituting an action for
reformation of contract against private respondents. It appears that, in the proceedings before the trial court, petitioners
vigorously asserted their cause from start to finish. Not even once did petitioners ever raise the issue of the courts
jurisdiction during the entire proceedings which lasted for two years. It was only after the trial court rendered its decision
and issued a writ of execution against them in 1998 did petitioners first raise the issue of jurisdiction and it was only
because said decision was unfavorable to them. Petitioners thus effectively waived their right to question the courts
jurisdiction over the case they themselves filed.

The petitioner is a graduate of the Philippine Military Academy, a member of the Armed Forces of the
Philippines and the Philippine Constabulary, as well as the Intelligence Group of the Philippine National
Police. On March 16, 1990, the petitioner was conducting surveillance operations on drug trafficking at the Sa
Harong Caf Bar and Restaurant located along Barlin St., Naga City. He somehow got involved in a shooting
incident, resulting in the death of one Rodney Rafael N. Nueca. On February 6, 1991, an amended Information
was filed with the RTC of Naga City, Branch 21, docketed as Criminal Case No. 90-3184 charging the
petitioner and a certain Natividad Bombita, Jr. alias "Jun Bombita" with murder. The accusatory portion of the
amended Information reads:

Petitioners should bear the consequence of their act. They cannot be allowed to profit from their omission to the damage
and prejudice of the private respondent. This Court frowns upon the undesirable practice of a party submitting his case
for decision and then accepting the judgment but only if favorable, and attacking it for lack of jurisdiction if not. 13
Public policy dictates that this Court must strongly condemn any double-dealing by parties who are disposed to trifle
with the courts by deliberately taking inconsistent positions, in utter disregard of the elementary principles of justice and
good faith.14 There is no denying that, in this case, petitioners never raised the issue of jurisdiction throughout the entire
proceedings in the trial court. Instead, they voluntarily and willingly submitted themselves to the jurisdiction of said
court. It is now too late in the day for them to repudiate the jurisdiction they were invoking all along.
WHEREFORE, the petition for review is hereby DENIED.
SO ORDERED.
Puno, (Chairman), Panganiban, Sandoval-Gutierrez, and Morales, JJ., concur.
SECOND DIVISION
G.R. No. 124644

February 5, 2004

ARNEL ESCOBAL, petitioner,

vs
HON. FRANCIS GARCHITORENA, Presiding Justice of the Sandiganbayan, Atty. Luisabel Alfonso-Cortez,
Executive Clerk of Court IV of the Sandiganbayan, Hon. David C. Naval, Presiding Judge of the Regional Trial
Court of Naga City, Branch 21, Luz N. Nueca, respondents.
DECISION
CALLEJO, SR., J.:

The petition at bench arose from the following milieu:

That on or about March 16, 1990, in the City of Naga, Philippines, and within the jurisdiction of this
Honorable Court by virtue of the Presidential Waiver, dated June 1, 1990, with intent to kill, conspiring and
confederating together and mutually helping each other, did, then and there, willfully, unlawfully and
feloniously attack, assault and maul one Rodney Nueca and accused 2Lt Arnel Escobal armed with a caliber .
45 service pistol shoot said Rodney Nueca thereby inflicting upon him serious, mortal and fatal wounds which
caused his death, and as a consequence thereof, complainant LUZ N. NUECA, mother of the deceased victim,
suffered actual and compensatory damages in the amount of THREE HUNDRED SIXTY-SEVEN
THOUSAND ONE HUNDRED SEVEN & 95/100 ( P367,107.95) PESOS, Philippine Currency, and moral and
exemplary damages in the amount of ONE HUNDRED THIRTY-FIVE THOUSAND ( P135,000.00) PESOS,
Philippine Currency.1
On March 19, 1991, the RTC issued an Order preventively suspending the petitioner from the service under Presidential
Decree No. 971, as amended by P.D. No. 1847. When apprised of the said order, the General Headquarters of the PNP
issued on October 6, 1992 Special Order No. 91, preventively suspending the petitioner from the service until the case
was terminated.2
The petitioner was arrested by virtue of a warrant issued by the RTC, while accused Bombita remained at large. The
petitioner posted bail and was granted temporary liberty.
When arraigned on April 9, 1991, 3 the petitioner, assisted by counsel, pleaded not guilty to the offense charged.
Thereafter, on December 23, 1991, the petitioner filed a Motion to Quash 4 the Information alleging that as mandated by
Commonwealth Act No. 408,5 in relation to Section 1, Presidential Decree No. 1822 and Section 95 of R.A. No. 6975,
the court martial, not the RTC, had jurisdiction over criminal cases involving PNP members and officers.
Pending the resolution of the motion, the petitioner on June 25, 1993 requested the Chief of the PNP for his
reinstatement. He alleged that under R.A. No. 6975, his suspension should last for only 90 days, and, having served the
same, he should now be reinstated. On September 23, 1993, 6 the PNP Region V Headquarters wrote Judge David C.
Naval requesting information on whether he issued an order lifting the petitioners suspension. The RTC did not reply.
Thus, on February 22, 1994, the petitioner filed a motion in the RTC for the lifting of the order of suspension. He alleged
that he had served the 90-day preventive suspension and pleaded for compassionate justice. The RTC denied the motion
on March 9, 1994.7 Trial thereafter proceeded, and the prosecution rested its case. The petitioner commenced the

CIVIL PROCEDURE - JURISDICTION|9

presentation of his evidence. On July 20, 1994, he filed a Motion to Dismiss 8the case. Citing Republic of the Philippines
v. Asuncion, et al.,9 he argued that since he committed the crime in the performance of his duties, the Sandiganbayan had
exclusive jurisdiction over the case.
On October 28, 1994, the RTC issued an Order 10 denying the motion to dismiss. It, however, ordered the conduct of a
preliminary hearing to determine whether or not the crime charged was committed by the petitioner in relation to his
office as a member of the PNP.
In the preliminary hearing, the prosecution manifested that it was no longer presenting any evidence in connection with
the petitioners motion. It reasoned that it had already rested its case, and that its evidence showed that the petitioner did
not commit the offense charged in connection with the performance of his duties as a member of the Philippine
Constabulary. According to the prosecution, they were able to show the following facts: (a) the petitioner was not
wearing his uniform during the incident; (b) the offense was committed just after midnight; (c) the petitioner was drunk
when the crime was committed; (d) the petitioner was in the company of civilians; and, (e) the offense was committed in
a beerhouse called "Sa Harong Caf Bar and Restaurant."11
For his part, the petitioner testified that at about 10:00 p.m. on March 15, 1990, he was at the Sa Harong Caf Bar and
Restaurant at Barlin St., Naga City, to conduct surveillance on alleged drug trafficking, pursuant to Mission Order No.
03-04 issued by Police Superintendent Rufo R. Pulido. The petitioner adduced in evidence the sworn statements of
Benjamin Cario and Roberto Fajardo who corroborated his testimony that he was on a surveillance mission on the
aforestated date.12
On July 31, 1995, the trial court issued an Order declaring that the petitioner committed the crime charged while not in
the performance of his official function. The trial court added that upon the enactment of R.A. No. 7975, 13the issue had
become moot and academic. The amendatory law transferred the jurisdiction over the offense charged from the
Sandiganbayan to the RTC since the petitioner did not have a salary grade of "27" as provided for in or by Section 4(a)
(1), (3) thereof. The trial court nevertheless ordered the prosecution to amend the Information pursuant to the ruling in
Republic v. Asuncion14 and R.A. No. 7975. The amendment consisted in the inclusion therein of an allegation that the
offense charged was not committed by the petitioner in the performance of his duties/functions, nor in relation to his
office.lawphi1.nt
The petitioner filed a motion for the reconsideration 15 of the said order, reiterating that based on his testimony and those
of Benjamin Cario and Roberto Fajardo, the offense charged was committed by him in relation to his official functions.
He asserted that the trial court failed to consider the exceptions to the prohibition. He asserted that R.A. No. 7975, which
was enacted on March 30, 1995, could not be applied retroactively.16
The petitioner further alleged that Luz Nacario Nueca, the mother of the victim, through counsel, categorically and
unequivocably admitted in her complaint filed with the Peoples Law Enforcement Board (PLEB) that he was on an
official mission when the crime was committed.
On November 24, 1995, the RTC made a volte face and issued an Order reversing and setting aside its July 31, 1995
Order. It declared that based on the petitioners evidence, he was on official mission when the shooting occurred. It
concluded that the prosecution failed to adduce controverting evidence thereto. It likewise considered Luz Nacario
Nuecas admission in her complaint before the PLEB that the petitioner was on official mission when the shooting
happened.

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

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 10
The private complainant agrees with the contention of the petitioner. In contrast, the Office of the Special Prosecutor
contends that the Presiding Justice of the Sandiganbayan acted in accordance with law when he ordered the remand of
the case to the RTC. It asserts that R.A. No. 7975 should be applied retroactively. Although the Sandiganbayan had
jurisdiction over the crime committed by the petitioner when the amended information was filed with the RTC, by the
time it resolved petitioners motion to dismiss on July 31, 1995, R.A. No. 7975 had already taken effect. Thus, the law
should be given retroactive effect.

Under the law, even if the offender committed the crime charged in relation to his office but occupies a position
corresponding to a salary grade below "27," the proper Regional Trial Court or Municipal Trial Court, as the case may
be, shall have exclusive jurisdiction over the case. In this case, the petitioner was a Police Senior Inspector, with salary
grade "23." He was charged with homicide punishable by reclusion temporal. Hence, the RTC had exclusive jurisdiction
over the crime charged conformably to Sections 20 and 32 of Batas Pambansa Blg. 129, as amended by Section 2 of R.A.
No. 7691.

The Ruling of the Court

The petitioners contention that R.A. No. 7975 should not be applied retroactively has no legal basis. It bears stressing
that R.A. No. 7975 is a substantive procedural law which may be applied retroactively.23

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

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

SO ORDERED.
Puno, (Chairman), Quisumbing, Austria-Martinez, and Tinga, JJ., concur.

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 11

THIRD DIVISION
G.R. No. 191894

July 15, 2015

DANILO A. DUNCANO, Petitioner,

vs.
HON. SANDIGANBAYAN (2nd DIVISION), and HON. OFFICE OF THE SPECIAL
PROSECUTOR, Respondents.
DECISION

In its Opposition,11 the OSP argued that a reading of Section 4 (A) (1) (a) to (g) of the subject law would clearly show
that the qualification as to Salary Grade 27 and higher applies only to officials of the executive branch other than the
Regional Director and those specifically enumerated. This is so since the term "Regional Director" and "higher" are
separated by the conjunction "and," which signifies that these two positions are different, apart and distinct, words but
are conjoined together "relating one to the other" to give effect to the purpose of the law. The fact that the position of
Regional Director was specifically mentioned without indication as to its salary grade signifies the lawmakers intention
that officials occupying such position, regardless of salary grade, fall within the original and exclusive jurisdiction of the
Sandiganbayan. This issue, it is claimed, was already resolved in Inding. Finally, the OSP contended that the filing of the
motion to dismiss is premature considering that the Sandiganbayan has yet to acquire jurisdiction over the person of the
accused.

PERALTA, J.:

Still not to be outdone, petitioner invoked the applicability of Cuyco v. Sandiganbayan 12 and Organo v.
Sandiganbayan13 in his rejoinder.

This petition for certiorari under Rule 65 of the Rules of Court (Rules) with prayer for issuance of preliminary injunction
and/or temporary restraining order seeks to reverse and set aside the August 18, 2009 Resolution 1 and February 8, 2010
Order2 of respondent Sandiganbayan Second Division in Criminal Case No. SB-09-CRM-0080, which denied petitioner's
Motion to Dismiss on the ground of la9k of jurisdiction.

On August 18, 2009, the Sandiganbayan Second Division promulgated its Resolution, disposing: WHEREFORE, in the
light of the foregoing, the Court hereby DENIES the instant Motion to Dismiss for being devoid of merit. Let a Warrant
of Arrest be therefore issued against the accused.

The facts are plain and undisputed.

Petitioner Danilo A. Duncano is, at the time material to the case, the Regional Director of the Bureau of Internal Revenue
(BIR) with Salary Grade 26 as classified under Republic Act (R.A.) No. 6758. 3 On March 24, 2009,4 the Office of the
Special Prosecutor (OSP), Office of the Ombudsman, filed a criminal case against him for violation of Section 8, in
relation to Section 11 of R.A. No. 6713,5 allegedly committed as follows:
That on or about April 15, 2003, or sometime prior or subsequent thereto, in Quezon City, Philippines, and within the
jurisdiction of this Honorable Court, accused DANILODUNCANO y ACIDO, a high ranking public officer, being the
Regional Director of Revenue Region No. 7, of the Bureau of Internal Revenue, Quezon City, and as such is under an
obligation to accomplish and submit declarations under oath of his assets, liabilities and net worth and financial and
business interests, did then and there, wilfully, unlawfully and criminally fail to disclose in his Sworn Statement of Assets
and Liabilities and Networth (SALN) for the year 2002, his financial and business interests/connection in Documail
Provides Corporation and Don Plus Trading of which he and his family are the registered owners thereof, and the 1993
Nissan Patrol motor vehicle registered in the name of his son VINCENT LOUIS P. DUNCANO which are part of his
assets, to the damage and prejudice of public interest.
CONTRARY TO LAW.6
Prior to his arraignment, petitioner filed a Motion to Dismiss With Prayer to Defer the Issuance of Warrant of
Arrest7 before respondent Sandiganbayan Second Division. As the OSP alleged, he admitted that he is a Regional
Director with Salary Grade 26. Citing Inding v. Sandiganbayan 8 and Serana v. Sandiganbayan, et al., 9 he asserted that
under Presidential Decree (P.D.) No. 1606, as amended by Section 4 (A) (1) of R.A No. 8249, 10 the Sandiganbayan has
no jurisdiction to try and hear the case because he is an official of the executive branch occupying the position of a
Regional Director but with a compensation that is classified as below Salary Grade 27.

SO ORDERED.14
The respondent court ruled that the position of Regional Director is one of those exceptions where the Sandiganbayan
has jurisdiction even if such position is not Salary Grade 27. It was opined that Section 4 (A) (1) of R.A No. 8249
unequivocally provides that respondent court has jurisdiction over officials of the executive branch of the government
occupying the position of regional director and higher, otherwise classified as Salary Grade 27 and higher, of R.A. No.
6758, including those officials who are expressly enumerated in subparagraphs (a) to (g). In support of the ruling, this
Courts pronouncements in Indingand Binay v. Sandiganbayan 15 were cited.
Petitioner filed a Motion for Reconsideration, but it was denied; 16 Hence, this petition.
Instead of issuing a temporary restraining order or writ of preliminary injunction, the Court required respondents to file a
comment on the petition without necessarily giving due course thereto. 17 Upon compliance of the OSP, a Rejoinder
(supposedly a Reply) was filed by petitioner.
At the heart of the controversy is the determination of whether, according to P.D. No. 1606, as amended by Section 4 (A)
(1) of R.A No. 8249, only Regional Directors with Salary Grade of 27 and higher, as classified under R.A. No. 6758, fall
within the exclusive jurisdiction of the Sandiganbayan. Arguing that he is not included among the public officials
specifically enumerated in Section 4 (A) (1) (a) to (g) of the law and heavily relying as well on Cuyco, petitioner insists
that respondent court lacks jurisdiction over him, who is merely a Regional Director with Salary Grade 26. On the
contrary, the OSP maintains that a Regional Director, irrespective of salary grade, falls within the exclusive original
jurisdiction of the Sandiganbayan. We find merit in the petition.
The creation of the Sandiganbayan was mandated by Section 5, Article XIII of the 1973 Constitution. 18 By virtue of the
powers vested in him by the Constitution and pursuant to Proclamation No. 1081, dated September 21, 1972, former

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 12
President Ferdinand E. Marcos issued P.D. No. 1486. 19 The decree was later amended by P.D. No. 1606, 20Section 20 of
Batas Pambansa Blg. 129,21 P.D. No. 1860,22 and P.D. No. 1861.23

"(3) Members of the judiciary without prejudice to the provisions of the Constitution;
"(4) Chairmen and members of Constitutional Commission, without prejudice to the provisions of the
Constitution; and

With the advent of the 1987 Constitution, the special court was retained as provided for in Section 4, Article XI
thereof.24 Aside from Executive Order Nos. 14 25 and 14-a,26 and R.A. 7080,27 which expanded the jurisdiction of the
Sandiganbayan, P.D. No. 1606 was further modified by R.A. No. 7975, 28 R.A. No. 8249,29 and just this year, R.A. No.
10660.30

"(5) All other national and local officials classified as Grade 27 and higher under the Compensation and
Position Classification Act of 1989.

For the purpose of this case, the relevant provision is Section 4 of R.A. No. 8249, which states: SEC. 4. Section 4 of the
same decree is hereby further amended to read as follows:

"B. Other offenses or felonies whether simple or complexed with other crimes committed by the public officials and
employees mentioned in subsection a of this section in relation to their office.

"SEC. 4. Jurisdiction. The Sandiganbayan shall exercise exclusive original jurisdiction in all cases involving:

"C. Civil and criminal cases filed pursuant to and in connection with Executive Order Nos. 1, 2, 14 and 14-A, issued in
1986.

"A. Violations of Republic Act No. 3019, as amended, otherwise known as the Anti-Graft and Corrupt Practices Act,
Republic Act No. 1379, and Chapter II, Section 2, Title VII, Book II of the Revised Penal Code, where one or more of
the accused are officials occupying the following positions in the government, whether in a permanent, acting or interim
capacity, at the time of the commission of the offense:
"(1) Officials of the executive branch occupying the positions of regional director and higher, otherwise classified as
Grade 27 and higher, of the Compensation and Position Classification Act of 1989 (Republic Act No. 6758),
specifically including:
"(a) Provincial governors, vice-governors, members of the sangguniang panlalawigan, and provincial
treasurers, assessors, engineers, and other provincial department heads;
"(b) City mayor, vice-mayors, members of the sangguniang panlungsod, city treasurers, assessors, engineers,
and other city department heads;
"(c) Officials of the diplomatic service occupying the position of consul and higher;
"(d) Philippine army and air force colonels, naval captains, and all officers of higher rank;
"(e) Officers of the Philippine National Police while occupying the position of provincial director and those
holding the rank of senior superintendent or higher;
"(f) City and provincial prosecutors and their assistants, and officials and prosecutors in the Office of the
Ombudsman and special prosecutor;
"(g) Presidents, directors or trustees, or managers of government-owned or controlled corporations, state
universities or educational institutions or foundations.
"(2) Members of Congress and officials thereof classified as Grade 27 and up under the Compensation and
Position Classification Act of 1989;

x x x"
Based on the afore-quoted, those that fall within the original jurisdiction of the Sandiganbayan are: (1) officials of the
executive branch with Salary Grade 27 or higher, and (2) officials specifically enumerated in Section 4 (A) (1) (a) to (g),
regardless of their salary grades.31 While the first part of Section 4 (A) covers only officials of the executive branch with
Salary Grade 27 and higher, its second part specifically includes other executive officials whose positions may not be of
Salary Grade 27 and higher but who are by express provision of law placed under the jurisdiction of the Sandiganbayan. 32
That the phrase "otherwise classified as Grade 27 and higher" qualifies "regional director and higher" is apparent from
the Sponsorship Speech of Senator Raul S. Roco on Senate Bill Nos. 1353and 844, which eventually became R.A. Nos.
7975 and 8249, respectively:
As proposed by the Committee, the Sandiganbayan shall exercise original jurisdiction over the cases assigned to it only
in instances where one or more of the principal accused are officials occupying the positions of regional director and
higher or are otherwise classified as Grade 27 and higher by the Compensation and Position Classification Act of 1989,
whether in a permanent, acting or interim capacity at the time of the commission of the offense. The jurisdiction,
therefore, refers to a certain grade upwards, which shall remain with the Sandiganbayan. 33 (Emphasis supplied)
To speed up trial in the Sandiganbayan, Republic Act No. 7975 was enacted for that Court to concentrate on the "larger
fish" and leave the "small fry" to the lower courts. This law became effective on May 6, 1995 and it provided a twopronged solution to the clogging of the dockets of that court, to wit:
It divested the Sandiganbayan of jurisdiction over public officials whose salary grades were at Grade "26" or lower,
devolving thereby these cases to the lower courts, and retaining the jurisdiction of the Sandiganbayan only over public
officials whose salary grades were at Grade "27" or higher and over other specific public officials holding important
positions in government regardless of salary grade; x x x34 (Emphasis supplied)
The legislative intent is to allow the Sandiganbayan to devote its time and expertise to big-time cases involving the socalled "big fishes" in the government rather than those accused who are of limited means who stand trial for "petty
crimes," the so-called "small fry," which, in turn, helps the court decongest its dockets. 35

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 13
Yet, those that are classified as Salary Grade 26 and below may still fall within the jurisdiction of the Sandiganbayan,
provided that they hold the positions enumerated by the law. 36 In this category, it is the position held, not the salary grade,
which determines the jurisdiction of the Sandiganbayan. 37 The specific inclusion constitutes an exception to the general
qualification relating to "officials of the executive branch occupying the positions of regional director and higher,
otherwise classified as Grade 27 and higher, of the Compensation and Position Classification Act of 1989." 38 As ruled in
Inding:
Following this disquisition, the paragraph of Section 4 which provides that if the accused is occupying a position lower
than SG 27, the proper trial court has jurisdiction, can only be properly interpreted as applying to those cases where the
principal accused is occupying a position lower than SG 27 and not among those specifically included in the enumeration
in Section 4 a. (1) (a) to (g). Stated otherwise, except for those officials specifically included in Section 4 a. (1) (a) to (g),
regardless of their salary grades, over whom the Sandiganbayan has jurisdiction, all other public officials below SG 27
shall be under the jurisdiction of the proper trial courts "where none of the principal accused are occupying positions
corresponding to SG 27 or higher." By this construction, the entire Section 4 is given effect. The cardinal rule, after all, in
statutory construction is that the particular words, clauses and phrases should not be studied as detached and isolated
expressions, but the whole and every part of the statute must be considered in fixing the meaning of any of its parts and
in order to produce a harmonious whole. And courts should adopt a construction that will give effect to every part of a
statute, if at all possible. Ut magis valeat quam pereat or that construction is to be sought which gives effect to the whole
of the statute its every word.39
Thus, to cite a few, We have held that a member of the Sangguniang Panlungsod, 40 a department manager of the
Philippine Health Insurance Corporation (Philhealth), 41 a student regent of the University of the Philippines,42 and a Head
of the Legal Department and Chief of the Documentation with corresponding ranks of Vice-Presidents and Assistant
Vice-President of the Armed Forces of the Philippines Retirement and Separation Benefits System (AFP-RSBS) 43 fall
within the jurisdiction of the Sandiganbayan.
Petitioner is not an executive official with Salary Grade 27 or higher. Neither does he hold any position particularly
enumerated in Section 4 (A) (1) (a) to (g). As he correctly argues, his case is, in fact, on all fours with
Cuyco.1avvphi1Therein, the accused was the Regional Director of the Land Transportation Office, Region IX,
Zamboanga City, but at the time of the commission of the crime in 1992, his position was classified as Director II with
Salary Grade 26.44 It was opined: Petitioner contends that at the time of the commission of the offense in 1992, he was
occupying the position of Director II, Salary Grade 26, hence, jurisdiction over the cases falls with the Regional Trial
Court.
We sustain petitioner's contention.
The Sandiganbayan has no jurisdiction over violations of Section 3(a) and (e), Republic Act No. 3019, as amended,
unless committed by public officials and employees occupying positions of regional director and higher with Salary
Grade "27" or higher, under the Compensation and Position Classification Act of 1989 (Republic Act No. 6758) in
relation to their office.
In ruling in favor of its jurisdiction, even though petitioner admittedly occupied the position of Director II with Salary
Grade "26" under the Compensation and Position Classification Act of 1989 (Republic Act No. 6758), the Sandiganbayan
incurred in serious error of jurisdiction, and acted with grave abuse of discretion amounting to lack of jurisdiction in
suspending petitioner from office, entitling petitioner to the reliefs prayed for.45

In the same way, a certification issued by the OIC Assistant Chief, Personnel Division of the BIR shows that, although
petitioner is a Regional Director of the BIR, his position is classified as Director II with Salary Grade 26. 46
There is no merit in the OSPs allegation that the petition was prematurely filed on the ground that respondent court has
not yet acquired jurisdiction over the person of petitioner. Records disclose that when a warrant of arrest was issued by
respondent court, petitioner voluntarily surrendered and posted a cash bond on September 17, 2009.Also, he was
arraigned on April 14, 2010,prior to the filing of the petition on April 30, 2010.
WHEREFORE, the foregoing considered, the instant petition for certiorari is GRANTED. The August 18, 2009
Resolution and February 8, 2010 Order of the Sandiganbayan Second Division, which denied petitioner's Motion to
Dismiss on the ground of lack of jurisdiction, are REVERSED AND SET ASIDE.
SO ORDERED.

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 14

EN BANC
G.R. No. 155001

January 21, 2004

DEMOSTHENES P. AGAN, JR., JOSEPH B. CATAHAN, JOSE MARI B. REUNILLA, MANUEL ANTONIO B.
BOE, MAMERTO S. CLARA, REUEL E. DIMALANTA, MORY V. DOMALAON, CONRADO G. DIMAANO,
LOLITA R. HIZON, REMEDIOS P. ADOLFO, BIENVENIDO C. HILARIO, MIASCOR WORKERS UNIONNATIONAL LABOR UNION (MWU-NLU), and PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION
(PALEA), petitioners,
vs.
PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., MANILA INTERNATIONAL AIRPORT
AUTHORITY, DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS and SECRETARY
LEANDRO M. MENDOZA, in his capacity as Head of the Department of Transportation and
Communications, respondents,
MIASCOR GROUNDHANDLING CORPORATION, DNATA-WINGS AVIATION SYSTEMS CORPORATION,
MACROASIA-EUREST SERVICES, INC., MACROASIA-MENZIES AIRPORT SERVICES CORPORATION,
MIASCOR CATERING SERVICES CORPORATION, MIASCOR AIRCRAFT MAINTENANCE
CORPORATION, and MIASCOR LOGISTICS CORPORATION, Petitioners-in-Intervention,
FLORESTE ALCONIS, GINA ALNAS, REY AMPOLOQUIO, ROSEMARIE ANG, EUGENE ARADA,
NENETTE BARREIRO, NOEL BARTOLOME, ALDRIN BASTADOR, ROLETTE DIVINE BERNARDO,
MINETTE BRAVO, KAREN BRECILLA, NIDA CAILAO, ERWIN CALAR, MARIFEL CONSTANTINO,
JANETTE CORDERO, ARNOLD FELICITAS, MARISSA GAYAGOY, ALEX GENERILLO, ELIZABETH
GRAY, ZOILO HERICO, JACQUELINE IGNACIO, THELMA INFANTE, JOEL JUMAO-AS, MARIETTA
LINCHOCO, ROLLY LORICO, FRANCIS AUGUSTO MACATOL, MICHAEL MALIGAT, DENNIS
MANALO, RAUL MANGALIMAN, JOEL MANLANGIT, CHARLIE MENDOZA, HAZNAH MENDOZA,
NICHOLS MORALES, ALLEN OLAO, CESAR ORTAL, MICHAEL ORTEGA, WAYNE PLAZA, JOSELITO
REYES, ROLANDO REYES, AILEEN SAPINA, RAMIL TAMAYO, PHILLIPS TAN, ANDREW UY, WILLIAM
VELASCO, EMILIO VELEZ, NOEMI YUPANO, MARY JANE ONG, RICHARD RAMIREZ, CHERYLE
MARIE ALFONSO, LYNDON BAUTISTA, MANUEL CABOCAN AND NEDY LAZO, Respondents-inIntervention,
NAGKAISANG MARALITA NG TAONG ASSOCIATION, INC., Respondents-in-Intervention,
x-------------------------x
G.R. No. 155547 January 21, 2004
SALACNIB F. BATERINA, CLAVEL A. MARTINEZ and CONSTANTINO G. JARAULA, petitioners,
vs.
PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., MANILA INTERNATIONAL AIRPORT
AUTHORITY, DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS, DEPARTMENT OF
PUBLIC WORKS AND HIGHWAYS, SECRETARY LEANDRO M. MENDOZA, in his capacity as Head of the

Department of Transportation and Communications, and SECRETARY SIMEON A. DATUMANONG, in his

capacity as Head of the Department of Public Works and Highways, respondents, JACINTO V. PARAS, RAFAEL
P. NANTES, EDUARDO C. ZIALCITA, WILLY BUYSON VILLARAMA, PROSPERO C. NOGRALES,
PROSPERO A. PICHAY, JR., HARLIN CAST ABAYON, and BENASING O. MACARANBON, RespondentsIntervenors,
FLORESTE ALCONIS, GINA ALNAS, REY AMPOLOQUIO, ROSEMARIE ANG, EUGENE ARADA,
NENETTE BARREIRO, NOEL BARTOLOME, ALDRIN BASTADOR, ROLETTE DIVINE BERNARDO,
MINETTE BRAVO, KAREN BRECILLA, NIDA CAILAO, ERWIN CALAR, MARIFEL CONSTANTINO,
JANETTE CORDERO, ARNOLD FELICITAS, MARISSA GAYAGOY, ALEX GENERILLO, ELIZABETH
GRAY, ZOILO HERICO, JACQUELINE IGNACIO, THELMA INFANTE, JOEL JUMAO-AS, MARIETTA
LINCHOCO, ROLLY LORICO, FRANCIS AUGUSTO MACATOL, MICHAEL MALIGAT, DENNIS
MANALO, RAUL MANGALIMAN, JOEL MANLANGIT, CHARLIE MENDOZA, HAZNAH MENDOZA,
NICHOLS MORALES, ALLEN OLAO, CESAR ORTAL, MICHAEL ORTEGA, WAYNE PLAZA, JOSELITO
REYES, ROLANDO REYES, AILEEN SAPINA, RAMIL TAMAYO, PHILLIPS TAN, ANDREW UY, WILLIAM
VELASCO, EMILIO VELEZ, NOEMI YUPANO, MARY JANE ONG, RICHARD RAMIREZ, CHERYLE
MARIE ALFONSO, LYNDON BAUTISTA, MANUEL CABOCAN AND NEDY LAZO, Respondents-inIntervention,
NAGKAISANG MARALITA NG TAONG ASSOCIATION, INC., Respondents-in-Intervention,
x-------------------------x
G.R. No. 155661 January 21, 2004
CEFERINO C. LOPEZ, RAMON M. SALES, ALFREDO B. VALENCIA, MA. TERESA V. GAERLAN,
LEONARDO DE LA ROSA, DINA C. DE LEON, VIRGIE CATAMIN, RONALD SCHLOBOM, ANGELITO
SANTOS, MA. LUISA M. PALCON and SAMAHANG MANGGAGAWA SA PALIPARAN NG PILIPINAS
(SMPP), petitioners,
vs.
PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., MANILA INTERNATIONAL AIRPORT
AUTHORITY, DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS, SECRETARY
LEANDRO M. MENDOZA, in his capacity as Head of the Department of Transportation and
Communications, respondents,
FLORESTE ALCONIS, GINA ALNAS, REY AMPOLOQUIO, ROSEMARIE ANG, EUGENE ARADA,
NENETTE BARREIRO, NOEL BARTOLOME, ALDRIN BASTADOR, ROLETTE DIVINE BERNARDO,
MINETTE BRAVO, KAREN BRECILLA, NIDA CAILAO, ERWIN CALAR, MARIFEL CONSTANTINO,
JANETTE CORDERO, ARNOLD FELICITAS, MARISSA GAYAGOY, ALEX GENERILLO, ELIZABETH
GRAY, ZOILO HERICO, JACQUELINE IGNACIO, THELMA INFANTE, JOEL JUMAO-AS, MARIETTA
LINCHOCO, ROLLY LORICO, FRANCIS AUGUSTO MACATOL, MICHAEL MALIGAT, DENNIS
MANALO, RAUL MANGALIMAN, JOEL MANLANGIT, CHARLIE MENDOZA, HAZNAH MENDOZA,
NICHOLS MORALES, ALLEN OLAO, CESAR ORTAL, MICHAEL ORTEGA, WAYNE PLAZA, JOSELITO
REYES, ROLANDO REYES, AILEEN SAPINA, RAMIL TAMAYO, PHILLIPS TAN, ANDREW UY, WILLIAM
VELASCO, EMILIO VELEZ, NOEMI YUPANO, MARY JANE ONG, RICHARD RAMIREZ, CHERYLE

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 15
MARIE ALFONSO, LYNDON BAUTISTA, MANUEL CABOCAN AND NEDY LAZO, Respondents-inIntervention,
NAGKAISANG MARALITA NG TAONG ASSOCIATION, INC., Respondents-in-Intervention.
RESOLUTION
PUNO, J.:
Before this Court are the separate Motions for Reconsideration filed by respondent Philippine International Air Terminals
Co., Inc. (PIATCO), respondents-intervenors Jacinto V. Paras, Rafael P. Nantes, Eduardo C. Zialcita, Willie Buyson
Villarama, Prospero C. Nograles, Prospero A. Pichay, Jr., Harlin Cast Abayon and Benasing O. Macaranbon, all members
of the House of Representatives (Respondent Congressmen), 1 respondents-intervenors who are employees of PIATCO
and other workers of the Ninoy Aquino International Airport International Passenger Terminal III (NAIA IPT III)
(PIATCO Employees)2 and respondents-intervenors Nagkaisang Maralita ng Taong Association, Inc., (NMTAI) 3 of the
Decision of this Court dated May 5, 2003 declaring the contracts for the NAIA IPT III project null and void.
Briefly, the proceedings. On October 5, 1994, Asias Emerging Dragon Corp. (AEDC) submitted an unsolicited proposal
to the Philippine Government through the Department of Transportation and Communication (DOTC) and Manila
International Airport Authority (MIAA) for the construction and development of the NAIA IPT III under a build-operateand-transfer arrangement pursuant to R.A. No. 6957, as amended by R.A. No. 7718 (BOT Law). 4 In accordance with the
BOT Law and its Implementing Rules and Regulations (Implementing Rules), the DOTC/MIAA invited the public for
submission of competitive and comparative proposals to the unsolicited proposal of AEDC. On September 20, 1996 a
consortium composed of the Peoples Air Cargo and Warehousing Co., Inc. (Paircargo), Phil. Air and Grounds Services,
Inc. (PAGS) and Security Bank Corp. (Security Bank) (collectively, Paircargo Consortium), submitted their competitive
proposal to the Prequalification Bids and Awards Committee (PBAC).
After finding that the Paircargo Consortium submitted a bid superior to the unsolicited proposal of AEDC and after
failure by AEDC to match the said bid, the DOTC issued the notice of award for the NAIA IPT III project to the
Paircargo Consortium, which later organized into herein respondent PIATCO. Hence, on July 12, 1997, the Government,
through then DOTC Secretary Arturo T. Enrile, and PIATCO, through its President, Henry T. Go, signed the "Concession
Agreement for the Build-Operate-and-Transfer Arrangement of the Ninoy Aquino International Airport Passenger
Terminal III" (1997 Concession Agreement). On November 26, 1998, the 1997 Concession Agreement was superseded
by the Amended and Restated Concession Agreement (ARCA) containing certain revisions and modifications from the
original contract. A series of supplemental agreements was also entered into by the Government and PIATCO. The First
Supplement was signed on August 27, 1999, the Second Supplement on September 4, 2000, and the Third Supplement on
June 22, 2001 (collectively, Supplements) (the 1997 Concession Agreement, ARCA and the Supplements collectively
referred to as the PIATCO Contracts).
On September 17, 2002, various petitions were filed before this Court to annul the 1997 Concession Agreement, the
ARCA and the Supplements and to prohibit the public respondents DOTC and MIAA from implementing them.
In a decision dated May 5, 2003, this Court granted the said petitions and declared the 1997 Concession Agreement, the
ARCA and the Supplements null and void.

Respondent PIATCO, respondent-Congressmen and respondents-intervenors now seek the reversal of the May 5, 2003
decision and pray that the petitions be dismissed. In the alternative, PIATCO prays that the Court should not strike down
the entire 1997 Concession Agreement, the ARCA and its supplements in light of their separability clause. RespondentCongressmen and NMTAI also pray that in the alternative, the cases at bar should be referred to arbitration pursuant to
the provisions of the ARCA. PIATCO-Employees pray that the petitions be dismissed and remanded to the trial courts for
trial on the merits or in the alternative that the 1997 Concession Agreement, the ARCA and the Supplements be declared
valid and binding.
I
Procedural Matters
a. Lack of Jurisdiction
Private respondents and respondents-intervenors reiterate a number of procedural issues which they insist deprived this
Court of jurisdiction to hear and decide the instant cases on its merits. They continue to claim that the cases at bar raise
factual questions which this Court is ill-equipped to resolve, hence, they must be remanded to the trial court for reception
of evidence. Further, they allege that although designated as petitions for certiorari and prohibition, the cases at bar are
actually actions for nullity of contracts over which the trial courts have exclusive jurisdiction. Even assuming that the
cases at bar are special civil actions for certiorari and prohibition, they contend that the principle of hierarchy of courts
precludes this Court from taking primary jurisdiction over them.
We are not persuaded.
There is a question of fact when doubt or difference arises as to the truth or falsity of the facts alleged. 5 Even a cursory
reading of the cases at bar will show that the Court decided them by interpreting and applying the Constitution, the BOT
Law, its Implementing Rules and other relevant legal principles on the basis of clearly undisputed facts. All
the operative facts were settled, hence, there is no need for a trial type determination of their truth or falsity by a trial
court.
We reject the unyielding insistence of PIATCO Employees that the following factual issues are critical and beyond the
capability of this Court to resolve, viz: (a) whether the National Economic Development Authority- Investment
Coordinating Committee (NEDA-ICC) approved the Supplements; (b) whether the First Supplement created ten (10)
new financial obligations on the part of the government; and (c) whether the 1997 Concession Agreement departed from
the draft Concession Agreement contained in the Bid Documents. 6
The factual issue of whether the NEDA-ICC approved the Supplements is hardly relevant. It is clear in our Decision that
the PIATCO contracts were invalidated on other and more substantial grounds. It did not rely on the presence or absence
of NEDA-ICC approval of the Supplements. On the other hand, the last two issues do not involve disputed facts. Rather,
they involve contractual provisions which are clear and categorical and need only to be interpreted. The
interpretation of contracts and the determination of whether their provisions violate our laws or contravene any
public policy is a legal issue which this Court may properly pass upon.
Respondents corollary contention that this Court violated the hierarchy of courts when it entertained the cases at bar
must also fail. The rule on hierarchy of courts in cases falling within the concurrent jurisdiction of the trial courts and
appellate courts generally applies to cases involving warring factual allegations. For this reason, litigants are required to

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 16
repair to the trial courts at the first instance to determine the truth or falsity of these contending allegations on the basis of
the evidence of the parties. Cases which depend on disputed facts for decision cannot be brought immediately before
appellate courts as they are not triers of facts.
It goes without saying that when cases brought before the appellate courts do not involve factual but legal questions, a
strict application of the rule of hierarchy of courts is not necessary. As the cases at bar merely concern the construction of
the Constitution, the interpretation of the BOT Law and its Implementing Rules and Regulations on undisputed
contractual provisions and government actions, and as the cases concern public interest, this Court resolved to take
primary jurisdiction over them. This choice of action follows the consistent stance of this Court to settle any controversy
with a high public interest component in a single proceeding and to leave no root or branch that could bear the seeds of
future litigation. The suggested remand of the cases at bar to the trial court will stray away from this policy. 7
b. Legal Standing
Respondent PIATCO stands pat with its argument that petitioners lack legal personality to file the cases at bar as they are
not real parties in interest who are bound principally or subsidiarily to the PIATCO Contracts. Further, respondent
PIATCO contends that petitioners failed to show any legally demandable or enforceable right to justify their standing to
file the cases at bar.
These arguments are not difficult to deflect. The determination of whether a person may institute an action or become a
party to a suit brings to fore the concepts of real party in interest, capacity to sue and standing to sue. To the legally
discerning, these three concepts are different although commonly directed towards ensuring that only certain parties can
maintain an action.8 As defined in the Rules of Court, a real party in interest is the party who stands to be benefited or
injured by the judgment in the suit or the party entitled to the avails of the suit. 9Capacity to sue deals with a situation
where a person who may have a cause of action is disqualified from bringing a suit under applicable law or is
incompetent to bring a suit or is under some legal disability that would prevent him from maintaining an action unless
represented by a guardian ad litem. Legal standing is relevant in the realm of public law. In certain instances, courts have
allowed private parties to institute actions challenging the validity of governmental action for violation of private rights
or constitutional principles.10 In these cases, courts apply the doctrine of legal standing by determining whether the party
has a direct and personal interest in the controversy and whether such party has sustained or is in imminent
danger of sustaining an injury as a result of the act complained of, a standard which is distinct from the concept of
real party in interest. 11Measured by this yardstick, the application of the doctrine on legal standing necessarily involves a
preliminary consideration of the merits of the case and is not purely a procedural issue. 12
Considering the nature of the controversy and the issues raised in the cases at bar, this Court affirms its ruling that the
petitioners have the requisite legal standing. The petitioners in G.R. Nos. 155001 and 155661 are employees of service
providers operating at the existing international airports and employees of MIAA while petitioners-intervenors are
service providers with existing contracts with MIAA and they will all sustain direct injury upon the implementation of
the PIATCO Contracts. The 1997 Concession Agreement and the ARCA both provide that upon the commencement of
operations at the NAIA IPT III, NAIA Passenger Terminals I and II will cease to be used as international passenger
terminals.13 Further, the ARCA provides:
(d) For the purpose of an orderly transition, MIAA shall not renew any expired concession agreement relative
to any service or operation currently being undertaken at the Ninoy Aquino International Airport Passenger
Terminal I, or extend any concession agreement which may expire subsequent hereto, except to the extent that
the continuation of the existing services and operations shall lapse on or before the In-Service Date. 14

Beyond iota of doubt, the implementation of the PIATCO Contracts, which the petitioners and petitioners-intervenors
denounce as unconstitutional and illegal, would deprive them of their sources of livelihood. Under settled jurisprudence,
one's employment, profession, trade, or calling is a property right and is protected from wrongful interference. 15 It is also
self evident that the petitioning service providers stand in imminent danger of losing legitimate business investments in
the event the PIATCO Contracts are upheld.
Over and above all these, constitutional and other legal issues with far-reaching economic and social implications are
embedded in the cases at bar, hence, this Court liberally granted legal standing to the petitioning members of the House
of Representatives. First, at stake is the build-operate-andtransfer contract of the countrys premier international airport
with a projected capacity of 10 million passengers a year. Second, the huge amount of investment to complete the project
is estimated to be P13,000,000,000.00. Third, the primary issues posed in the cases at bar demand a discussion and
interpretation of the Constitution, the BOT Law and its implementing rules which have not been passed upon by this
Court in previous cases. They can chart the future inflow of investment under the BOT Law.
Before writing finis to the issue of legal standing, the Court notes the bid of new parties to participate in the cases at bar
as respondents-intervenors, namely, (1) the PIATCO Employees and (2) NMTAI (collectively, the New RespondentsIntervenors). After the Courts Decision, the New Respondents-Intervenors filed separate Motions for ReconsiderationIn-Intervention alleging prejudice and direct injury. PIATCO employees claim that "they have a direct and personal
interest [in the controversy]... since they stand to lose their jobs should the governments contract with PIATCO be
declared null and void."16 NMTAI, on the other hand, represents itself as a corporation composed of responsible taxpaying Filipino citizens with the objective of "protecting and sustaining the rights of its members to civil liberties, decent
livelihood, opportunities for social advancement, and to a good, conscientious and honest government." 17
The Rules of Court govern the time of filing a Motion to Intervene. Section 2, Rule 19 provides that a Motion to
Intervene should be filed "before rendition of judgment...." The New Respondents-Intervenors filed their separate
motions after a decision has been promulgated in the present cases. They have not offered any worthy explanation to
justify their late intervention. Consequently, their Motions for Reconsideration-In-Intervention are denied for the rules
cannot be relaxed to await litigants who sleep on their rights. In any event, a sideglance at these late motions will show
that they hoist no novel arguments.
c. Failure to Implead an Indispensable Party
PIATCO next contends that petitioners should have impleaded the Republic of the Philippines as an indispensable party.
It alleges that petitioners sued the DOTC, MIAA and the DPWH in their own capacities or as implementors of the
PIATCO Contracts and not as a contract party or as representatives of the Government of the Republic of the Philippines.
It then leapfrogs to the conclusion that the "absence of an indispensable party renders ineffectual all the proceedings
subsequent to the filing of the complaint including the judgment." 18
PIATCOs allegations are inaccurate. The petitions clearly bear out that public respondents DOTC and MIAA were
impleaded as parties to the PIATCO Contracts and not merely as their implementors. The separate petitions filed by
the MIAA employees19 and members of the House of Representatives 20 alleged that "public respondents are impleaded
herein because they either executed the PIATCO Contracts or are undertaking acts which are related to the PIATCO
Contracts. They are interested and indispensable parties to this Petition." 21 Thus, public respondents DOTC and MIAA
were impleaded as parties to the case for having executed the contracts.

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More importantly, it is also too late in the day for PIATCO to raise this issue. If PIATCO seriously views the noninclusion of the Republic of the Philippines as an indispensable party as fatal to the petitions at bar, it should have raised
the issue at the onset of the proceedings as a ground to dismiss. PIATCO cannot litigate issues on a piecemeal basis,
otherwise, litigations shall be like a shore that knows no end. In any event, the Solicitor General, the legal counsel of the
Republic, appeared in the cases at bar in representation of the interest of the government.
II
Pre-qualification of PIATCO
The Implementing Rules provide for the unyielding standards the PBAC should apply to determine the financial
capability of a bidder for pre-qualification purposes: (i) proof of the ability of the project proponent and/or the
consortium to provide a minimum amount of equity to the project and (ii) a letter testimonial from reputable banks
attesting that the project proponent and/or members of the consortium are banking with them, that they are in
good financial standing, and that they have adequate resources.22 The evident intent of these standards is to protect
the integrity and insure the viability of the project by seeing to it that the proponent has the financial capability to carry it
out. As a further measure to achieve this intent, it maintains a certain debt-to-equity ratio for the project.

In the cases at bar, after applying the investment ceilings provided under the General Banking Act and considering the
maximum amounts that each member of the consortium may validly invest in the project, it is daylight clear that the
Paircargo Consortium, at the time of pre-qualification, had a net worth equivalent to only 6.08% of the total estimated
project cost.25 By any reckoning, a showing by a bidder that at the time of pre-qualification its maximum funds available
for investment amount to only 6.08% of the project cost is insufficient to satisfy the requirement prescribed by the
Implementing Rules that the project proponent must have the ability to provide at least 30% of the total estimated project
cost. In peso and centavo terms, at the time of pre-qualification, the Paircargo Consortium had maximum funds available
for investment to the NAIA IPT III Project only in the amount of P558,384,871.55, when it had to show that it had the
ability to provide at least P2,755,095,000.00. The huge disparity cannot be dismissed as of de minimis importance
considering the high public interest at stake in the project.
PIATCO nimbly tries to sidestep its failure by alleging that it submitted not only audited financial statements but also
testimonial letters from reputable banks attesting to the good financial standing of the Paircargo Consortium. It contends
that in adjudging whether the Paircargo Consortium is a pre-qualified bidder, the PBAC should have considered not only
its financial statements but other factors showing its financial capability.
Anent this argument, the guidelines provided in the Bid Documents are instructive:

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

3.3.4 FINANCING AND FINANCIAL PREQUALIFICATIONS REQUIREMENTS

Minimum Amount of Equity

The minimum amount of equity to which the proponents financial capability will be based shall be thirty
percent (30%) of the project cost instead of the twenty percent (20%) specified in Section 3.6.4 of the
Bid Documents. This is to correlate with the required debt-to-equity ratio of 70:30 in Section 2.01a of the
draft concession agreement. The debt portion of the project financing should not exceed 70% of the actual
project cost.23
In relation thereto, section 2.01 (a) of the ARCA provides:
Section 2.01 Project Scope.
The scope of the project shall include:
(a) Financing the project at an actual Project cost of not less than Three Hundred Fifty Million United States
Dollars (US$350,000,000.00) while maintaining a debt-to-equity ratio of 70:30, provided that if the actual
Project costs should exceed the aforesaid amount, Concessionaire shall ensure that the debt-to-equity ratio is
maintained;24
Under the debt-to-equity restriction, a bidder may only seek financing of the NAIA IPT III Project up to 70% of the
project cost. Thirty percent (30%) of the cost must come in the form of equity or investment by the bidder itself. It cannot
be overly emphasized that the rules require a minimum amount of equity to ensure that a bidder is not merely an operator
or implementor of the project but an investor with a substantial interest in its success. The minimum equity
requirement also guarantees the Philippine government and the general public, who are the ultimate beneficiaries of the
project, that a bidder will not be indifferent to the completion of the project. The discontinuance of the project will
irreparably damage public interest more than private interest.

Each member of the proponent entity is to provide evidence of networth in cash and assets representing the
proportionate share in the proponent entity. Audited financial statements for the past five (5) years as a
company for each member are to be provided.
Project Loan Financing
Testimonial letters from reputable banks attesting that each of the members of the ownership entity are
banking with them, in good financial standing and having adequate resources are to be provided. 26
It is beyond refutation that Paircargo Consortium failed to prove its ability to provide the amount of at least
P2,755,095,000.00, or 30% of the estimated project cost. Its submission of testimonial letters attesting to its good
financial standing will not cure this failure. At best, the said letters merely establish its credit worthiness or its ability to
obtain loans to finance the project. They do not, however, prove compliance with the aforesaid requirement of minimum
amount of equity in relation to the prescribed debt-to-equity ratio. This equity cannot be satisfied through possible loans.
In sum, we again hold that given the glaring gap between the net worth of Paircargo and PAGS combined with the
amount of maximum funds that Security Bank may invest by equity in a non-allied undertaking, Paircargo Consortium,
at the time of pre-qualification, failed to show that it had the ability to provide 30% of the project cost and necessarily, its
financial capability for the project cannot pass muster.
III
Concession Agreement

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

....

Respondents insist that there were no substantial or material amendments in the 1997 Concession Agreement as to the
technical aspects of the project, i.e., engineering design, technical soundness, operational and maintenance methods and
procedures of the project or the technical proposal of PIATCO. Further, they maintain that there was no modification of
the financial features of the project, i.e., minimum project cost, debt-to-equity ratio, the operations and maintenance
budget, the schedule and amount of annual guaranteed payments, or the financial proposal of PIATCO. A discussion of
some of these changes to determine whether they altered the terms and conditions upon which the bids were made is
again in order.

(f) porterage fees;

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

PIATCO clings to the contention that the removal of the groundhandling fees, airline office rentals and porterage fees
from the category of fees subject to MIAA regulation in the 1997 Concession Agreement does not constitute a substantial
amendment as these fees are not really public utility fees. In other words, PIATCO justifies the re-classification under the
1997 Concession Agreement on the ground that these fees are non-public utility revenues.
We disagree. The removal of groundhandling fees, airline office rentals and porterage fees from the category of "Public
Utility Revenues" under the draft Concession Agreement and its re-classification to "Non-Public Utility Revenues" under
the 1997 Concession Agreement is significant and has far reaching consequence. The 1997 Concession Agreement
provides that with respect to Non-Public Utility Revenues, which include groundhandling fees, airline office rentals and
porterage fees,27 "[PIATCO] may make any adjustments it deems appropriatewithout need for the consent of GRP or
any government agency."28 In contrast, the draft Concession Agreement specifies these fees as part of Public Utility
Revenues and can be adjusted "only once every two years and in accordance with the Parametric Formula" and "the
adjustments shall be made effective only after the written express approval of the MIAA."29 The Bid Documents
themselves clearly provide:
4.2.3 Mechanism for Adjustment of Fees and Charges
4.2.3.1 Periodic Adjustment in Fees and Charges
Adjustments in the fees and charges enumerated hereunder, whether or not falling within the
purview of public utility revenues, shall be allowed only once every two years in accordance with
the parametric formula attached hereto as Annex 4.2f. Provided that the adjustments shall be made
effective only after the written express approval of MIAA. Provided, further, that MIAAs approval,
shall be contingent only on conformity of the adjustments to the said parametric formula.
The fees and charges to be regulated in the above manner shall consist of the following:

c) groundhandling fees;
d) rentals on airline offices;
....

. . . .30
The plain purpose in re-classifying groundhandling fees, airline office rentals and porterage fees as non-public utility
fees is to remove them from regulation by the MIAA. In excluding these fees from government regulation, the danger
to public interest cannot be downplayed.
We are not impressed by the effort of PIATCO to depress this prejudice to public interest by its contention that in the
1997 Concession Agreement governing Non-Public Utility Revenues, it is provided that "[PIATCO] shall at all times
be judicious in fixing fees and charges constituting Non-Public Utility Revenues in order to ensure that End Users are
not unreasonably deprived of services." 31 PIATCO then peddles the proposition that the said provision confers upon
MIAA "full regulatory powers to ensure that PIATCO is charging non-public utility revenues atjudicious rates."32 To the
trained eye, the argument will not fly for it is obviously non sequitur. Fairly read, it is PIATCO that wields the power to
determine the judiciousness of the said fees and charges. In the draft Concession Agreement the power was expressly
lodged with the MIAA and any adjustment can only be done once every two years. The changes are not insignificant
specks as interpreted by PIATCO.
PIATCO further argues that there is no substantial change in the 1997 Concession Agreement with respect to fees and
charges PIATCO is allowed to impose which are not covered by Administrative Order No. 1, Series of 1993 33as the
"relevant provision of the 1997 Concession Agreement is practically identical with the draft Concession Agreement." 34
We are not persuaded. Under the draft Concession Agreement, PIATCO may impose fees and charges other than those
fees and charges previously imposed or collected at the Ninoy Aquino International Airport Passenger Terminal I, subject
to the written approval of MIAA.35 Further, the draft Concession Agreement provides that MIAAreserves the right to
regulate these new fees and charges if in its judgment the users of the airport shall be deprived of a free option for the
services they cover.36 In contrast, under the 1997 Concession Agreement, the MIAA merely retained the right to
approve any imposition of new fees and charges which were not previously collected at the Ninoy Aquino International
Airport Passenger Terminal I. The agreement did not contain an equivalent provision allowing MIAA to reserve the
right to regulate the adjustments of these new fees and charges. 37 PIATCO justifies the amendment by arguing that
MIAA can establish terms before approval of new fees and charges, inclusive of the mode for their adjustment.
PIATCOs stance is again a strained one. There would have been no need for an amendment if there were no change in
the power to regulate on the part of MIAA. The deletion of MIAAs reservation of its right to regulate the price
adjustments of new fees and charges can have no other purpose but to dilute the extent of MIAAs regulation in the
collection of these fees. Again, the amendment diminished the authority of MIAA to protect the public interest in case of
abuse by PIATCO.

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b. Assumption by the Government of the liabilities of PIATCO in the event of the latters default
PIATCO posits the thesis that the new provisions in the 1997 Concession Agreement in case of default by PIATCO on its
loans were merely meant to prescribe and limit the rights of PIATCOs creditors with regard to the NAIA Terminal III.
PIATCO alleges that Section 4.04 of the 1997 Concession Agreement simply provides that PIATCOs creditors have no
right to foreclose the NAIA Terminal III.
We cannot concur. The pertinent provisions of the 1997 Concession Agreement state:
Section 4.04 Assignment.
....
(b) In the event Concessionaire should default in the payment of an Attendant Liability, and the default has
resulted in the acceleration of the payment due date of the Attendant Liability prior to its stated date of
maturity, the Unpaid Creditors and Concessionaire shall immediately inform GRP in writing of such default.
GRP shall, within one hundred eighty (180) Days from receipt of the joint written notice of the Unpaid
Creditors and Concessionaire, either (i) take over the Development Facility and assume the Attendant
Liabilities, or (ii) allow the Unpaid Creditors, if qualified, to be substituted as concessionaire and operator of
the Development Facility in accordance with the terms and conditions hereof, or designate a qualified operator
acceptable to GRP to operate the Development Facility, likewise under the terms and conditions of this
Agreement; Provided that if at the end of the 180-day period GRP shall not have served the Unpaid Creditors
and Concessionaire written notice of its choice, GRP shall be deemed to have elected to take over the
Development Facility with the concomitant assumption of Attendant Liabilities.
(c) If GRP should, by written notice, allow the Unpaid Creditors to be substituted as concessionaire, the latter
shall form and organize a concession company qualified to take over the operation of the Development
Facility. If the concession company should elect to designate an operator for the Development Facility, the
concession company shall in good faith identify and designate a qualified operator acceptable to GRP within
one hundred eighty (180) days from receipt of GRPs written notice. If the concession company, acting in good
faith and with due diligence, is unable to designate a qualified operator within the aforesaid period, then GRP
shall at the end of the 180-day period take over the Development Facility and assume Attendant Liabilities.
A plain reading of the above provision shows that it spells out in limpid language the obligation of government in case of
default by PIATCO on its loans. There can be no blinking from the fact that in case of PIATCOs default, the government
will assume PIATCOs Attendant Liabilities as defined in the 1997 Concession Agreement. 38 This obligation is not found
in the draft Concession Agreement and the change runs roughshod to the spirit and policy of the BOT Law which was
crafted precisely to prevent government from incurring financial risk.
In any event, PIATCO pleads that the entire agreement should not be struck down as the 1997 Concession Agreement
contains a separability clause.
The plea is bereft of merit. The contracts at bar which made a mockery of the bidding process cannot be upheld and must
be annulled in their entirety for violating law and public policy. As demonstrated, the contracts were substantially
amended after their award to the successful bidder on terms more beneficial to PIATCO and prejudicial to public interest.

If this flawed process would be allowed, public bidding will cease to be competitive and worse, government would not
be favored with the best bid. Bidders will no longer bid on the basis of the prescribed terms and conditions in the bid
documents but will formulate their bid in anticipation of the execution of a future contract containing new and better
terms and conditions that were not previously available at the time of the bidding. Such a public bidding will not inure to
the public good. The resulting contracts cannot be given half a life but must be struck down as totally lawless.
IV.
Direct Government Guarantee
The respondents further contend that the PIATCO Contracts do not contain direct government guarantee provisions. They
assert that section 4.04 of the ARCA, which superseded sections 4.04(b) and (c), Article IV of the 1997 Concession
Agreement, is but a "clarification and explanation" 39 of the securities allowed in the bid documents. They allege that
these provisions merely provide for "compensation to PIATCO" 40 in case of a government buy-out or takeover of NAIA
IPT III. The respondents, particularly respondent PIATCO, also maintain that the guarantee contained in the contracts, if
any, is an indirect guarantee allowed under the BOT Law, as amended. 41
We do not agree. Section 4.04(c), Article IV 42 of the ARCA should be read in conjunction with section 1.06, Article I, 43 in
the same manner that sections 4.04(b) and (c), Article IV of the 1997 Concession Agreement should be related to Article
1.06 of the same contract. Section 1.06, Article I of the ARCA and its counterpart provision in the 1997 Concession
Agreement define in no uncertain terms the meaning of "attendant liabilities." They tell us of the amounts that the
Government has to pay in the event respondent PIATCO defaults in its loan payments to its Senior Lenders and no
qualified transferee or nominee is chosen by the Senior Lenders or is willing to take over from respondent PIATCO.
A reasonable reading of all these relevant provisions would reveal that the ARCA made the Government liable to pay "all
amounts ... from time to time owed or which may become owing by Concessionaire [PIATCO] to Senior Lenders or
any other persons or entities who have provided, loaned, or advanced funds or provided financial facilities to
Concessionaire [PIATCO] for the Project [NAIA Terminal 3]." 44 These amounts include "without limitation, all
principal, interest, associated fees, charges, reimbursements, and other related expenses... whether payable at
maturity, by acceleration or otherwise."45 They further include amounts owed by respondent PIATCO to its "professional
consultants and advisers, suppliers, contractors and sub-contractors" as well as "fees, charges and expenses of any agents
or trustees" of the Senior Lenders or any other persons or entities who have provided loans or financial facilities to
respondent PIATCO in relation to NAIA IPT III. 46 The counterpart provision in the 1997 Concession Agreement
specifying the attendant liabilities that the Government would be obligated to pay should PIATCO default in its loan
obligations is equally onerous to the Government as those contained in the ARCA. According to the 1997 Concession
Agreement, in the event the Government is forced to prematurely take over NAIA IPT III as a result of respondent
PIATCOs default in the payment of its loan obligations to its Senior Lenders, it would be liable to pay the following
amounts as "attendant liabilities":
Section 1.06. Attendant Liabilities
Attendant Liabilities refer to all amounts recorded and from time to time outstanding in the books of the
Concessionaire as owing to Unpaid Creditors who have provided, loaned or advanced funds actually used
for the Project, including all interests, penalties, associated fees, charges, surcharges, indemnities,
reimbursements and other related expenses, and further including amounts owed by Concessionaire to its
suppliers, contractors and sub-contractors. 47

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These provisions reject respondents contention that what the Government is obligated to pay, in the event that
respondent PIATCO defaults in the payment of its loans, is merely termination payment or just compensation for its
takeover of NAIA IPT III. It is clear from said section 1.06 that what the Government would pay is the sum total of all
the debts, including all interest, fees and charges, that respondent PIATCO incurred in pursuance of the NAIA IPT III
Project. This reading is consistent with section 4.04 of the ARCA itself which states that the Government "shall make a
termination payment to Concessionaire [PIATCO] equal to the Appraised Value (as hereinafter defined) of the
Development Facility [NAIA Terminal III] or the sum of the Attendant Liabilities, if greater." For sure, respondent
PIATCO will not receive any amount less than sufficient to cover its debts, regardless of whether or not the value
of NAIA IPT III, at the time of its turn over to the Government, may actually be less than the amount of
PIATCOs debts. The scheme is a form of direct government guarantee for it is undeniable that it leaves the government
no option but to pay the "attendant liabilities" in the event that the Senior Lenders are unable or unwilling to appoint a
qualified nominee or transferee as a result of PIATCOs default in the payment of its Senior Loans. As we stressed in our
Decision, this Court cannot depart from the legal maxim that "those that cannot be done directly cannot be done
indirectly."
This is not to hold, however, that indirect government guarantee is not allowed under the BOT Law, as amended. The
intention to permit indirect government guarantee is evident from the Senate deliberations on the amendments to the
BOT Law. The idea is to allow for reasonable government undertakings, such as to authorize the project proponent to
undertake related ventures within the project area, in order to encourage private sector participation in development
projects.48 An example cited by then Senator Gloria Macapagal-Arroyo, one of the sponsors of R.A. No. 7718, is the
Mandaluyong public market which was built under the Build-and-Transfer ("BT") scheme wherein instead of the
government paying for the transfer, the project proponent was allowed to operate the upper floors of the structure as a
commercial mall in order to recoup their investments. 49 It was repeatedly stressed in the deliberations that in allowing
indirect government guarantee, the law seeks to encourage both the government and the private sector to formulate
reasonable and innovative government undertakings in pursuance of BOT projects. In no way, however, can the
government be made liable for the debts of the project proponent as this would be tantamount to a direct government
guarantee which is prohibited by the law. Such liability would defeat the very purpose of the BOT Law which is to
encourage the use of private sector resources in the construction, maintenance and/or operation of development projects
with no, or at least minimal, capital outlay on the part of the government.
The respondents again urge that should this Court affirm its ruling that the PIATCO Contracts contain direct government
guarantee provisions, the whole contract should not be nullified. They rely on the separability clause in the PIATCO
Contracts.
We are not persuaded.
The BOT Law and its implementing rules provide that there are three (3) essential requisites for an unsolicited proposal
to be accepted: (1) the project involves a new concept in technology and/or is not part of the list of priority projects, (2)
no direct government guarantee, subsidy or equity is required, and (3) the government agency or local government
unit has invited by publication other interested parties to a public bidding and conducted the same. 50 The failure to fulfill
any of the requisites will result in the denial of the proposal. Indeed, it is further provided that a direct government
guarantee, subsidy or equity provision will "necessarily disqualify a proposal from being treated and accepted as an
unsolicited proposal."51 In fine, the mere inclusion of a direct government guarantee in an unsolicited proposal is fatal to
the proposal. There is more reason to invalidate a contract if a direct government guarantee provision is inserted later in
the contract via a backdoor amendment. Such an amendment constitutes a crass circumvention of the BOT Law and
renders the entire contract void.

Respondent PIATCO likewise claims that in view of the fact that other BOT contracts such as the JANCOM contract, the
Manila Water contract and the MRT contract had been considered valid, the PIATCO contracts should be held valid as
well.52 There is no parity in the cited cases. For instance, a reading of Metropolitan Manila Development Authority v.
JANCOM Environmental Corporation53 will show that its issue is different from the issues in the cases at bar. In the
JANCOM case, the main issue is whether there is a perfected contract between JANCOM and the Government. The
resolution of the issue hinged on the following: (1) whether the conditions precedent to the perfection of the contract
were complied with; (2) whether there is a valid notice of award; and (3) whether the signature of the Secretary of the
Department of Environment and Natural Resources is sufficient to bind the Government. These issue and sub-issues are
clearly distinguishable and different. For one, the issue of direct government guarantee was not considered by this Court
when it held the JANCOM contract valid, yet, it is a key reason for invalidating the PIATCO Contracts. It is a basic
principle in law that cases with dissimilar facts cannot have similar disposition.
This Court, however, is not unmindful of the reality that the structures comprising the NAIA IPT III facility are almost
complete and that funds have been spent by PIATCO in their construction. For the government to take over the said
facility, it has to compensate respondent PIATCO as builder of the said structures. The compensation must be just and in
accordance with law and equity for the government can not unjustly enrich itself at the expense of PIATCO and its
investors.
II.
Temporary takeover of business affected with public interest in times of national emergency
Section 17, Article XII of the 1987 Constitution grants the State in times of national emergency the right to temporarily
take over the operation of any business affected with public interest. This right is an exercise of police power which is
one of the inherent powers of the State.
Police power has been defined as the "state authority to enact legislation that may interfere with personal liberty or
property in order to promote the general welfare." 54 It consists of two essential elements. First, it is an imposition of
restraint upon liberty or property. Second, the power is exercised for the benefit of the common good. Its definition in
elastic terms underscores its all-encompassing and comprehensive embrace. 55 It is and still is the "most essential,
insistent, and illimitable"56 of the States powers. It is familiar knowledge that unlike the power of eminent domain,
police power is exercised without provision for just compensation for its paramount consideration is public welfare.57
It is also settled that public interest on the occasion of a national emergency is the primary consideration when the
government decides to temporarily take over or direct the operation of a public utility or a business affected with public
interest. The nature and extent of the emergency is the measure of the duration of the takeover as well as the terms
thereof. It is the State that prescribes such reasonable terms which will guide the implementation of the temporary
takeover as dictated by the exigencies of the time. As we ruled in our Decision, this power of the State can not be negated
by any party nor should its exercise be a source of obligation for the State.
Section 5.10(c), Article V of the ARCA provides that respondent PIATCO "shall be entitled to reasonable compensation
for the duration of the temporary takeover by GRP, which compensation shall take into account the reasonable cost for
the use of the Terminal and/or Terminal Complex." 58 It clearly obligates the government in the exercise of its police
power to compensate respondent PIATCO and this obligation is offensive to the Constitution. Police power can not be
diminished, let alone defeated by any contract for its paramount consideration is public welfare and interest. 59

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Again, respondent PIATCOs reliance on the case of Heirs of Suguitan v. City of Mandaluyong60 to justify its claim for
reasonable compensation for the Governments temporary takeover of NAIA IPT III in times of national emergency is
erroneous. What was involved in Heirs of Suguitan is the exercise of the states power of eminent domain and not of
police power, hence, just compensation was awarded. The cases at bar will not involve the exercise of the power of
eminent domain.
III.
Monopoly
Section 19, Article XII of the 1987 Constitution mandates that the State prohibit or regulate monopolies when public
interest so requires. Monopolies are not per se prohibited. Given its susceptibility to abuse, however, the State has the
bounden duty to regulate monopolies to protect public interest. Such regulation may be called for, especially in sensitive
areas such as the operation of the countrys premier international airport, considering the public interest at stake.
By virtue of the PIATCO contracts, NAIA IPT III would be the only international passenger airport operating in the
Island of Luzon, with the exception of those already operating in Subic Bay Freeport Special Economic Zone
("SBFSEZ"), Clark Special Economic Zone ("CSEZ") and in Laoag City. Undeniably, the contracts would create a
monopoly in the operation of an international commercial passenger airport at the NAIA in favor of PIATCO.
The grant to respondent PIATCO of the exclusive right to operate NAIA IPT III should not exempt it from regulation by
the government. The government has the right, indeed the duty, to protect the interest of the public. Part of this duty is to
assure that respondent PIATCOs exercise of its right does not violate the legal rights of third parties. We reiterate our
ruling that while the service providers presently operating at NAIA Terminals I and II do not have the right to demand for
the renewal or extension of their contracts to continue their services in NAIA IPT III, those who have subsisting contracts
beyond the In-Service Date of NAIA IPT III can not be arbitrarily or unreasonably treated.
Finally, the Respondent Congressmen assert that at least two (2) committee reports by the House of Representatives
found the PIATCO contracts valid and contend that this Court, by taking cognizance of the cases at bar, reviewed an
action of a co-equal body.61 They insist that the Court must respect the findings of the said committees of the House of
Representatives.62 With due respect, we cannot subscribe to their submission. There is a fundamental difference between
a case in court and an investigation of a congressional committee. The purpose of a judicial proceeding is to settle the
dispute in controversy by adjudicating the legal rights and obligations of the parties to the case. On the other hand, a
congressional investigation is conducted in aid of legislation. 63 Its aim is to assist and recommend to the legislature a
possible action that the body may take with regard to a particular issue, specifically as to whether or not to enact a new
law or amend an existing one. Consequently, this Court cannot treat the findings in a congressional committee report as
binding because the facts elicited in congressional hearings are not subject to the rigors of the Rules of Court on
admissibility of evidence. The Court in assuming jurisdiction over the petitions at bar simply performed its constitutional
duty as the arbiter of legal disputes properly brought before it, especially in this instance when public interest requires
nothing less.
WHEREFORE, the motions for reconsideration filed by the respondent PIATCO, respondent Congressmen and the
respondents-in-intervention are DENIED with finality.
SO ORDERED.

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 22

EN BANC
G.R. No. 154599

January 21, 2004

THE LIGA NG MGA BARANGAY NATIONAL, petitioner,

vs.
THE CITY MAYOR OF MANILA, HON. JOSE ATIENZA, JR., and THE CITY COUNCIL OF
MANILA, respondents.
DECISION
DAVIDE, JR., C.J.:
This petition for certiorari under Rule 65 of the Rules of Court seeks the nullification of Manila City Ordinance No.
8039, Series of 2002,1 and respondent City Mayors Executive Order No. 011, Series of 2002, 2 dated 15 August 2002 ,
for being patently contrary to law.
The antecedents are as follows:
Petitioner Liga ng mga Barangay National (Liga for brevity) is the national organization of all the barangays in
the Philippines, which pursuant to Section 492 of Republic Act No. 7160, otherwise known as The Local
Government Code of 1991, constitutes the duly elected presidents of highly-urbanized cities, provincial
chapters, the metropolitan Manila Chapter, and metropolitan political subdivision chapters.
Section 493 of that law provides that "[t]he liga at the municipal, city, provincial, metropolitan political
subdivision, and national levels directly elect a president, a vice-president, and five (5) members of the board
of directors." All other matters not provided for in the law affecting the internal organization of the leagues of
local government units shall be governed by their respective constitution and by-laws, which must always
conform to the provisions of the Constitution and existing laws. 3
On 16 March 2000, the Liga adopted and ratified its own Constitution and By-laws to govern its internal
organization.4 Section 1, third paragraph, Article XI of said Constitution and By-Laws states:
All other election matters not covered in this Article shall be governed by the "Liga Election Code" or such
other rules as may be promulgated by the National Liga Executive Board in conformity with the provisions of
existing laws.
By virtue of the above-cited provision, the Liga adopted and ratified its own Election Code. 5 Section 1.2, Article I of the
Liga Election Code states:
1.2 Liga ng mga Barangay Provincial, Metropolitan, HUC/ICC Chapters. There shall be nationwide
synchronized elections for the provincial, metropolitan, and HUC/ICC chapters to be held on the third Monday
of the month immediately after the month when the synchronized elections in paragraph 1.1 above was held.

The incumbent Liga chapter president concerned duly assisted by the proper government agency, office or
department, e.g. Provincial/City/NCR/Regional Director, shall convene all the duly elected Component
City/Municipal Chapter Presidents and all the current elected Punong Barangays (for HUC/ICC) of the
respective chapters in any public place within its area of jurisdiction for the purpose of reorganizing and
electing the officers and directors of the provincial, metropolitan or HUC/ICC Liga chapters. Said president
duly assisted by the government officer aforementioned, shall notify, in writing, all the above concerned at
least fifteen (15) days before the scheduled election meeting on the exact date, time, place and requirements of
the said meeting.
The Liga thereafter came out with its Calendar of Activities and Guidelines in the Implementation of the Liga Election
Code of 2002,6 setting on 21 October 2002 the synchronized elections for highly urbanized city chapters, such as the Liga
Chapter of Manila, together with independent component city, provincial, and metropolitan chapters.lawphi1.net
On 28 June 2002, respondent City Council of Manila enacted Ordinance No. 8039, Series of 2002, providing, among
other things, for the election of representatives of the District Chapters in the City Chapter of Manila and setting the
elections for both chapters thirty days after the barangay elections. Section 3 (A) and (B) of the assailed ordinance read:
SEC. 3. Representation Chapters. Every Barangay shall be represented in the said Liga Chapters by the
Punong Barangayor, in his absence or incapacity, by the kagawad duly elected for the purpose among its
members.
A. District Chapter
All elected Barangay Chairman in each District shall elect from among themselves the President, VicePresident and five (5) members of the Board.
B. City Chapter
The District Chapter representatives shall automatically become members of the Board and they shall elect
from among themselves a President, Vice-President, Secretary, Treasurer, Auditor and create other positions as
it may deem necessary for the management of the chapter.
The assailed ordinance was later transmitted to respondent City Mayor Jose L. Atienza, Jr., for his signature
and approval.
On 16 July 2002, upon being informed that the ordinance had been forwarded to the Office of the City Mayor,
still unnumbered and yet to be officially released, the Liga sent respondent Mayor of Manila a letter requesting
him that said ordinance be vetoed considering that it encroached upon, or even assumed, the functions of the
Liga through legislation, a function which was clearly beyond the ambit of the powers of the City Council. 7
Respondent Mayor, however, signed and approved the assailed city ordinance and issued on 15 August 2002 Executive
Order No. 011, Series of 2002, to implement the ordinance.

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 23
Hence, on 27 August 2002, the Liga filed the instant petition raising the following issues:
I
WHETHER OR NOT THE RESPONDENT CITY COUNCIL OF MANILA COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF OR IN EXCESS OF JURISDICTION, WHEN IT ENACTED CITY
ORDINANCE NO. 8039 S. 2002 PURPOSELY TO GOVERN THE ELECTIONS OF THE MANILA CHAPTER OF
THE LIGA NG MGA BARANGAYS AND WHICH PROVIDES A DIFFERENT MANNER OF ELECTING ITS
OFFICERS, DESPITE THE FACT THAT SAID CHAPTERS ELECTIONS, AND THE ELECTIONS OF ALL OTHER
CHAPTERS OF THE LIGA NG MGA BARANGAYS FOR THAT MATTER, ARE BY LAW MANDATED TO BE
GOVERNED BY THE LIGA CONSTITUTION AND BY-LAWS AND THE LIGA ELECTION CODE.
II
WHETHER OR NOT THE RESPONDENT CITY MAYOR OF MANILA COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF OR IN EXCESS OF JURISDICTION WHEN HE ISSUED EXECUTIVE
ORDER NO. 011 TO IMPLEMENT THE QUESTIONED CITY ORDINANCE NO. 8039 S. 2002.
In support of its petition, the Liga argues that City Ordinance No. 8039, Series of 2002, and Executive Order No. 011,
Series of 2002, contradict the Liga Election Code and are therefore invalid. There exists neither rhyme nor reason, not to
mention the absence of legal basis, for the Manila City Council to encroach upon, or even assume, the functions of the
Liga by prescribing, through legislation, the manner of conducting the Liga elections other than what has been provided
for by the Liga Constitution and By-laws and the Liga Election Code. Accordingly, the subject ordinance is an ultra
vires act of the respondents and, as such, should be declared null and void.
As for its prayer for the issuance of a temporary restraining order, the petitioner cites as reason therefor the fact that
under Section 5 of the assailed city ordinance, the Manila District Chapter elections would be held thirty days after the
regular barangay elections. Hence, it argued that the issuance of a temporary restraining order and/or preliminary
injunction would be imperative to prevent the implementation of the ordinance and executive order.
On 12 September 2002, Barangay Chairman Arnel Pea, in his capacity as a member of the Liga ng mga Barangay in the
City Chapter of Manila, filed a Complaint in Intervention with Urgent Motion for the Issuance of Temporary Restraining
Order and/or Preliminary Injunction. 8 He supports the position of the Liga and prays for the declaration of the questioned
ordinance and executive order, as well as the elections of the Liga ng mga Barangay pursuant thereto, to be null and void.
The assailed ordinance prescribing for an "indirect manner of election" amended, in effect, the provisions of the Local
Government Code of 1991, which provides for the election of the Liga officers at large. It also violated and curtailed the
rights of the petitioner and intervenor, as well as the other 896 Barangay Chairmen in the City of Manila, to vote and be
voted upon in a direct election.
On 25 October 2002, the Office of the Solicitor General (OSG) filed a Manifestation in lieu of Comment. 9 It supports the
petition of the Liga, arguing that the assailed city ordinance and executive order are clearly inconsistent with the express
public policy enunciated in R.A. No. 7160. Local political subdivisions are able to legislate only by virtue of a valid
delegation of legislative power from the national legislature. They are mere agents vested with what is called the power
of subordinate legislation. Thus, the enactments in question, which are local in origin, cannot prevail against the decree,
which has the force and effect of law.

On the issue of non-observance by the petitioners of the hierarchy-of-courts rule, the OSG posits that technical rules of
procedure should be relaxed in the instant petition. While Batas Pambansa Blg. 129, as amended, grants original
jurisdiction over cases of this nature to the Regional Trial Court (RTC), the exigency of the present petition, however,
calls for the relaxation of this rule. Section 496 (should be Section 491) of the Local Government Code of 1991 primarily
intended that the Liga ng mga Barangay determine the representation of the Liga in the sanggunians for the immediate
ventilation, articulation, and crystallization of issues affecting barangay government administration. Thus, the immediate
resolution of this petition is a must.
On the other hand, the respondents defend the validity of the assailed ordinance and executive order and pray for the
dismissal of the present petition on the following grounds: (1) certiorari under Rule 65 of the Rules of Court is
unavailing; (2) the petition should not be entertained by this Court in view of the pendency before the Regional Trial
Court of Manila of two actions or petitions questioning the subject ordinance and executive order; (3) the petitioner is
guilty of forum shopping; and (4) the act sought to be enjoined is fait accompli.
The respondents maintain that certiorari is an extraordinary remedy available to one aggrieved by the decision of a
tribunal, officer, or board exercising judicial or quasi-judicial functions. The City Council and City Mayor of Manila are
not the "board" and "officer" contemplated in Rule 65 of the Rules of Court because both do not exercise judicial
functions. The enactment of the subject ordinance and issuance of the questioned executive order are legislative and
executive functions, respectively, and thus, do not fall within the ambit of "judicial functions." They are both within the
prerogatives, powers, and authority of the City Council and City Mayor of Manila, respectively. Furthermore, the petition
failed to show with certainty that the respondents acted without or in excess of jurisdiction or with grave abuse of
discretion.
The respondents also asseverate that the petitioner cannot claim that it has no other recourse in addressing its grievance
other than this petition for certiorari. As a matter of fact, there are two cases pending before Branches 33 and 51 of the
RTC of Manila (one is for mandamus; the other, for declaratory relief) and three in the Court of Appeals (one is for
prohibition; the two other cases, for quo warranto), which are all akin to the present petition in the sense that the relief
being sought therein is the declaration of the invalidity of the subject ordinance. Clearly, the petitioner may ask the RTC
or the Court of Appeals the relief being prayed for before this Court. Moreover, the petitioner failed to prove discernible
compelling reasons attending the present petition that would warrant cognizance of the present petition by this Court.
Besides, according to the respondents, the petitioner has transgressed the proscription against forum-shopping in filing
the instant suit. Although the parties in the other pending cases and in this petition are different individuals or entities,
they represent the same interest.
With regard to petitioner's prayer for temporary restraining order and/ or preliminary injunction in its petition, the
respondents maintain that the same had become moot and academic in view of the elections of officers of the City Liga
ng mga Barangay on 15 September 2002 and their subsequent assumption to their respective offices. 10Since the acts to be
enjoined are now fait accompli, this petition for certiorari with an application for provisional remedies must necessarily
fail. Thus, where the records show that during the pendency of the case certain events or circumstances had taken place
that render the case moot and academic, the petition for certiorari must be dismissed.
After due deliberation on the pleadings filed, we resolve to dismiss this petition for certiorari.

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 24
First, the respondents neither acted in any judicial or quasi-judicial capacity nor arrogated unto themselves any judicial or
quasi-judicial prerogatives. A petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure is a special civil
action that may be invoked only against a tribunal, board, or officer exercising judicial or quasi-judicial functions.
Section 1, Rule 65 of the 1997 Rules of Civil Procedure provides:
SECTION 1. Petition for certiorari. When any tribunal, board or officer exercising judicial or quasijudicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy
in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court,
alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings
of such tribunal, board or officer, and granting such incidental reliefs as law and justice may require.
Elsewise stated, for a writ of certiorari to issue, the following requisites must concur: (1) it must be directed
against a tribunal, board, or officer exercising judicial or quasi-judicial functions; (2) the tribunal, board, or
officer must have acted without or in excess of jurisdiction or with grave abuse of discretion amounting lack or
excess of jurisdiction; and (3) there is no appeal or any plain, speedy, and adequate remedy in the ordinary
course of law.
A respondent is said to be exercising judicial function where he has the power to determine what the law is and
what the legal rights of the parties are, and then undertakes to determine these questions and adjudicate upon
the rights of the parties.11
Quasi-judicial function, on the other hand, is "a term which applies to the actions, discretion, etc., of public
administrative officers or bodies required to investigate facts or ascertain the existence of facts, hold hearings, and
draw conclusions from them as a basis for their official action and to exercise discretion of a judicial nature." 12
Before a tribunal, board, or officer may exercise judicial or quasi-judicial acts, it is necessary that there be a law that
gives rise to some specific rights of persons or property under which adverse claims to such rights are made, and the
controversy ensuing therefrom is brought before a tribunal, board, or officer clothed with power and authority to
determine the law and adjudicate the respective rights of the contending parties. 13
The respondents do not fall within the ambit of tribunal, board, or officer exercising judicial or quasi-judicial functions.
As correctly pointed out by the respondents, the enactment by the City Council of Manila of the assailed ordinance and
the issuance by respondent Mayor of the questioned executive order were done in the exercise of legislative and
executive functions, respectively, and not of judicial or quasi-judicial functions. On this score alone, certiorari will not
lie.
Second, although the instant petition is styled as a petition for certiorari, in essence, it seeks the declaration by this Court
of the unconstitutionality or illegality of the questioned ordinance and executive order. It, thus, partakes of the nature of a
petition for declaratory relief over which this Court has only appellate, not original, jurisdiction. 14Section 5, Article VIII
of the Constitution provides:
Sec. 5. The Supreme Court shall have the following powers:

(1) Exercise original jurisdiction over cases affecting ambassadors, other public ministers and
consuls, and over petitions for certiorari, prohibition, mandamus, quo warranto, and habeas corpus.
(2) Review, revise, reverse, modify, or affirm on appeal or certiorari as the law or the Rules of Court
may provide, final judgments and orders of lower courts in:
(a) All cases in which the constitutionality or validity of any treaty, international or
executive agreement, law, presidential decree, proclamation, order, instruction, ordinance,
or regulation is in question. (Italics supplied).
As such, this petition must necessary fail, as this Court does not have original jurisdiction over a petition for
declaratory relief even if only questions of law are involved. 15
Third, even granting arguendo that the present petition is ripe for the extraordinary writ of certiorari, there is here a clear
disregard of the hierarchy of courts. No special and important reason or exceptional and compelling circumstance has
been adduced by the petitioner or the intervenor why direct recourse to this Court should be allowed.
We have held that this Courts original jurisdiction to issue a writ of certiorari (as well as of prohibition, mandamus,quo
warranto, habeas corpus and injunction) is not exclusive, but is concurrent with the Regional Trial Courts and the Court
of Appeals in certain cases. As aptly stated in People v. Cuaresma: 16
This concurrence of jurisdiction is not, however, to be taken as according to parties seeking any of the writs an
absolute, unrestrained freedom of choice of the court to which application therefor0 will be directed. There is
after all a hierarchy of courts. That hierarchy is determinative of the venue of appeals, and also serves as a
general determinant of the appropriate forum for petitions for the extraordinary writs. A becoming regard of
that judicial hierarchy most certainly indicates that petitions for the issuance of extraordinary writs against first
level ("inferior") courts should be filed with the Regional Trial Court, and those against the latter, with the
Court of Appeals. A direct invocation of the Supreme Courts original jurisdiction to issue these writs should
be allowed only when there are special and important reasons therefor, clearly and specifically set out in the
petition. This is [an] established policy. It is a policy necessary to prevent inordinate demands upon the Courts
time and attention which are better devoted to those matters within its exclusive jurisdiction, and to prevent
further over-crowding of the Courts docket.
As we have said in Santiago v. Vasquez,17 the propensity of litigants and lawyers to disregard the hierarchy of courts in
our judicial system by seeking relief directly from this Court must be put to a halt for two reasons: (1) it would be an
imposition upon the precious time of this Court; and (2) it would cause an inevitable and resultant delay, intended or
otherwise, in the adjudication of cases, which in some instances had to be remanded or referred to the lower court as the
proper forum under the rules of procedure, or as better equipped to resolve the issues because this Court is not a trier of
facts.
Thus, we shall reaffirm the judicial policy that this Court will not entertain direct resort to it unless the redress desired
cannot be obtained in the appropriate courts, and exceptional and compelling circumstances justify the availment of the
extraordinary remedy of writ of certiorari, calling for the exercise of its primary jurisdiction. 18

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 25
Petitioners reliance on Pimentel v. Aguirre 19 is misplaced because the non-observance of the hierarchy-of-courts rule
was not an issue therein. Besides, what was sought to be nullified in the petition for certiorari and prohibition therein was
an act of the President of the Philippines, which would have greatly affected all local government units. We reiterated
therein that when an act of the legislative department is seriously alleged to have infringed the Constitution, settling the
controversy becomes the duty of this Court. The same is true when what is seriously alleged to be unconstitutional is an
act of the President, who in our constitutional scheme is coequal with Congress.
We hesitate to rule that the petitioner and the intervenor are guilty of forum-shopping. Forum-shopping exists where the
elements of litis pendentia are present or when a final judgment in one case will amount to res judicatain the other.
For litis pendentia to exist, the following requisites must be present: (1) identity of parties, or at least such parties as are
representing the same interests in both actions; (2) identity of rights asserted and reliefs prayed for, the reliefs being
founded on the same facts; and (3) identity with respect to the two preceding particulars in the two cases, such that any
judgment that may be rendered in the pending case, regardless of which party is successful, would amount to res
judicata in the other case.20
In the instant petition, and as admitted by the respondents, the parties in this case and in the alleged other pending cases
are different individuals or entities; thus, forum-shopping cannot be said to exist. Moreover, even assuming that those
five petitions are indeed pending before the RTC of Manila and the Court of Appeals, we can only guess the causes of
action and issues raised before those courts, considering that the respondents failed to furnish this Court with copies of
the said petitions.
WHEREFORE, the petition is DISMISSED.
SO ORDERED.
Davide, Jr., C.J., Puno, Vitug, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez, Corona,
Carpio-Morales, Callejo, Sr., Azcuna, and Tinga, JJ., concur.
Panganiban, J., in the result.

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 26

THIRD DIVISION
G.R. No. 139791

Once more, petitioner issued another notice to move-in addressed to its building administrator advising the latter that
respondent is scheduled to move in on August 22, 1990.

December 12, 2003

MANILA BANKERS LIFE INSURANCE CORPORATION, petitioner,

vs.
EDDY NG KOK WEI, respondent.
DECISION
SANDOVAL-GUTIERREZ, J.:
Before us is a petition for review on certiorari assailing the Decision 1 dated March 26, 1999 and Resolution 2 dated
August 5, 1999 of the Court of Appeals in CA-G.R. CV No. 40504, entitled "Eddy Ng Kok Wei vs. Manila Bankers Life
Insurance Corporation".
The factual antecedents as borne by the records are:
Eddy Ng Kok Wei, respondent, is a Singaporean businessman who ventured into investing in the Philippines. On
November 29, 1988, respondent, in a Letter of Intent addressed to Manila Bankers Life Insurance Corporation, petitioner,
expressed his intention to purchase a condominium unit at Valle Verde Terraces.
Subsequently or on December 5, 1988, respondent paid petitioner a reservation fee of P50,000.00 for the purchase of a
46-square meter condominium unit (Unit 703) valued at P860,922.00. On January 16, 1989, respondent paid 90% of the
purchase price in the sum of P729,830.00.
Consequently, petitioner, through its President, Mr. Antonio G. Puyat, executed a Contract to Sell in favor of the
respondent. The contract expressly states that the subject condominium unit "shall substantially be completed and
delivered" to the respondent "within fifteen (15) months" from February 8, 1989 or on May 8, 1990, and that "(S)hould
there be no substantial completion and fail(ure) to deliver the unit on the date specified, a penalty of 1% of the total
amount paid (by respondent) shall be charged against (petitioner)".
Considering that the stipulated 15-month period was at hand, respondent returned to the Philippines sometime in April,
1990.
In a letter dated April 5, 1990, petitioner, through its Senior Assistant Vice-President, Mr. Mario G. Zavalla, informed
respondent of the substantial completion of his condominium unit, however, due to various uncontrollable forces (such
as coup d etat attempts, typhoon and steel and cement shortage), the final turnover is reset to May 31, 1990.1wphi1
Meanwhile, on July 5, 1990, upon receipt of petitioners notice of delivery dated May 31, 1990, respondent again flew
back to Manila. He found the unit still uninhabitable for lack of water and electric facilities.

On October 5, 1990, respondent returned to the Philippines only to find that his condominium unit was still unlivable.
Exasperated, he was constrained to send petitioner a letter dated November 21, 1990 demanding payment for the
damages he sustained. But petitioner ignored such demand, prompting respondent to file with the Regional Trial Court,
Branch 150, Makati City, a complaint against the former for specific performance and damages, docketed as Civil Case
No. 90-3440.
Meanwhile, during the pendency of the case, respondent finally accepted the condominium unit and on April 12, 1991,
occupied the same. Thus, respondents cause of action has been limited to his claim for damages.
On December 18, 1992, the trial court rendered a Decision 3 finding the petitioner liable for payment of damages due to
the delay in the performance of its obligation to the respondent. The dispositive portion reads:
"WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendant, ordering Manila Bankers Life
Insurance Corporation to pay plaintiff Eddy Ng Kok Wei the following:
1. One percent (1%) of the total amount plaintiff paid defendant;
2. P100,000.00 as moral damages;
3. P50,000.00 as exemplary damages;
4. P25,000.00 by way of attorneys fees; and
Cost of suit.
"SO ORDERED."
On appeal, the Court of Appeals, in a Decision dated March 26, 1999, affirmed in toto the trial courts award of damages
in favor of the respondent.
Unsatisfied, petitioner filed a motion for reconsideration but was denied by the Appellate Court in a Resolution dated
August 5, 1999.
Hence, this petition for review on certiorari. Petitioner contends that the trial court has no jurisdiction over the instant
case; and that the Court of Appeals erred in affirming the trial courts finding that petitioner incurred unreasonable delay
in the delivery of the condominium unit to respondent.
On petitioners contention that the trial court has no jurisdiction over the instant case, Section 1 (c) of Presidential Decree
No. 1344, as amended, provides:

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 27
"SECTION 1. In the exercise of its functions to regulate the real estate trade and business and in addition to its powers
provided for in Presidential Decree No. 957, the National Housing Authority [now Housing and Land Use Regulatory
Board (HLURB)]4 shall have exclusive jurisdiction to hear and decide cases of the following nature:
xxx
"C. Cases involving specific performance of contractual and statutory obligations filed by buyers of subdivision lots or
condominium units against the owner, developer, dealer, broker or salesman.
x x x."
Pursuant to the above provisions, it is the HLURB which has jurisdiction over the instant case. We have consistently held
that complaints for specific performance with damages by a lot or condominium unit buyer against the owner or
developer falls under the exclusive jurisdiction of the HLURB. 5
While it may be true that the trial court is without jurisdiction over the case, petitioners active participation in the
proceedings estopped it from assailing such lack of it. We have held that it is an undesirable practice of a party
participating in the proceedings and submitting its case for decision and then accepting the judgment, only if favorable,
and attacking it for lack of jurisdiction, when adverse.6
Here, petitioner failed to raise the question of jurisdiction before the trial court and the Appellate Court. In effect,
petitioner confirmed and ratified the trial courts jurisdiction over this case. Certainly, it is now in estoppel and can no
longer question the trial courts jurisdiction.
On petitioners claim that it did not incur delay, suffice it to say that this is a factual issue. Time and again, we have ruled
that "the factual findings of the trial court are given weight when supported by substantial evidence and carries more
weight when affirmed by the Court of Appeals." 7 Whether or not petitioner incurred delay and thus, liable to pay
damages as a result thereof, are indeed factual questions.
The jurisdiction of this Court in a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as
amended, is limited to reviewing only errors of law, not of fact, unless the factual findings being assailed are not
supported by evidence on record or the impugned judgment is based on a misapprehension of facts. 8 These exceptions are
not present here.
WHEREFORE, the petition is DENIED. The assailed Decision dated March 26, 1999 and Resolution dated August 5,
1999 of the Court of Appeals are hereby AFFIRMED IN TOTO.
Costs against the petitioner.
SO ORDERED.
Vitug, (Chairman), Corona, and Carpio-Morales, JJ., concur.

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 28

FIRST DIVISION
A.M. No. MTJ-01-1370
April 25, 2003
(Formerly A.M. No. 00-11-238-MTC)
OFFICE OF THE COURT ADMINISTRATOR, complainant,
vs.
JUDGE AGUSTIN T. SARDIDO, Municipal Trial Court of Koronadal, South Cotabato, respondent.
CARPIO, J.:
The Case
This is an administrative case against respondent Judge Agustin T. Sardido ("Judge Sardido") formerly presiding judge of
the Municipal Trial Court of Koronadal, South Cotabato, for gross ignorance of the law. Judge Sardido issued an Order
dated 20 October 1998 excluding Judge Braulio Hurtado, Jr. ("Judge Hurtado") of the Regional Trial Court of Kabacan,
North Cotabato as one of the accused in an Amended Information. 1 Judge Sardido ruled that Supreme Court Circular No.
3-89 requires that Judge Hurtado be dropped from the Amended Information and his case be forwarded to the Court.
The Facts
Private complainant Teresita Aguirre Magbanua accused Oscar Pagunsan and Danilo Ong of the crime of "Falsification
by Private Individual and Use of Falsified Document." 2 The Amended Information included Judge Hurtado. The case,
docketed as Criminal Case No. 14071, was raffled to Judge Sardido, then presiding judge of the Municipal Trial Court of
Koronadal, South Cotabato ("MTC-Koronadal").
In a Deed of Absolute Sale dated 8 August 1993, private complainant Magbanua and six other vendors allegedly sold two
parcels of land, covered by TCT Nos. 47873 and 33633 and located at the commercial district of Koronadal, to Davao
Realty Development Corporation, represented by accused Ong, with co-accused Pagunsan, as broker. Judge Hurtado,
who at that time was the Clerk of Court of RTC-Koronadal and ex-officio notary public, notarized the Deed of Absolute
Sale.
However, private complainant Magbanua denies signing the Deed of Absolute Sale dated 8 August 1993 which states that
the consideration for the sale was only P600,000.00. Private complainant asserts that what she and the other vendors
signed was a Deed of Absolute Sale dated 6 August 1996 for a consideration of P16,000,000.00. Under the terms of the
sale, the vendee agreed to pay for the capital gains tax. The consideration in the 8 August 1993 Deed of Absolute Sale
was apparently undervalued. Subsequently, the Bureau of Internal Revenue assessed the vendors a deficiency capital
gains tax of P1,023,375.00.
Judge Hurtado filed a motion praying that the criminal complaint against him be forwarded to the Supreme Court. Judge
Hurtado claimed that Circular No. 3-89 dated 6 February 1989 requires "all cases involving justices and judges of the
lower courts, whether or not such complaints deal with acts apparently unrelated to the discharge of their official
functions, such as acts of immorality, estafa, crimes against persons and property, etc." to be forwarded to the Supreme

Court. Judge Hurtado asserted that since the case against him is one involving a judge of a lower court, the same should
be forwarded to the Supreme Court pursuant to Circular No. 3-89.
The Provincial Prosecutor opposed Judge Hurtados motion, arguing that the case against Judge Hurtado is not within the
scope of Circular No. 3-89 since it is not an IBP-initiated case. Moreover, the offense charged was committed in 1993
when Judge Hurtado was still a clerk of court and ex-officio notary public.
On 20 October 1998, Judge Sardido issued an Order, the pertinent portions of which read:
The issue to be resolved in the instant case is, whether the case of Judge Hurtado, who is charged for acts
committed prior to his appointment as an RTC Judge, falls within the purview of the afore-said Circular No. 389.
It is the humble submission of the Court that the case of Judge Hurtado, an RTC Judge of the Regional Trial
Court of Kabacan, North Cotabato, falls within the meaning and intent of the said circular.
For reasons being, firstly, the said circular provides that all cases involving justices and judges of lower courts
shall be forwarded to the Supreme Court for appropriate action, whether or not such complaints deal with acts
apparently unrelated to the discharge of their official functions, and regardless of the nature of the crime,
without any qualification whether the crime was committed before or during his tenure of office. Under the
law on Legal Hermeneutics, if the law does not qualify we must not qualify. Secondly, it would sound, to the
mind of the Court, awkward for a first level court to be trying an incumbent judge of a second level court.
For reasons afore-stated, this Court can not and shall not try this case as against Judge Hurtado, unless the
Honorable Supreme Court would order otherwise.
Wherefore, the foregoing premises duly considered, the name of Judge Braulio L. Hurtado, Jr. is ordered
excluded from the amended information and the case against him is ordered forwarded to the Honorable
Supreme Court, pursuant to the afore-said Circular No. 3-89 of the Supreme Court, dated February 9, 1989.
Accordingly, Maxima S. Borja ("Borja"), Stenographer I and Acting Clerk of Court II of the MTC-Koronadal, South
Cotabato, wrote a letter dated 21 July 1999 forwarding the criminal case against Judge Hurtado to the Court
Administrator for appropriate action.
Then Court Administrator Alfredo L. Benipayo issued a Memorandum dated 25 October 2000 pointing out that Circular
No. 3-89 refers only to administrative complaints filed with the IBP against justices and judges of lower courts. The
Circular does not apply to criminal cases filed before trial courts against such justices and judges.
Thus, in the Resolution of 6 December 2000, the Court directed that the letter of Acting Clerk of Court Borja be returned
to the MTC-Koronadal together with the records of the criminal case. The Court directed Judge Sardido to explain in
writing why he should not be held liable for gross ignorance of the law for excluding Judge Hurtado from the Amended
Information and for transmitting the records of Judge Hurtados case to the Court.

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 29
In his Explanation dated 26 January 2001, Judge Sardido reasoned out that he excluded Judge Hurtado because Circular
No. 3-89 directs the IBP to "forward to the Supreme Court for appropriate action all cases involving justices and judges
of lower courts x x x." Judge Sardido claims that the Circular likewise "applies to courts in cases involving justices or
judges of the lower courts," especially so in this case where "Judge Hurtado was charged with falsification of public
document as a notary public while he was still the Clerk of Court of the Regional Trial Court of the 11 th Judicial Region
in Koronadal, South Cotabato."
In the Resolution of 28 March 2001, the Court referred this case to the Office of the Court Administrator ("OCA") for
evaluation, report and recommendation. On 10 July 2001, the OCA submitted a Memorandum recommending that this
case be re-docketed as a regular administrative matter.
Judge Sardido filed his Manifestation dated 20 September 2001 stating that he is submitting the case for decision based
on the pleadings and records already filed. Judge Sardido insisted that he did "what he had done in all honesty and good
faith."
OCAs Findings and Conclusions
The OCA found that Judge Sardido erred in excluding Judge Hurtado as one of the accused in the Amended Information
in Criminal Case No. 14071. The OCA held that Circular No. 3-89, which is Judge Sardidos basis in issuing the Order of
20 October 1998, refers to administrative complaints filed with the IBP against justices and judges of lower courts. The
Circular does not apply to criminal cases filed against justices and judges of lower courts. The OCA recommended that a
fine of P5,000.00 be imposed on Judge Sardido for gross ignorance of the law.
The Courts Ruling
The Court issued Circular No. 3-89 in response to a letter dated 19 December 1988 by then IBP President Leon M.
Garcia, seeking clarification of the Courts En Banc Resolution of 29 November 1998 in RE: Letter of then Acting
Presiding Justice Rodolfo A. Nocon 3 and Associate Justices Reynato Puno4 and Alfredo Marigomen5 of the Court of
Appeals.
A certain Atty. Eduardo R. Balaoing had filed a complaint against Court of Appeals Justices Nocon, Puno and
Marigomen relating to a petition filed before their division. In its En Banc Resolution of 29 November 1988, the Court
required the IBP to refer to the Supreme Court for appropriate action the complaint 6 filed by Atty. Balaoing with the IBP
Commission on Bar Discipline. The Court stated that the power to discipline justices and judges of the lower courts is
within the Courts exclusive power and authority as provided in Section 11, Article VII of the 1987 Constitution. 7 The
Court Administrator publicized the En Banc Resolution of 29 November 1988 by issuing Circular No. 17 dated 20
December 1988.

Circular No. 3-89 clarified the second paragraph, Section 1 of Rule 139-B of the Rules of Court which states that:
The IBP Board of Governors may, motu proprio or upon referral by the Supreme Court or by a Chapter Board
of Officers, or at the instance of any person, initiate and prosecute proper charges against erringattorneys
including those in the government service. (Emphasis supplied).
As clarified, the phrase "attorneys x x x in the government service" in Section 1 of Rule 139-B does not include justices
of appellate courts and judges of lower courts who are not subject to the disciplining authority of the IBP. All
administrative cases against justices of appellate courts and judges of lower courts fall exclusively within the jurisdiction
of the Supreme Court.
However, Rule 139-B refers to Disbarment and Discipline of Attorneys which is administrative and not criminal in
nature. The cases referred to in Circular No. 3-89 are administrative cases for disbarment, suspension or discipline of
attorneys, including justices of appellate courts and judges of the lower courts. The Court has vested the IBP with the
power to initiate and prosecute administrative cases against erring lawyers. 8 However, under Circular No. 3-89, the Court
has directed the IBP to refer to the Supreme Court for appropriate action all administrative cases filed with IBP against
justices of appellate courts and judges of the lower courts. As mandated by the Constitution, the Court exercises the
exclusive power to discipline administratively justices of appellate courts and judges of lower courts.
Circular No. 3-89 does not refer to criminal cases against erring justices of appellate courts or judges of lower courts.
Trial courts retain jurisdiction over the criminal aspect of offenses committed by justices of appellate courts 9 and judges
of lower courts. This is clear from the Circular directing the IBP, and not the trial courts, to refer all administrative cases
filed against justices of appellate courts and judges of lower courts to the Supreme Court. The case filed against Judge
Hurtado is not an administrative case filed with the IBP. It is a criminal case filed with the trial court under its jurisdiction
as prescribed by law.
The acts or omissions of a judge may well constitute at the same time both a criminal act and an administrative offense.
Whether the criminal case against Judge Hurtado relates to an act committed before or after he became a judge is of no
moment. Neither is it material that an MTC judge will be trying an RTC judge in the criminal case. A criminal case
against an attorney or judge is distinct and separate from an administrative case against him. The dismissal of the
criminal case does not warrant the dismissal of an administrative case arising from the same set of facts. The quantum of
evidence that is required in the latter is only preponderance of evidence, and not proof beyond reasonable doubt which is
required in criminal cases.10 As held in Gatchalian Promotions Talents Pool, Inc. v. Naldoza:11
Administrative cases against lawyers belong to a class of their own. They are distinct from and they may
proceed independently of civil and criminal cases.

The Court issued Circular No. 3-89 on 6 February 1989 clarifying the En Banc Resolution of 29 November 1988.
Circular No. 3-89 provides in part as follows:

The burden of proof for these types of cases differ. In a criminal case, proof beyond reasonable doubt is
necessary; in an administrative case for disbarment or suspension, clearly preponderant evidence is all that is
required. Thus, a criminal prosecution will not constitute a prejudicial question even if the same facts and
circumstances are attendant in the administrative proceedings.

(1) The IBP (Board of Governors and Commission on Bar Discipline) shall forward to the Supreme Court for
appropriate action all cases involving justices and judges of lower courts, whether or not such complaints deal
with acts apparently unrelated to the discharge of their official functions, such as acts of immorality, estafa,
crimes against persons and property, etc. x x x. (Emphasis supplied)

It should be emphasized that a finding of guilt in the criminal case will not necessarily result in a finding of
liability in the administrative case. Conversely, respondents acquittal does not necessarily exculpate him
administratively. In the same vein, the trial courts finding of civil liability against the respondent will not

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 30
inexorably lead to a similar finding in the administrative action before this Court. Neither will a favorable
disposition in the civil action absolve the administrative liability of the lawyer. The basic premise is that
criminal and civil cases are altogether different from administrative matters, such that the disposition in the
first two will not inevitably govern the third and vice versa. For this reason, it would be well to remember the
Courts ruling in In re Almacen, which we quote:
"x x x Disciplinary proceedings against lawyers are sui generis. Neither purely civil nor purely
criminal, they do not involve a trial of an action or a suit, but are rather investigations by the Court
into the conduct of one of its officers. Not being intended to inflict punishment, [they are] in no
sense a criminal prosecution. Accordingly, there is neither a plaintiff nor a prosecutor therein.
[They] may be initiated by the Court motu proprio. Public interest is [their] primary objective, and
the real question for determination is whether or not the attorney is still a fit person to be allowed
the privileges as such. Hence, in the exercise of its disciplinary powers, the Court merely calls upon
a member of the Bar to account for his actuations as an officer of the Court with the end in view of
preserving the purity of the legal profession and the proper and honest administration of justice by
purging the profession of members who by their misconduct have prove[n] themselves no longer
worthy to be entrusted with the duties and responsibilities pertaining to the office of an attorney. x x
x"
A judge is called upon to exhibit more than just a cursory acquaintance with statutes and procedural rules. He must be
conversant with basic legal principles and well-settled doctrines. He should strive for excellence and seek the truth with
passion.12 Judge Sardido failed in this regard. He erred in excluding Judge Hurtado as one of the accused in the Amended
Information and in forwarding the criminal case against Judge Hurtado to the Court.
One last point. This administrative case against Judge Sardido started before the amendment 13 of Rule 140 classifying
gross ignorance of the law a serious offense punishable by a fine of more than P20,000.00 but not exceeding P40,000.00.
The amendment cannot apply retroactively to Judge Sardidos case. However, the fine of P5,000.00 recommended by the
OCA is too light a penalty considering that this is not the first offense of Judge Sardido.
In RE: Hold Departure Order Issued by Judge Agustin T. Sardido, 14 the Court reprimanded Judge Sardido for issuing a
hold-departure order contrary to Circular No. 39-97. In Cabilao v. Judge Sardido,15 the Court fined Judge Sardido
P5,000.00 for gross ignorance of the law, grave abuse of discretion and gross misconduct. The Court gave a stern
warning to Judge Sardido that a commission of the same or similar act would be dealt with more severely. In Almeron v.
Judge Sardido,16 the Court imposed on Judge Sardido a stiffer fine of P10,000.00 for gross ignorance of the law. He was
again sternly warned that the commission of the same or similar act in the future would be dealt with more severely
including, if warranted, his dismissal from the service.
In a more recent administrative case, Torcende v. Judge Sardido, 17 the Court found Judge Sardido again guilty of gross
ignorance of the law and of gross misconduct. This time the Court dismissed Judge Sardido from the service with
forfeiture of his retirement benefits, except accrued leave credits. The dismissal was with prejudice to reemployment in
any branch of the government or any of its agencies or instrumentalities, including government-owned and controlled
corporations.
The records of the OCA further disclose that Judge Sardido has other similar administrative complaints 18 still pending
against him. Such an unflattering service record erodes the peoples faith and confidence in the judiciary. It is the duty of

every member of the bench to avoid any impression of impropriety to protect the image and integrity of the
judiciary.19 The Court may still impose a fine on Judge Sardido in the instant case despite his dismissal from the service.
WHEREFORE, respondent Judge Agustin T. Sardido is FINED Ten Thousand Pesos (P10,000.00) for gross ignorance of
the law. The fine may be deducted from his accrued leave credits.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Vitug, Ynares-Santiago, and Azcuna, JJ., concur.

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 31

THIRD DIVISION
G.R. No. 151149

Island, located in Tagpait, Aborlan, Palawan, which consists of approximately 18 hectares. Said property is
within Timberland Block of LC Project No. 10-C of Aborlan, Palawan, per BF Map LC No. 1582.

September 7, 2004

GEORGE KATON, petitioner,

vs.
MANUEL PALANCA JR., LORENZO AGUSTIN, JESUS GAPILANGO and JUAN FRESNILLO, respondents.
DECISION
PANGANIBAN, J.:
Where prescription, lack of jurisdiction or failure to state a cause of action clearly appear from the complaint filed with
the trial court, the action may be dismissed motu proprio by the Court of Appeals, even if the case has been elevated for
review on different grounds. Verily, the dismissal of such cases appropriately ends useless litigations.

"Thereafter, the Bureau of Forestry District Office, Puerto Princesa, Palawan, ordered the inspection,
investigation and survey of the land subject of the petitioners request for eventual conversion or reclassification from forest to agricultural land, and thereafter for George Katon to apply for a homestead patent.
"Gabriel Mandocdoc (now retired Land Classification Investigator) undertook the investigation, inspection and
survey of the area in the presence of the petitioner, his brother Rodolfo Katon (deceased) and his cousin,
[R]espondent Manuel Palanca, Jr. During said survey, there were no actual occupants on the island but there
were some coconut trees claimed to have been planted by petitioner and [R]espondent Manuel Palanca, Jr.
(alleged overseer of petitioner) who went to the island from time to time to undertake development work, like
planting of additional coconut trees.

The Case

"The application for conversion of the whole Sombrero Island was favorably endorsed by the Forestry District
Office of Puerto Princesa to its main office in Manila for appropriate action. The names of Felicisimo Corpuz,
Clemente Magdayao and Jesus Gapilango and Juan Fresnillo were included in the endorsement as coapplicants of the petitioner.

Before us is a Petition for Review1 under Rule 45 of the Rules of Court, assailing the December 8, 2000 Decision 2and the
November 20, 2001 Resolution3 of the Court of Appeals in CA-GR SP No. 57496. The assailed Decision disposed as
follows:

"In a letter dated September 23, 1965, then Asst. Director of Forestry R.J.L. Utleg informed the Director of
Lands, Manila, that since the subject land was no longer needed for forest purposes, the same is therefore
certified and released as agricultural land for disposition under the Public Land Act.

"Assuming that petitioner is correct in saying that he has the exclusive right in applying for the patent over the
land in question, it appears that his action is already barred by laches because he slept on his alleged right for
almost 23 years from the time the original certificate of title has been issued to respondent Manuel Palanca, Jr.,
or after 35 years from the time the land was certified as agricultural land. In addition, the proper party in the
annulment of patents or titles acquired through fraud is the State; thus, the petitioners action is deemed
misplaced as he really does not have any right to assert or protect. What he had during the time he requested
for the re-classification of the land was the privilege of applying for the patent over the same upon the lands
conversion from forest to agricultural.

"Petitioner contends that the whole area known as Sombrero Island had been classified from forest land to
agricultural land and certified available for disposition upon his request and at his instance. However, Mr.
Lucio Valera, then [l]and investigator of the District Land Office, Puerto Princesa, Palawan, favorably
endorsed the request of [R]espondents Manuel Palanca Jr. and Lorenzo Agustin, for authority to survey on
November 15, 1965. On November 22, a second endorsement was issued by Palawan District Officer
Diomedes De Guzman with specific instruction to survey vacant portions of Sombrero Island for the
respondents consisting of five (5) hectares each. On December 10, 1965, Survey Authority No. R III-342-65
was issued authorizing Deputy Public Land Surveyor Eduardo Salvador to survey ten (10) hectares of
Sombrero Island for the respondents. On December 23, 1990, [R]espondent Lorenzo Agustin filed a
homestead patent application for a portion of the subject island consisting of an area of 4.3 hectares.

"WHEREFORE, the petition is hereby DISMISSED. No pronouncement as to cost." 4

The assailed Resolution, on the other hand, denied the Motion for Reconsideration filed by petitioner. It affirmed the
RTCs dismissal of his Complaint in Civil Case No. 3231, not on the grounds relied upon by the trial court, but because
of prescription and lack of jurisdiction.

"Records show that on November 8, 1996, [R]espondent Juan Fresnillo filed a homestead patent application
for a portion of the island comprising 8.5 hectares. Records also reveal that [R]espondent Jesus Gapilango
filed a homestead application on June 8, 1972. Respondent Manuel Palanca, Jr. was issued Homestead Patent
No. 145927 and OCT No. G-7089 on March 3, 19775 with an area of 6.84 hectares of Sombrero Island.

The Antecedent Facts

The CA narrates the antecedent facts as follows:
"On August 2, 1963, herein [P]etitioner [George Katon] filed a request with the District Office of the Bureau
of Forestry in Puerto Princesa, Palawan, for the re-classification of a piece of real property known as Sombrero

"Petitioner assails the validity of the homestead patents and original certificates of title covering certain
portions of Sombrero Island issued in favor of respondents on the ground that the same were obtained through
fraud. Petitioner prays for the reconveyance of the whole island in his favor.

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 32
"On the other hand, [R]espondent Manuel Palanca, Jr. claims that he himself requested for the reclassification
of the island in dispute and that on or about the time of such request, [R]espondents Fresnillo, Palanca and
Gapilango already occupied their respective areas and introduced numerous improvements. In addition,
Palanca said that petitioner never filed any homestead application for the island. Respondents deny that
Gabriel Mandocdoc undertook the inspection and survey of the island.
"According to Mandocdoc, the island was uninhabited but the respondents insist that they already had their
respective occupancy and improvements on the island. Palanca denies that he is a mere overseer of the
petitioner because he said he was acting for himself in developing his own area and not as anybodys caretaker.
"Respondents aver that they are all bona fide and lawful possessors of their respective portions and have
declared said portions for taxation purposes and that they have been faithfully paying taxes thereon for twenty
years.
"Respondents contend that the petitioner has no legal capacity to sue insofar as the island is concerned because
an action for reconveyance can only be brought by the owner and not a mere homestead applicant and that
petitioner is guilty of estoppel by laches for his failure to assert his right over the land for an unreasonable and
unexplained period of time.
"In the instant case, petitioner seeks to nullify the homestead patents and original certificates of title issued in
favor of the respondents covering certain portions of the Sombrero Island as well as the reconveyance of the
whole island in his favor. The petitioner claims that he has the exclusive right to file an application for
homestead patent over the whole island since it was he who requested for its conversion from forest land to
agricultural land."6
Respondents filed their Answer with Special and/or Affirmative Defenses and Counterclaim in due time. On June 30,
1999, they also filed a Motion to Dismiss on the ground of the alleged defiance by petitioner of the trial courts Order to
amend his Complaint so he could thus effect a substitution by the legal heirs of the deceased, Respondent Gapilango. The
Motion to Dismiss was granted by the RTC in its Order dated July 29, 1999.
Petitioners Motion for Reconsideration of the July 29, 1999 Order was denied by the trial court in its Resolution dated
December 17, 1999, for being a third and prohibited motion. In his Petition for Certiorari before the CA, petitioner
charged the trial court with grave abuse of discretion on the ground that the denied Motion was his first and only Motion
for Reconsideration of the aforesaid Order.
Ruling of the Court of Appeals
Instead of limiting itself to the allegation of grave abuse of discretion, the CA ruled on the merits. It held that while
petitioner had caused the reclassification of Sombrero Island from forest to agricultural land, he never applied for a
homestead patent under the Public Land Act. Hence, he never acquired title to that land.
The CA added that the annulment and cancellation of a homestead patent and the reversion of the property to the State
were matters between the latter and the homestead grantee. Unless and until the government takes steps to annul the
grant, the homesteaders right thereto stands.

Finally, granting arguendo that petitioner had the exclusive right to apply for a patent to the land in question, he was
already barred by laches for having slept on his right for almost 23 years from the time Respondent Palancas title had
been issued.
In the Assailed Resolution, the CA acknowledged that it had erred when it ruled on the merits of the case. It agreed with
petitioner that the trial court had acted without jurisdiction in perfunctorily dismissing his September 10, 1999 Motion
for Reconsideration, on the erroneous ground that it was a third and prohibited motion when it was actually only his first
motion.
Nonetheless, the Complaint was dismissed motu proprio by the challenged Resolution of the CA Special Division of five
members with two justices dissenting pursuant to its "residual prerogative" under Section 1 of Rule 9 of the Rules of
Court.
From the allegations of the Complaint, the appellate court opined that petitioner clearly had no standing to seek
reconveyance of the disputed land, because he neither held title to it nor even applied for a homestead patent. It reiterated
that only the State could sue for cancellation of the title issued upon a homestead patent, and for reversion of the land to
the public domain.
Finally, it ruled that prescription had already barred the action for reconveyance. First, petitioners action was brought 24
years after the issuance of Palancas homestead patent. Under the Public Land Act, such action should have been taken
within ten years from the issuance of the homestead certificate of title. Second, it appears from the submission (Annex
"F" of the Complaint) of petitioner himself that Respondents Fresnillo and Palanca had been occupying six hectares of
the island since 1965, or 33 years before he took legal steps to assert his right to the property. His action was filed beyond
the 30-year prescriptive period under Articles 1141 and 1137 of the Civil Code.
Hence, this Petition.7
Issues
In his Memorandum, petitioner raises the following issues:
"1. Is the Court of Appeals correct in resolving the Petition for Certiorari based on an issue not raised (the
merits of the case) in the Petition?
"2. Is the Court of Appeals correct in invoking its alleged residual prerogative under Section 1, Rule 9 of the
1997 Rules of Civil Procedure in resolving the Petition on an issue not raised in the Petition?" 8
The Courts Ruling
The Petition has no merit.
First Issue:
Propriety of Ruling on the Merits

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 33
This is not the first time that petitioner has taken issue with the propriety of the CAs ruling on the merits. He raised it
with the appellate court when he moved for reconsideration of its December 8, 2000 Decision. The CA even corrected
itself in its November 20, 2001 Resolution, as follows:
"Upon another review of the case, the Court concedes that it may indeed have lost its way and been waylaid by
the variety, complexity and seeming importance of the interests and issues involved in the case below, the
apparent reluctance of the judges, five in all, to hear the case, and the volume of the conflicting, often
confusing, submissions bearing on incidental matters. We stand corrected." 9
That explanation should have been enough to settle the issue. The CAs Resolution on this point has rendered petitioners
issue moot. Hence, there is no need to discuss it further. Suffice it to say that the appellate court indeed acted ultra
jurisdictio in ruling on the merits of the case when the only issue that could have been, and was in fact, raised was the
alleged grave abuse of discretion committed by the trial court in denying petitioners Motion for Reconsideration. Settled
is the doctrine that the sole office of a writ of certiorari is the correction of errors of jurisdiction. Such writ does not
include a review of the evidence,10 more so when no determination of the merits has yet been made by the trial court, as
in this case.
Second Issue:
Dismissal for Prescription and Lack of Jurisdiction
Petitioner next submits that the CA erroneously invoked its "residual prerogatives" under Section 1 of Rule 9 of the Rules
of Court when it motu proprio dismissed the Petition for lack of jurisdiction and prescription. According to him, residual
prerogative refers to the power that the trial court, in the exercise of its original jurisdiction, may still validly exercise
even after perfection of an appeal. It follows that such powers are not possessed by an appellate court.
Petitioner has confused what the CA adverted to as its "residual prerogatives" under Section 1 of Rule 9 of the Rules of
Court with the "residual jurisdiction" of trial courts over cases appealed to the CA.
Under Section 1 of Rule 9 of the Rules of Court, defenses and objections not pleaded either in a motion to dismiss or in
the answer are deemed waived, except when (1) lack of jurisdiction over the subject matter, (2) litis pendentia, (3) res
judicata and (4) prescription are evident from the pleadings or the evidence on record. In the four excepted instances, the
court shall motu proprio dismiss the claim or action. In Gumabon v. Larin 11 we explained thus:
"x x x [T]he motu proprio dismissal of a case was traditionally limited to instances when the court clearly had
no jurisdiction over the subject matter and when the plaintiff did not appear during trial, failed to prosecute his
action for an unreasonable length of time or neglected to comply with the rules or with any order of the court.
Outside of these instances, any motu proprio dismissal would amount to a violation of the right of the plaintiff
to be heard. Except for qualifying and expanding Section 2, Rule 9, and Section 3, Rule 17, of the Revised
Rules of Court, the amendatory 1997 Rules of Civil Procedure brought about no radical change. Under the
new rules, a court may motu proprio dismiss a claim when it appears from the pleadings or evidence on record
that it has no jurisdiction over the subject matter; when there is another cause of action pending between the
same parties for the same cause, or where the action is barred by a prior judgment or by statute of limitations.
x x x."12 (Italics supplied)

On the other hand, "residual jurisdiction" is embodied in Section 9 of Rule 41 of the Rules of Court, as follows:
"SEC. 9. Perfection of appeal; effect thereof. A partys appeal by notice of appeal is deemed perfected as to
him upon the filing of the notice of appeal in due time.
"A partys appeal by record on appeal is deemed perfected as to him with respect to the subject matter thereof
upon the approval of the record on appeal filed in due time.
"In appeals by notice of appeal, the court loses jurisdiction over the case upon the perfection of the appeals
filed in due time and the expiration of the time to appeal of the other parties.
"In appeals by record on appeal, the court loses jurisdiction only over the subject matter thereof upon the
approval of the records on appeal filed in due time and the expiration of the time to appeal of the other parties.
"In either case, prior to the transmittal of the original record or the record on appeal, the court may issue orders
for the protection and preservation of the rights of the parties which do not involve any matter litigated by the
appeal, approve compromises, permit appeals of indigent litigants, order execution pending appeal in
accordance with Section 2 of Rule 39, and allow withdrawal of the appeal." (Italics supplied)
The "residual jurisdiction" of trial courts is available at a stage in which the court is normally deemed to have lost
jurisdiction over the case or the subject matter involved in the appeal. This stage is reached upon the perfection of the
appeals by the parties or upon the approval of the records on appeal, but prior to the transmittal of the original records or
the records on appeal.13 In either instance, the trial court still retains its so-called residual jurisdiction to issue protective
orders, approve compromises, permit appeals of indigent litigants, order execution pending appeal, and allow the
withdrawal of the appeal.
The CAs motu proprio dismissal of petitioners Complaint could not have been based, therefore, on residual jurisdiction
under Rule 41. Undeniably, such order of dismissal was not one for the protection and preservation of the rights of the
parties, pending the disposition of the case on appeal. What the CA referred to as residual prerogatives were the general
residual powers of the courts to dismiss an action motu proprio upon the grounds mentioned in Section 1 of Rule 9 of the
Rules of Court and under authority of Section 2 of Rule 1 14 of the same rules.
To be sure, the CA had the excepted instances in mind when it dismissed the Complaint motu proprio "on more
fundamental grounds directly bearing on the lower courts lack of jurisdiction" 15 and for prescription of the action.
Indeed, when a court has no jurisdiction over the subject matter, the only power it has is to dismiss the action. 16
Jurisdiction over the subject matter is conferred by law and is determined by the allegations in the complaint and the
character of the relief sought.17 In his Complaint for "Nullification of Applications for Homestead and Original
Certificate of Title No. G-7089 and for Reconveyance of Title," 18 petitioner averred:
"2. That on November 10, 1965, without the knowledge of [petitioner, Respondent] Manuel Palanca Jr.,
[petitioners] cousin, in connivance with his co-[respondent], Lorenzo Agustin, x x x fraudulently and in bad
faith:

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 34
2.1. x x x made the request for authority to survey as a pre-requisite to the filing of an application
for homestead patent in his name and that of his Co-[Respondent] Agustin, [despite being] fully
aware that [Petitioner] KATON had previously applied or requested for re-classification and
certification of the same land from forest land to agricultural land which request was favorably
acted upon and approved as mentioned earlier; a clear case of intrinsic fraud and misrepresentation;
xxx

xxx

xxx

2.3. In stating in his application for homestead patent that he was applying for the VACANT
PORTION of Sombrero Island where there was none, the same constituted another clear case of
fraud and misrepresentation;
"3. That the issuance of Homestead Patent No. 145927 and OCT No. G-7089 in the name of [Respondent]
Manuel Palanca Jr. and the filing of Homestead Patent Applications in the names of [respondents], Lorenzo
Agustin, Jesus Gapilango and Juan Fresnillo[,] having been done fraudulently and in bad faith, are ipso facto
null and void and of no effect whatsoever."19
xxx

xxx

xxx

"x x x. By a wrongful act or a willful omission and intending the effects with natural necessity arise knowing
from such act or omission, [Respondent Palanca] on account of his blood relation, first degree cousins, trust,
interdependence and intimacy is guilty of intrinsic fraud [sic]. x x x." 20
Thereupon, petitioner prayed, among others, for a judgment (1) nullifying the homestead patent applications of
Respondents Agustin, Fresnillo and Gapilango as well as Homestead Patent No. 145927 and OCT No. G-7089 in the
name of Respondent Palanca; and (2) ordering the director of the Land Management Bureau to reconvey the Sombrero
Island to petitioner.21
The question is, did the Complaint sufficiently allege an action for declaration of nullity of the free patent and certificate
of title or, alternatively, for reconveyance? Or did it plead merely for reversion?
The Complaint did not sufficiently make a case for any of such actions, over which the trial court could have exercised
jurisdiction.
In an action for nullification of title or declaration of its nullity, the complaint must contain the following allegations: 1)
that the contested land was privately owned by the plaintiff prior to the issuance of the assailed certificate of title to the
defendant; and 2) that the defendant perpetuated a fraud or committed a mistake in obtaining a document of title over the
parcel of land claimed by the plaintiff. 22 In these cases, the nullity arises not from fraud or deceit, but from the fact that
the director of the Land Management Bureau had no jurisdiction to bestow title; hence, the issued patent or certificate of
title was void ab initio.23
In an alternative action for reconveyance, the certificate of title is also respected as incontrovertible, but the transfer of
the property or title thereto is sought to be nullified on the ground that it was wrongfully or erroneously registered in the
defendants name.24 As with an annulment of title, a complaint must allege two facts that, if admitted, would entitle the
plaintiff to recover title to the disputed land: (1) that the plaintiff was the owner of the land, and (2) that the defendant

illegally dispossessed the plaintiff of the property.25 Therefore, the defendant who acquired the property through mistake
or fraud is bound to hold and reconvey to the plaintiff the property or the title thereto. 26
In the present case, nowhere in the Complaint did petitioner allege that he had previously held title to the land in
question. On the contrary, he acknowledged that the disputed island was public land, 27 that it had never been privately
titled in his name, and that he had not applied for a homestead under the provisions of the Public Land Act. 28 This Court
has held that a complaint by a private party who alleges that a homestead patent was obtained by fraudulent means, and
who consequently prays for its annulment, does not state a cause of action; hence, such complaint must be dismissed. 29
Neither can petitioners case be one for reversion. Section 101 of the Public Land Act categorically declares that only the
solicitor general or the officer in his stead may institute such an action. 30 A private person may not bring an action for
reversion or any other action that would have the effect of canceling a free patent and its derivative title, with the result
that the land thereby covered would again form part of the public domain. 31
Thus, when the plaintiff admits in the complaint that the disputed land will revert to the public domain even if the title is
canceled or amended, the action is for reversion; and the proper party who may bring action is the government, to which
the property will revert.32 A mere homestead applicant, not being the real party in interest, has no cause of action in a suit
for reconveyance.33 As it is, vested rights over the land applied for under a homestead may be validly claimed only by the
applicant, after approval by the director of the Land Management Bureau of the formers final proof of homestead
patent.34
Consequently, the dismissal of the Complaint is proper not only because of lack of jurisdiction, but also because of the
utter absence of a cause of action, 35 a defense raised by respondents in their Answer. 36 Section 2 of Rule 3 of the Rules of
Court37 ordains that every action must be prosecuted or defended in the name of the real party in interest, who stands to
be benefited or injured by the judgment in the suit. Indeed, one who has no right or interest to protect has no cause of
action by which to invoke, as a party-plaintiff, the jurisdiction of the court. 38
Finally, assuming that petitioner is the proper party to bring the action for annulment of title or its reconveyance, the case
should still be dismissed for being time-barred.39 It is not disputed that a homestead patent and an Original Certificate of
Title was issued to Palanca on February 21, 1977, 40 while the Complaint was filed only on October 6, 1998. Clearly, the
suit was brought way past ten years from the date of the issuance of the Certificate, the prescriptive period for
reconveyance of fraudulently registered real property.41
It must likewise be stressed that Palancas title -- which attained the status of indefeasibility one year from the issuance
of the patent and the Certificate of Title in February 1977 -- is no longer open to review on the ground of actual fraud.
Ybanez v. Intermediate Appellate Court 42 ruled that a certificate of title, issued under an administrative proceeding
pursuant to a homestead patent, is as indefeasible as one issued under a judicial registration proceeding one year from its
issuance; provided, however, that the land covered by it is disposable public land, as in this case.
In Aldovino v. Alunan,43 the Court has held that when the plaintiffs own complaint shows clearly that the action has
prescribed, such action may be dismissed even if the defense of prescription has not been invoked by the defendant. In
Gicano v. Gegato,44 we also explained thus:
"x x x [T]rial courts have authority and discretion to dismiss an action on the ground of prescription when the
parties' pleadings or other facts on record show it to be indeed time-barred; (Francisco v. Robles, Feb. 15,

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 35
1954; Sison v. McQuaid, 50 O.G. 97; Bambao v. Lednicky, Jan. 28, 1961; Cordova v. Cordova, Jan. 14, 1958;
Convets, Inc. v. NDC, Feb. 28, 1958; 32 SCRA 529; Sinaon v. Sorongan, 136 SCRA 408); and it may do so on
the basis of a motion to dismiss (Sec. 1,f, Rule 16, Rules of Court), or an answer which sets up such ground as
an affirmative defense (Sec. 5, Rule 16), or even if the ground is alleged after judgment on the merits, as in a
motion for reconsideration (Ferrer v. Ericta, 84 SCRA 705); or even if the defense has not been asserted at all,
as where no statement thereof is found in the pleadings (Garcia v. Mathis, 100 SCRA 250; PNB v. Pacific
Commission House, 27 SCRA 766; Chua Lamco v. Dioso, et al., 97 Phil. 821); or where a defendant has been
declared in default (PNB v. Perez, 16 SCRA 270). What is essential only, to repeat, is that the facts
demonstrating the lapse of the prescriptive period be otherwise sufficiently and satisfactorily apparent on the
record; either in the averments of the plaintiff's complaint, or otherwise established by the evidence." 45 (Italics
supplied)
Clearly then, the CA did not err in dismissing the present case. After all, if and when they are able to do so, courts must
endeavor to settle entire controversies before them to prevent future litigations. 46
WHEREFORE, the Petition is hereby DENIED, and the assailed Resolution AFFIRMED. The dismissal of the
Complaint in Civil Case No. 3231 is SUSTAINED on the grounds of lack of jurisdiction, failure to state a cause of
action and prescription. Costs against petitioner.
SO ORDERED.
Sandoval-Gutierrez, Corona, and Carpio Morales*, JJ., concur.

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 36

THIRD DIVISION
G.R. No. 147406

thereto is only 20 kilometers per hour, when no evidence whatsoever to that effect was ever presented by the
prosecution during the trial of this case?

July 14, 2008

d. Is the Honorable Court of Appeals justified in convicting the petitioner for homicide through reckless
imprudence (the legally correct designation is "reckless imprudence resulting to homicide") with violation of
the Land Transportation and Traffic Code when the prosecution did not prove this during the trial and, more
importantly, the information filed against the petitioner does not contain an allegation to that effect?

VENANCIO FIGUEROA y CERVANTES, Petitioner,

vs.
PEOPLE OF THE PHILIPPINES, Respondent.

e. Does the uncontroverted testimony of the defense witness Leonardo Hernal that the victim unexpectedly
crossed the road resulting in him getting hit by the bus driven by the petitioner not enough evidence to acquit
him of the crime charged?9

DECISION
NACHURA, J.:
When is a litigant estopped by laches from assailing the jurisdiction of a tribunal? This is the paramount issue raised in
this petition for review of the February 28, 2001 Decision 2 of the Court of Appeals (CA) in CA-G.R. CR No. 22697.
Pertinent are the following antecedent facts and proceedings:
On July 8, 1994, an information3 for reckless imprudence resulting in homicide was filed against the petitioner before the
Regional Trial Court (RTC) of Bulacan, Branch 18. 4 The case was docketed as Criminal Case No. 2235-M-94. 5 Trial on
the merits ensued and on August 19, 1998, the trial court convicted the petitioner as charged. 6 In his appeal before the
CA, the petitioner questioned, among others, for the first time, the trial courts jurisdiction. 7
The appellate court, however, in the challenged decision, considered the petitioner to have actively participated in the
trial and to have belatedly attacked the jurisdiction of the RTC; thus, he was already estopped by laches from asserting
the trial courts lack of jurisdiction. Finding no other ground to reverse the trial courts decision, the CA affirmed the
petitioners conviction but modified the penalty imposed and the damages awarded. 8
Dissatisfied, the petitioner filed the instant petition for review on certiorari raising the following issues for our resolution:
a. Does the fact that the petitioner failed to raise the issue of jurisdiction during the trial of this case, which
was initiated and filed by the public prosecutor before the wrong court, constitute laches in relation to the
doctrine laid down in Tijam v. Sibonghanoy, notwithstanding the fact that said issue was immediately raised in
petitioners appeal to the Honorable Court of Appeals? Conversely, does the active participation of the
petitioner in the trial of his case, which is initiated and filed not by him but by the public prosecutor, amount to
estoppel?
b. Does the admission of the petitioner that it is difficult to immediately stop a bus while it is running at 40
kilometers per hour for the purpose of avoiding a person who unexpectedly crossed the road, constitute enough
incriminating evidence to warrant his conviction for the crime charged?
c. Is the Honorable Court of Appeals justified in considering the place of accident as falling within Item 4 of
Section 35 (b) of the Land Transportation and Traffic Code, and subsequently ruling that the speed limit

Applied uniformly is the familiar rule that the jurisdiction of the court to hear and decide a case is conferred by the law in
force at the time of the institution of the action, unless such statute provides for a retroactive application thereof. 10 In this
case, at the time the criminal information for reckless imprudence resulting in homicide with violation of the Automobile
Law (now Land Transportation and Traffic Code) was filed, Section 32(2) of Batas Pambansa (B.P.) Blg. 129 11 had
already been amended by Republic Act No. 7691.12 The said provision thus reads:
Sec. 32. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in Criminal
Cases.Except in cases falling within the exclusive original jurisdiction of Regional Trial Courts and the
Sandiganbayan, the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts shall exercise:
xxxx
(2) Exclusive original jurisdiction over all offenses punishable with imprisonment not exceeding six (6) years
irrespective of the amount of fine, and regardless of other imposable accessory or other penalties, including the civil
liability arising from such offenses or predicated thereon, irrespective of kind, nature, value or amount thereof: Provided,
however, That in offenses involving damage to property through criminal negligence, they shall have exclusive original
jurisdiction thereof.
As the imposable penalty for the crime charged herein is prision correccional in its medium and maximum periods or
imprisonment for 2 years, 4 months and 1 day to 6 years, 13 jurisdiction to hear and try the same is conferred on the
Municipal Trial Courts (MTCs). Clearly, therefore, the RTC of Bulacan does not have jurisdiction over Criminal Case
No. 2235-M-94.
While both the appellate court and the Solicitor General acknowledge this fact, they nevertheless are of the position that
the principle of estoppel by laches has already precluded the petitioner from questioning the jurisdiction of the RTCthe
trial went on for 4 years with the petitioner actively participating therein and without him ever raising the jurisdictional
infirmity. The petitioner, for his part, counters that the lack of jurisdiction of a court over the subject matter may be raised
at any time even for the first time on appeal. As undue delay is further absent herein, the principle of laches will not be
applicable.
To settle once and for all this problem of jurisdiction vis--vis estoppel by laches, which continuously confounds the
bench and the bar, we shall analyze the various Court decisions on the matter.

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 37
As early as 1901, this Court has declared that unless jurisdiction has been conferred by some legislative act, no court or
tribunal can act on a matter submitted to it.14 We went on to state in U.S. v. De La Santa15 that:

this Court (over P200,000). Our minute resolution in G.R. No. L-10096, Hyson Tan, et al. vs. Filipinas Compaa de
Seguros, et al., of March 23, 1956, a parallel case, is applicable to the conduct of plaintiff-appellee in this case, thus:

It has been frequently held that a lack of jurisdiction over the subject-matter is fatal, and subject to objection at any stage
of the proceedings, either in the court below or on appeal (Ency. of Pl. & Pr., vol. 12, p. 189, and large array of cases
there cited), and indeed, where the subject-matter is not within the jurisdiction, the court may dismiss the proceeding ex
mero motu. (4 Ill., 133; 190 Ind., 79; Chipman vs. Waterbury, 59 Conn., 496.)

x x x that an appellant who files his brief and submits his case to the Court of Appeals for decision, without questioning
the latters jurisdiction until decision is rendered therein, should be considered as having voluntarily waived so much of
his claim as would exceed the jurisdiction of said Appellate Court; for the reason that a contrary rule would encourage
the undesirable practice of appellants submitting their cases for decision to the Court of Appeals in expectation of
favorable judgment, but with intent of attacking its jurisdiction should the decision be unfavorable: x x x 20

Jurisdiction over the subject-matter in a judicial proceeding is conferred by the sovereign authority which organizes the
court; it is given only by law and in the manner prescribed by law and an objection based on the lack of such jurisdiction
can not be waived by the parties. x x x16

Then came our ruling in Tijam v. Sibonghanoy 21 that a party may be barred by laches from invoking lack of jurisdiction
at a late hour for the purpose of annulling everything done in the case with the active participation of said party invoking
the plea. We expounded, thus:

Later, in People v. Casiano,17 the Court explained:

4. The operation of the principle of estoppel on the question of jurisdiction seemingly depends upon whether the lower
court actually had jurisdiction or not. If it had no jurisdiction, but the case was tried and decided upon the theory that it
had jurisdiction, the parties are not barred, on appeal, from assailing such jurisdiction, for the same "must exist as a
matter of law, and may not be conferred by consent of the parties or by estoppel" (5 C.J.S., 861-863). However, if the
lower court had jurisdiction, and the case was heard and decided upon a given theory, such, for instance, as that the court
had no jurisdiction, the party who induced it to adopt such theory will not be permitted, on appeal, to assume an
inconsistent positionthat the lower court had jurisdiction. Here, the principle of estoppel applies. The rule that
jurisdiction is conferred by law, and does not depend upon the will of the parties, has no bearing thereon. Thus, Corpus
Juris Secundum says:
Where accused has secured a decision that the indictment is void, or has been granted an instruction based on its
defective character directing the jury to acquit, he is estopped, when subsequently indicted, to assert that the former
indictment was valid. In such case, there may be a new prosecution whether the indictment in the former prosecution was
good or bad. Similarly, where, after the jury was impaneled and sworn, the court on accused's motion quashed the
information on the erroneous assumption that the court had no jurisdiction, accused cannot successfully plead former
jeopardy to a new information. x x x (22 C.J.S., sec. 252, pp. 388-389; italics ours.)
Where accused procured a prior conviction to be set aside on the ground that the court was without jurisdiction, he is
estopped subsequently to assert, in support of a defense of previous jeopardy, that such court had jurisdiction." (22 C.J.S.
p. 378.)18

A party may be estopped or barred from raising a question in different ways and for different reasons. Thus, we speak of
estoppel in pais, of estoppel by deed or by record, and of estoppel by laches.
Laches, in a general sense, is failure or neglect, for an unreasonable and unexplained length of time, to do that which, by
exercising due diligence, could or should have been done earlier; it is negligence or omission to assert a right within a
reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert
it.
The doctrine of laches or of "stale demands" is based upon grounds of public policy which requires, for the peace of
society, the discouragement of stale claims and, unlike the statute of limitations, is not a mere question of time but is
principally a question of the inequity or unfairness of permitting a right or claim to be enforced or asserted.
It has been held that a party cannot invoke the jurisdiction of a court to secure affirmative relief against his opponent and,
after obtaining or failing to obtain such relief, repudiate or question that same jurisdiction (Dean vs. Dean, 136 Or. 694,
86 A.L.R. 79). In the case just cited, by way of explaining the rule, it was further said that the question whether the court
had jurisdiction either of the subject matter of the action or of the parties was not important in such cases because the
party is barred from such conduct not because the judgment or order of the court is valid and conclusive as an
adjudication, but for the reason that such a practice cannot be toleratedobviously for reasons of public policy.

But in Pindagan Agricultural Co., Inc. v. Dans, 19 the Court, in not sustaining the plea of lack of jurisdiction by the
plaintiff-appellee therein, made the following observations:

Furthermore, it has also been held that after voluntarily submitting a cause and encountering an adverse decision on the
merits, it is too late for the loser to question the jurisdiction or power of the court (Pease vs. Rathbun-Jones etc., 243 U.S.
273, 61 L. Ed. 715, 37 S.Ct. 283; St. Louis etc. vs. McBride, 141 U.S. 127, 35 L. Ed. 659). And in Littleton vs. Burgess,
16 Wyo. 58, the Court said that it is not right for a party who has affirmed and invoked the jurisdiction of a court in a
particular matter to secure an affirmative relief, to afterwards deny that same jurisdiction to escape a penalty.

It is surprising why it is only now, after the decision has been rendered, that the plaintiff-appellee presents the question of
this Courts jurisdiction over the case. Republic Act No. 2613 was enacted on August 1, 1959. This case was argued on
January 29, 1960. Notwithstanding this fact, the jurisdiction of this Court was never impugned until the adverse decision
of this Court was handed down. The conduct of counsel leads us to believe that they must have always been of the belief
that notwithstanding said enactment of Republic Act 2613 this Court has jurisdiction of the case, such conduct being born
out of a conviction that the actual real value of the properties in question actually exceeds the jurisdictional amount of

Upon this same principle is what We said in the three cases mentioned in the resolution of the Court of Appeals of May
20, 1963 (supra)to the effect that we frown upon the "undesirable practice" of a party submitting his case for decision
and then accepting the judgment, only if favorable, and attacking it for lack of jurisdiction, when adverseas well as in
Pindagan etc. vs. Dans et al., G.R. L-14591, September 26, 1962; Montelibano et al. vs. Bacolod-Murcia Milling Co.,
Inc., G.R. L-15092; Young Men Labor Union etc. vs. The Court of Industrial Relations et al., G.R. L-20307, Feb. 26,
1965, and Mejia vs. Lucas, 100 Phil. p. 277.

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 38
The facts of this case show that from the time the Surety became a quasi-party on July 31, 1948, it could have raised the
question of the lack of jurisdiction of the Court of First Instance of Cebu to take cognizance of the present action by
reason of the sum of money involved which, according to the law then in force, was within the original exclusive
jurisdiction of inferior courts. It failed to do so. Instead, at several stages of the proceedings in the court a quo, as well as
in the Court of Appeals, it invoked the jurisdiction of said courts to obtain affirmative relief and submitted its case for a
final adjudication on the merits. It was only after an adverse decision was rendered by the Court of Appeals that it finally
woke up to raise the question of jurisdiction. Were we to sanction such conduct on its part, We would in effect be
declaring as useless all the proceedings had in the present case since it was commenced on July 19, 1948 and compel the
judgment creditors to go up their Calvary once more. The inequity and unfairness of this is not only patent but
revolting.22
For quite a time since we made this pronouncement in Sibonghanoy, courts and tribunals, in resolving issues that involve
the belated invocation of lack of jurisdiction, have applied the principle of estoppel by laches. Thus, in Calimlim v.
Ramirez,23 we pointed out that Sibonghanoy was developing into a general rule rather than the exception:
A rule that had been settled by unquestioned acceptance and upheld in decisions so numerous to cite is that the
jurisdiction of a court over the subject-matter of the action is a matter of law and may not be conferred by consent or
agreement of the parties. The lack of jurisdiction of a court may be raised at any stage of the proceedings, even on
appeal. This doctrine has been qualified by recent pronouncements which stemmed principally from the ruling in the
cited case of Sibonghanoy. It is to be regretted, however, that the holding in said case had been applied to situations
which were obviously not contemplated therein. The exceptional circumstance involved in Sibonghanoy which justified
the departure from the accepted concept of non-waivability of objection to jurisdiction has been ignored and, instead a
blanket doctrine had been repeatedly upheld that rendered the supposed ruling in Sibonghanoy not as the exception, but
rather the general rule, virtually overthrowing altogether the time-honored principle that the issue of jurisdiction is not
lost by waiver or by estoppel.
In Sibonghanoy, the defense of lack of jurisdiction of the court that rendered the questioned ruling was held to be barred
by estoppel by laches. It was ruled that the lack of jurisdiction having been raised for the first time in a motion to dismiss
filed almost fifteen (15) years after the questioned ruling had been rendered, such a plea may no longer be raised for
being barred by laches. As defined in said case, laches is "failure or neglect, for an unreasonable and unexplained length
of time, to do that which, by exercising due diligence, could or should have been done earlier; it is negligence or
omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert has
abandoned it or declined to assert it.24
In Calimlim, despite the fact that the one who benefited from the plea of lack of jurisdiction was the one who invoked the
courts jurisdiction, and who later obtained an adverse judgment therein, we refused to apply the ruling in Sibonghanoy.
The Court accorded supremacy to the time-honored principle that the issue of jurisdiction is not lost by waiver or by
estoppel.
Yet, in subsequent cases decided after Calimlim, which by sheer volume are too plentiful to mention, the Sibonghanoy
doctrine, as foretold in Calimlim, became the rule rather than the exception. As such, in Soliven v. Fastforms Philippines,
Inc.,25 the Court ruled:
While it is true that jurisdiction may be raised at any time, "this rule presupposes that estoppel has not supervened." In
the instant case, respondent actively participated in all stages of the proceedings before the trial court and invoked its
authority by asking for an affirmative relief. Clearly, respondent is estopped from challenging the trial courts

jurisdiction, especially when an adverse judgment has been rendered. In PNOC Shipping and Transport Corporation vs.
Court of Appeals, we held:
Moreover, we note that petitioner did not question at all the jurisdiction of the lower court x x x in its answers to both the
amended complaint and the second amended complaint. It did so only in its motion for reconsideration of the decision of
the lower court after it had received an adverse decision. As this Court held in Pantranco North Express, Inc. vs. Court of
Appeals (G.R. No. 105180, July 5, 1993, 224 SCRA 477, 491), participation in all stages of the case before the trial
court, that included invoking its authority in asking for affirmative relief, effectively barred petitioner by estoppel from
challenging the courts jurisdiction. Notably, from the time it filed its answer to the second amended complaint on April
16, 1985, petitioner did not question the lower courts jurisdiction. It was only on December 29, 1989 when it filed its
motion for reconsideration of the lower courts decision that petitioner raised the question of the lower courts lack of
jurisdiction. Petitioner thus foreclosed its right to raise the issue of jurisdiction by its own inaction. (italics ours)
Similarly, in the subsequent case of Sta. Lucia Realty and Development, Inc. vs. Cabrigas, we ruled:
In the case at bar, it was found by the trial court in its 30 September 1996 decision in LCR Case No. Q-60161(93) that
private respondents (who filed the petition for reconstitution of titles) failed to comply with both sections 12 and 13 of
RA 26 and therefore, it had no jurisdiction over the subject matter of the case. However, private respondents never
questioned the trial courts jurisdiction over its petition for reconstitution throughout the duration of LCR Case No. Q60161(93). On the contrary, private respondents actively participated in the reconstitution proceedings by filing pleadings
and presenting its evidence. They invoked the trial courts jurisdiction in order to obtain affirmative relief the
reconstitution of their titles. Private respondents have thus foreclosed their right to raise the issue of jurisdiction by their
own actions.
The Court has constantly upheld the doctrine that while jurisdiction may be assailed at any stage, a litigants participation
in all stages of the case before the trial court, including the invocation of its authority in asking for affirmative relief, bars
such party from challenging the courts jurisdiction (PNOC Shipping and Transport Corporation vs. Court of Appeals,
297 SCRA 402 [1998]). A party cannot invoke the jurisdiction of a court to secure affirmative relief against his opponent
and after obtaining or failing to obtain such relief, repudiate or question that same jurisdiction (Asset Privatization Trust
vs. Court of Appeals, 300 SCRA 579 [1998]; Province of Bulacan vs. Court of Appeals, 299 SCRA 442 [1998]). The
Court frowns upon the undesirable practice of a party participating in the proceedings and submitting his case for
decision and then accepting judgment, only if favorable, and attacking it for lack of jurisdiction, when adverse
(Producers Bank of the Philippines vs. NLRC, 298 SCRA 517 [1998], citing Ilocos Sur Electric Cooperative, Inc. vs.
NLRC, 241 SCRA 36 [1995]). (italics ours)26
Noteworthy, however, is that, in the 2005 case of Metromedia Times Corporation v. Pastorin, 27 where the issue of lack of
jurisdiction was raised only in the National Labor Relations Commission (NLRC) on appeal, we stated, after examining
the doctrines of jurisdiction vis--vis estoppel, that the ruling in Sibonghanoy stands as an exception, rather than the
general rule. Metromedia, thus, was not estopped from assailing the jurisdiction of the labor arbiter before the NLRC on
appeal.281avvphi1
Later, in Francel Realty Corporation v. Sycip,29 the Court clarified that:
Petitioner argues that the CAs affirmation of the trial courts dismissal of its case was erroneous, considering that a fullblown trial had already been conducted. In effect, it contends that lack of jurisdiction could no longer be used as a ground
for dismissal after trial had ensued and ended.

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 39
The above argument is anchored on estoppel by laches, which has been used quite successfully in a number of cases to
thwart dismissals based on lack of jurisdiction. Tijam v. Sibonghanoy, in which this doctrine was espoused, held that a
party may be barred from questioning a courts jurisdiction after being invoked to secure affirmative relief against its
opponent. In fine, laches prevents the issue of lack of jurisdiction from being raised for the first time on appeal by a
litigant whose purpose is to annul everything done in a trial in which it has actively participated.
Laches is defined as the "failure or neglect for an unreasonable and unexplained length of time, to do that which, by
exercising due diligence, could or should have been done earlier; it is negligence or omission to assert a right within a
reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert
it."
The ruling in Sibonghanoy on the matter of jurisdiction is, however, the exception rather than the rule. 1avvphi1 Estoppel
by laches may be invoked to bar the issue of lack of jurisdiction only in cases in which the factual milieu is analogous to
that in the cited case. In such controversies, laches should be clearly present; that is, lack of jurisdiction must have been
raised so belatedly as to warrant the presumption that the party entitled to assert it had abandoned or declined to assert it.
That Sibonghanoy applies only to exceptional circumstances is clarified in Calimlim v. Ramirez, which we quote:
A rule that had been settled by unquestioned acceptance and upheld in decisions so numerous to cite is that the
jurisdiction of a court over the subject-matter of the action is a matter of law and may not be conferred by consent or
agreement of the parties. The lack of jurisdiction of a court may be raised at any stage of the proceedings, even on
appeal. This doctrine has been qualified by recent pronouncements which stemmed principally from the ruling in the
cited case of Sibonghanoy. It is to be regretted, however, that the holding in said case had been applied to situations
which were obviously not contemplated therein. The exceptional circumstance involved in Sibonghanoy which justified
the departure from the accepted concept of non-waivability of objection to jurisdiction has been ignored and, instead a
blanket doctrine had been repeatedly upheld that rendered the supposed ruling in Sibonghanoy not as the exception, but
rather the general rule, virtually overthrowing altogether the time-honored principle that the issue of jurisdiction is not
lost by waiver or by estoppel.
Indeed, the general rule remains: a courts lack of jurisdiction may be raised at any stage of the proceedings, even on
appeal. The reason is that jurisdiction is conferred by law, and lack of it affects the very authority of the court to take
cognizance of and to render judgment on the action. Moreover, jurisdiction is determined by the averments of the
complaint, not by the defenses contained in the answer.30
Also, in Mangaliag v. Catubig-Pastoral,31 even if the pleader of lack of jurisdiction actively took part in the trial
proceedings by presenting a witness to seek exoneration, the Court, reiterating the doctrine in Calimlim, said:
Private respondent argues that the defense of lack of jurisdiction may be waived by estoppel through active participation
in the trial. Such, however, is not the general rule but an exception, best characterized by the peculiar circumstances
in Tijam vs. Sibonghanoy. In Sibonghanoy, the party invoking lack of jurisdiction did so only after fifteen years and at a
stage when the proceedings had already been elevated to the CA. Sibonghanoy is an exceptional case because of the
presence of laches, which was defined therein as failure or neglect for an unreasonable and unexplained length of time to
do that which, by exercising due diligence, could or should have been done earlier; it is the negligence or omission to
assert a right within a reasonable time, warranting a presumption that the party entitled to assert has abandoned it or
declined to assert it.32

And in the more recent Regalado v. Go, 33 the Court again emphasized that laches should be clearly present for the
Sibonghanoy doctrine to be applicable, thus:
Laches is defined as the "failure or neglect for an unreasonable and unexplained length of time, to do that which, by
exercising due diligence, could or should have been done earlier, it is negligence or omission to assert a right within a
reasonable length of time, warranting a presumption that the party entitled to assert it either has abandoned it or declined
to assert it."
The ruling in People v. Regalario that was based on the landmark doctrine enunciated in Tijam v. Sibonghanoy on the
matter of jurisdiction by estoppel is the exception rather than the rule. Estoppel by laches may be invoked to bar the issue
of lack of jurisdiction only in cases in which the factual milieu is analogous to that in the cited case. In such
controversies, laches should have been clearly present; that is, lack of jurisdiction must have been raised so belatedly as
to warrant the presumption that the party entitled to assert it had abandoned or declined to assert it.
In Sibonghanoy, the defense of lack of jurisdiction was raised for the first time in a motion to dismiss filed by the Surety
almost 15 years after the questioned ruling had been rendered. At several stages of the proceedings, in the court a quo as
well as in the Court of Appeals, the Surety invoked the jurisdiction of the said courts to obtain affirmative relief and
submitted its case for final adjudication on the merits. It was only when the adverse decision was rendered by the Court
of Appeals that it finally woke up to raise the question of jurisdiction.
Clearly, the factual settings attendant in Sibonghanoy are not present in the case at bar. Petitioner Atty. Regalado, after
the receipt of the Court of Appeals resolution finding her guilty of contempt, promptly filed a Motion for Reconsideration
assailing the said courts jurisdiction based on procedural infirmity in initiating the action. Her compliance with the
appellate courts directive to show cause why she should not be cited for contempt and filing a single piece of pleading to
that effect could not be considered as an active participation in the judicial proceedings so as to take the case within the
milieu of Sibonghanoy. Rather, it is the natural fear to disobey the mandate of the court that could lead to dire
consequences that impelled her to comply.34
The Court, thus, wavered on when to apply the exceptional circumstance in Sibonghanoy and on when to apply the
general rule enunciated as early as in De La Santa and expounded at length in Calimlim. The general rule should,
however, be, as it has always been, that the issue of jurisdiction may be raised at any stage of the proceedings, even on
appeal, and is not lost by waiver or by estoppel. Estoppel by laches, to bar a litigant from asserting the courts absence or
lack of jurisdiction, only supervenes in exceptional cases similar to the factual milieu of Tijam v. Sibonghanoy. Indeed,
the fact that a person attempts to invoke unauthorized jurisdiction of a court does not estop him from thereafter
challenging its jurisdiction over the subject matter, since such jurisdiction must arise by law and not by mere consent of
the parties. This is especially true where the person seeking to invoke unauthorized jurisdiction of the court does not
thereby secure any advantage or the adverse party does not suffer any harm. 35
Applying the said doctrine to the instant case, the petitioner is in no way estopped by laches in assailing the jurisdiction
of the RTC, considering that he raised the lack thereof in his appeal before the appellate court. At that time, no
considerable period had yet elapsed for laches to attach. True, delay alone, though unreasonable, will not sustain the
defense of "estoppel by laches" unless it further appears that the party, knowing his rights, has not sought to enforce them
until the condition of the party pleading laches has in good faith become so changed that he cannot be restored to his
former state, if the rights be then enforced, due to loss of evidence, change of title, intervention of equities, and other
causes.36 In applying the principle of estoppel by laches in the exceptional case of Sibonghanoy, the Court therein

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 40
considered the patent and revolting inequity and unfairness of having the judgment creditors go up their Calvary once
more after more or less 15 years.37 The same, however, does not obtain in the instant case.
We note at this point that estoppel, being in the nature of a forfeiture, is not favored by law. It is to be applied rarely
only from necessity, and only in extraordinary circumstances. The doctrine must be applied with great care and the equity
must be strong in its favor.38 When misapplied, the doctrine of estoppel may be a most effective weapon for the
accomplishment of injustice.39 Moreover, a judgment rendered without jurisdiction over the subject matter is
void.40 Hence, the Revised Rules of Court provides for remedies in attacking judgments rendered by courts or tribunals
that have no jurisdiction over the concerned cases. No laches will even attach when the judgment is null and void for
want of jurisdiction.41 As we have stated in Heirs of Julian Dela Cruz and Leonora Talaro v. Heirs of Alberto Cruz, 42
It is axiomatic that the jurisdiction of a tribunal, including a quasi-judicial officer or government agency, over the nature
and subject matter of a petition or complaint is determined by the material allegations therein and the character of the
relief prayed for, irrespective of whether the petitioner or complainant is entitled to any or all such reliefs. Jurisdiction
over the nature and subject matter of an action is conferred by the Constitution and the law, and not by the consent or
waiver of the parties where the court otherwise would have no jurisdiction over the nature or subject matter of the action.
Nor can it be acquired through, or waived by, any act or omission of the parties. Moreover, estoppel does not apply to
confer jurisdiction to a tribunal that has none over the cause of action. x x x
Indeed, the jurisdiction of the court or tribunal is not affected by the defenses or theories set up by the defendant or
respondent in his answer or motion to dismiss. Jurisdiction should be determined by considering not only the status or the
relationship of the parties but also the nature of the issues or questions that is the subject of the controversy. x x x x The
proceedings before a court or tribunal without jurisdiction, including its decision, are null and void, hence, susceptible to
direct and collateral attacks.43
With the above considerations, we find it unnecessary to resolve the other issues raised in the petition.
WHEREFORE, premises considered, the petition for review on certiorari is GRANTED. Criminal Case No. 2235-M-94
is hereby DISMISSED without prejudice.
SO ORDERED.

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THIRD DIVISION
G.R. No. 162059

January 22, 2008

HANNAH EUNICE D. SERANA, petitioner,

vs.
SANDIGANBAYAN and PEOPLE OF THE PHILIPPINES, respondents.
DECISION
REYES, R.T., J.:
CAN the Sandiganbayan try a government scholaran ** accused, along with her brother, of swindling government funds?
MAAARI bang litisin ng Sandiganbayan ang isang iskolar ng bayan, at ang kanyang kapatid, na kapwa
pinararatangan ng estafa ng pera ng bayan?
The jurisdictional question is posed in this petition for certiorari assailing the Resolutions 1 of the Sandiganbayan, Fifth
Division, denying petitioners motion to quash the information and her motion for reconsideration.
The Antecedents
Petitioner Hannah Eunice D. Serana was a senior student of the University of the Philippines-Cebu. A student of a state
university is known as a government scholar. She was appointed by then President Joseph Estrada on December 21, 1999
as a student regent of UP, to serve a one-year term starting January 1, 2000 and ending on December 31, 2000.
In the early part of 2000, petitioner discussed with President Estrada the renovation of Vinzons Hall Annex in UP
Diliman.2 On September 4, 2000, petitioner, with her siblings and relatives, registered with the Securities and Exchange
Commission the Office of the Student Regent Foundation, Inc. (OSRFI). 3
One of the projects of the OSRFI was the renovation of the Vinzons Hall Annex. 4 President Estrada gave Fifteen Million
Pesos (P15,000,000.00) to the OSRFI as financial assistance for the proposed renovation. The source of the funds,
according to the information, was the Office of the President.
The renovation of Vinzons Hall Annex failed to materialize. 5 The succeeding student regent, Kristine Clare Bugayong,
and Christine Jill De Guzman, Secretary General of the KASAMA sa U.P., a system-wide alliance of student councils
within the state university, consequently filed a complaint for Malversation of Public Funds and Property with the Office
of the Ombudsman.6
On July 3, 2003, the Ombudsman, after due investigation, found probable cause to indict petitioner and her brother Jade
Ian D. Serana for estafa, docketed as Criminal Case No. 27819 of the Sandiganbayan.7 The Information reads:

The undersigned Special Prosecution Officer III, Office of the Special Prosecutor, hereby accuses HANNAH
EUNICE D. SERANA and JADE IAN D. SERANA of the crime of Estafa, defined and penalized under
Paragraph 2(a), Article 315 of the Revised Penal Code, as amended committed as follows:
That on October, 24, 2000, or sometime prior or subsequent thereto, in Quezon City, Metro Manila,
Philippines, and within the jurisdiction of this Honorable Court, above-named accused, HANNAH EUNICE
D. SERANA, a high-ranking public officer, being then the Student Regent of the University of the Philippines,
Diliman, Quezon City, while in the performance of her official functions, committing the offense in relation to
her office and taking advantage of her position, with intent to gain, conspiring with her brother, JADE IAN D.
SERANA, a private individual, did then and there wilfully, unlawfully and feloniously defraud the government
by falsely and fraudulently representing to former President Joseph Ejercito Estrada that the renovation of the
Vinzons Hall of the University of the Philippines will be renovated and renamed as "President Joseph Ejercito
Estrada Student Hall," and for which purpose accused HANNAH EUNICE D. SERANA requested the amount
of FIFTEEN MILLION PESOS (P15,000,000.00), Philippine Currency, from the Office of the President, and
the latter relying and believing on said false pretenses and misrepresentation gave and delivered to said
accused Land Bank Check No. 91353 dated October 24, 2000 in the amount of FIFTEEN MILLION PESOS
(P15,000,000.00), which check was subsequently encashed by accused Jade Ian D. Serana on October 25,
2000 and misappropriated for their personal use and benefit, and despite repeated demands made upon the
accused for them to return aforesaid amount, the said accused failed and refused to do so to the damage and
prejudice of the government in the aforesaid amount.
CONTRARY TO LAW. (Underscoring supplied)
Petitioner moved to quash the information. She claimed that the Sandiganbayan does not have any jurisdiction over the
offense charged or over her person, in her capacity as UP student regent.
Petitioner claimed that Republic Act (R.A.) No. 3019, as amended by R.A. No. 8249, enumerates the crimes or offenses
over which the Sandiganbayan has jurisdiction. 8 It has no jurisdiction over the crime of estafa.9 It only has jurisdiction
over crimes covered by Title VII, Chapter II, Section 2 (Crimes Committed by Public Officers), Book II of the Revised
Penal Code (RPC). Estafa falling under Title X, Chapter VI (Crimes Against Property), Book II of the RPC is not within
the Sandiganbayans jurisdiction.
She also argued that it was President Estrada, not the government, that was duped. Even assuming that she received
the P15,000,000.00, that amount came from Estrada, not from the coffers of the government. 10
Petitioner likewise posited that the Sandiganbayan had no jurisdiction over her person. As a student regent, she was not a
public officer since she merely represented her peers, in contrast to the other regents who held their positions in an ex
officio capacity. She addsed that she was a simple student and did not receive any salary as a student regent.
She further contended that she had no power or authority to receive monies or funds. Such power was vested with the
Board of Regents (BOR) as a whole. Since it was not alleged in the information that it was among her functions or duties
to receive funds, or that the crime was committed in connection with her official functions, the same is beyond the
jurisdiction of the Sandiganbayan citing the case of Soller v. Sandiganbayan.11

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 42
The Ombudsman opposed the motion. 12 It disputed petitioners interpretation of the law. Section 4(b) of Presidential
Decree (P.D.) No. 1606 clearly contains the catch -all phrase "in relation to office," thus, the Sandiganbayan has
jurisdiction over the charges against petitioner. In the same breath, the prosecution countered that the source of the
money is a matter of defense. It should be threshed out during a full-blown trial. 13

the primordial consideration in the inclusion of these officials is the nature of their responsibilities and
functions.

According to the Ombudsman, petitioner, despite her protestations, iwas a public officer. As a member of the BOR, she
hads the general powers of administration and exerciseds the corporate powers of UP. Based on Mechems definition of a
public office, petitioners stance that she was not compensated, hence, not a public officer, is erroneous. Compensation is
not an essential part of public office. Parenthetically, compensation has been interpreted to include allowances. By this
definition, petitioner was compensated.14

A meticulous review of the existing Charter of the University of the Philippines reveals that the Board of
Regents, to which accused-movant belongs, exclusively exercises the general powers of administration and
corporate powers in the university, such as: 1) To receive and appropriate to the ends specified by law such
sums as may be provided by law for the support of the university; 2) To prescribe rules for its own government
and to enact for the government of the university such general ordinances and regulations, not contrary to law,
as are consistent with the purposes of the university; and 3) To appoint, on recommendation of the President of
the University, professors, instructors, lecturers and other employees of the University; to fix their
compensation, hours of service, and such other duties and conditions as it may deem proper; to grant to them
in its discretion leave of absence under such regulations as it may promulgate, any other provisions of law to
the contrary notwithstanding, and to remove them for cause after an investigation and hearing shall have been
had.

Is accused-movant included in the contemplated provision of law?

Sandiganbayan Disposition
In a Resolution dated November 14, 2003, the Sandiganbayan denied petitioners motion for lack of merit. 15 It
ratiocinated:
The focal point in controversy is the jurisdiction of the Sandiganbayan over this case.

It is well-established in corporation law that the corporation can act only through its board of directors, or
board of trustees in the case of non-stock corporations. The board of directors or trustees, therefore, is the
governing body of the corporation.

It is extremely erroneous to hold that only criminal offenses covered by Chapter II, Section 2, Title VII, Book
II of the Revised Penal Code are within the jurisdiction of this Court. As correctly pointed out by the
prosecution, Section 4(b) of R.A. 8249 provides that the Sandiganbayan also has jurisdiction over other
offenses committed by public officials and employees in relation to their office. From this provision, there is
no single doubt that this Court has jurisdiction over the offense of estafa committed by a public official in
relation to his office.

It is unmistakably evident that the Board of Regents of the University of the Philippines is performing
functions similar to those of the Board of Trustees of a non-stock corporation. This draws to fore the
conclusion that being a member of such board, accused-movant undoubtedly falls within the category of
public officials upon whom this Court is vested with original exclusive jurisdiction, regardless of the fact that
she does not occupy a position classified as Salary Grade 27 or higher under the Compensation and Position
Classification Act of 1989.

Accused-movants claim that being merely a member in representation of the student body, she was never a
public officer since she never received any compensation nor does she fall under Salary Grade 27, is of no
moment, in view of the express provision of Section 4 of Republic Act No. 8249 which provides:

Finally, this court finds that accused-movants contention that the same of P15 Million was received from
former President Estrada and not from the coffers of the government, is a matter a defense that should be
properly ventilated during the trial on the merits of this case. 16

Sec. 4. Jurisdiction The Sandiganbayan shall exercise exclusive original jurisdiction in all cases involving:
(A) x x x
(1) Officials of the executive branch occupying the positions of regional director and higher, otherwise
classified as Grade "27" and higher, of the Compensation and Position Classification Act of 1989 (Republic
Act No. 6758), specifically including:
xxxx
(g) Presidents, directors or trustees, or managers of government-owned or controlled corporations, state
universities or educational institutions or foundations. (Italics supplied)
It is very clear from the aforequoted provision that the Sandiganbayan has original exclusive jurisdiction over
all offenses involving the officials enumerated in subsection (g), irrespective of their salary grades, because

On November 19, 2003, petitioner filed a motion for reconsideration. 17 The motion was denied with finality in a
Resolution dated February 4, 2004.18
Issue
Petitioner is now before this Court, contending that "THE RESPONDENT COURT COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION IN NOT QUASHING THE
INFORMATION AND DISMISING THE CASE NOTWITHSTANDING THAT IS HAS NO JURISDICTION OVER
THE OFFENSE CHARGED IN THE INFORMATION."19
In her discussion, she reiterates her four-fold argument below, namely: (a) the Sandiganbayan has no jurisdiction
over estafa; (b) petitioner is not a public officer with Salary Grade 27 and she paid her tuition fees; (c) the offense

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 43
charged was not committed in relation to her office; (d) the funds in question personally came from President Estrada,
not from the government.

In Manalo v. Mariano (69 SCRA 80), upon the denial of a motion to dismiss based on bar by prior judgment,
this Court granted the petition for certiorari and directed the respondent judge to dismiss the case.

Our Ruling

In Yuviengco v. Dacuycuy (105 SCRA 668), upon the denial of a motion to dismiss based on the Statute of
Frauds, this Court granted the petition for certiorari and dismissed the amended complaint.

The petition cannot be granted.

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

In Tacas v. Cariaso (72 SCRA 527), this Court granted the petition for certiorari after the motion to quash
based on double jeopardy was denied by respondent judge and ordered him to desist from further action in the
criminal case except to dismiss the same.
In People v. Ramos (83 SCRA 11), the order denying the motion to quash based on prescription was set aside
on certiorari and the criminal case was dismissed by this Court.24
We do not find the Sandiganbayan to have committed a grave abuse of discretion.
The jurisdiction of the Sandiganbayan is
set by P.D. No. 1606, as amended, not by
R.A. No. 3019, as amended.
We first address petitioners contention that the jurisdiction of the Sandiganbayan is determined by Section 4 of R.A. No.
3019 (The Anti-Graft and Corrupt Practices Act, as amended). We note that petitioner refers to Section 4 of the said law
yet quotes Section 4 of P.D. No. 1606, as amended, in her motion to quash before the Sandiganbayan. 25 She repeats the
reference in the instant petition for certiorari26 and in her memorandum of authorities.27
We cannot bring ourselves to write this off as a mere clerical or typographical error. It bears stressing that petitioner
repeated this claim twice despite corrections made by the Sandiganbayan. 28
Her claim has no basis in law. It is P.D. No. 1606, as amended, rather than R.A. No. 3019, as amended, that determines
the jurisdiction of the Sandiganbayan. A brief legislative history of the statute creating the Sandiganbayan is in order. The
Sandiganbayan was created by P.D. No. 1486, promulgated by then President Ferdinand E. Marcos on June 11, 1978. It
was promulgated to attain the highest norms of official conduct required of public officers and employees, based on the
concept that public officers and employees shall serve with the highest degree of responsibility, integrity, loyalty and
efficiency and shall remain at all times accountable to the people. 29
P.D. No. 1486 was, in turn, amended by P.D. No. 1606 which was promulgated on December 10, 1978. P.D. No. 1606
expanded the jurisdiction of the Sandiganbayan. 30
P.D. No. 1606 was later amended by P.D. No. 1861 on March 23, 1983, further altering the Sandiganbayan
jurisdiction. R.A. No. 7975 approved on March 30, 1995 made succeeding amendments to P.D. No. 1606, which was
again amended on February 5, 1997 by R.A. No. 8249. Section 4 of R.A. No. 8249 further modified the jurisdiction of
the Sandiganbayan. As it now stands, the Sandiganbayan has jurisdiction over the following:
Sec. 4. Jurisdiction. - The Sandiganbayan shall exercise exclusive original jurisdiction in all cases involving:

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 44
A. Violations of Republic Act No. 3019, as amended, other known as the Anti-Graft and Corrupt Practices Act,
Republic Act No. 1379, and Chapter II, Section 2, Title VII, Book II of the Revised Penal Code, where one or
more of the accused are officials occupying the following positions in the government, whether in a
permanent, acting or interim capacity, at the time of the commission of the offense:
(1) Officials of the executive branch occupying the positions of regional director and higher, otherwise
classified as Grade "27" and higher, of the Compensation and Position Classification Act of 989 (Republic Act
No. 6758), specifically including:
" (a) Provincial governors, vice-governors, members of the sangguniang panlalawigan, and provincial
treasurers, assessors, engineers, and other city department heads;
" (b) City mayor, vice-mayors, members of the sangguniang panlungsod, city treasurers, assessors, engineers,
and other city department heads;
"(c ) Officials of the diplomatic service occupying the position of consul and higher;
" (d) Philippine army and air force colonels, naval captains, and all officers of higher rank;
" (e) Officers of the Philippine National Police while occupying the position of provincial director and those
holding the rank of senior superintended or higher;
" (f) City and provincial prosecutors and their assistants, and officials and prosecutors in the Office of the
Ombudsman and special prosecutor;
" (g) Presidents, directors or trustees, or managers of government-owned or controlled corporations, state
universities or educational institutions or foundations.
" (2) Members of Congress and officials thereof classified as Grade "27'" and up under the Compensation and
Position Classification Act of 1989;
" (3) Members of the judiciary without prejudice to the provisions of the Constitution;
" (4) Chairmen and members of Constitutional Commission, without prejudice to the provisions of the
Constitution; and
" (5) All other national and local officials classified as Grade "27'" and higher under the Compensation and
Position Classification Act of 1989.
B. Other offenses of felonies whether simple or complexed with other crimes committed by the public officials
and employees mentioned in subsection a of this section in relation to their office.
C. Civil and criminal cases filed pursuant to and in connection with Executive Order Nos. 1, 2, 14 and 14-A,
issued in 1986.

" In cases where none of the accused are occupying positions corresponding to Salary Grade "27'" or higher, as
prescribed in the said Republic Act No. 6758, or military and PNP officer mentioned above, exclusive original
jurisdiction thereof shall be vested in the proper regional court, metropolitan trial court, municipal trial court,
and municipal circuit trial court, as the case may be, pursuant to their respective jurisdictions as provided in
Batas Pambansa Blg. 129, as amended.
" The Sandiganbayan shall exercise exclusive appellate jurisdiction over final judgments, resolutions or order
of regional trial courts whether in the exercise of their own original jurisdiction or of their appellate
jurisdiction as herein provided.
" The Sandiganbayan shall have exclusive original jurisdiction over petitions for the issuance of the writs of
mandamus, prohibition, certiorari, habeas corpus, injunctions, and other ancillary writs and processes in aid of
its appellate jurisdiction and over petitions of similar nature, including quo warranto, arising or that may arise
in cases filed or which may be filed under Executive Order Nos. 1, 2, 14 and 14-A, issued in 1986: Provided,
That the jurisdiction over these petitions shall not be exclusive of the Supreme Court.
" The procedure prescribed in Batas Pambansa Blg. 129, as well as the implementing rules that the Supreme
Court has promulgated and may thereafter promulgate, relative to appeals/petitions for review to the Court of
Appeals, shall apply to appeals and petitions for review filed with the Sandiganbayan. In all cases elevated to
the Sandiganbayan and from the Sandiganbayan to the Supreme Court, the Office of the Ombudsman, through
its special prosecutor, shall represent the People of the Philippines, except in cases filed pursuant to Executive
Order Nos. 1, 2, 14 and 14-A, issued in 1986.
" In case private individuals are charged as co-principals, accomplices or accessories with the public officers
or employees, including those employed in government-owned or controlled corporations, they shall be tried
jointly with said public officers and employees in the proper courts which shall exercise exclusive jurisdiction
over them.
" Any provisions of law or Rules of Court to the contrary notwithstanding, the criminal action and the
corresponding civil action for the recovery of civil liability shall, at all times, be simultaneously instituted
with, and jointly determined in, the same proceeding by the Sandiganbayan or the appropriate courts, the filing
of the criminal action being deemed to necessarily carry with it the filing of the civil action, and no right to
reserve the filing such civil action separately from the criminal action shall be recognized: Provided, however,
That where the civil action had heretofore been filed separately but judgment therein has not yet been
rendered, and the criminal case is hereafter filed with the Sandiganbayan or the appropriate court, said civil
action shall be transferred to the Sandiganbayan or the appropriate court, as the case may be, for consolidation
and joint determination with the criminal action, otherwise the separate civil action shall be deemed
abandoned."
Upon the other hand, R.A. No. 3019 is a penal statute approved on August 17, 1960. The said law represses certain acts
of public officers and private persons alike which constitute graft or corrupt practices or which may lead
thereto.31 Pursuant to Section 10 of R.A. No. 3019, all prosecutions for violation of the said law should be filed with the
Sandiganbayan.32

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 45
R.A. No. 3019 does not contain an enumeration of the cases over which the Sandiganbayan has jurisdiction. In fact,
Section 4 of R.A. No. 3019 erroneously cited by petitioner, deals not with the jurisdiction of the Sandiganbayan but with
prohibition on private individuals. We quote:

1606. Plainly, estafa is one of those other felonies. The jurisdiction is simply subject to the twin requirements that (a) the
offense is committed by public officials and employees mentioned in Section 4(A) of P.D. No. 1606, as amended, and
that (b) the offense is committed in relation to their office.

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

In Perlas, Jr. v. People,37 the Court had occasion to explain that the Sandiganbayan has jurisdiction over an indictment
for estafa versus a director of the National Parks Development Committee, a government instrumentality. The Court held
then:

(b) It shall be unlawful for any person knowingly to induce or cause any public official to commit any of the
offenses defined in Section 3 hereof.
In fine, the two statutes differ in that P.D. No. 1606, as amended, defines the jurisdiction of the Sandiganbayan while
R.A. No. 3019, as amended, defines graft and corrupt practices and provides for their penalties.
Sandiganbayan has jurisdiction over
the offense of estafa.
Relying on Section 4 of P.D. No. 1606, petitioner contends that estafa is not among those crimes cognizable by the
Sandiganbayan. We note that in hoisting this argument, petitioner isolated the first paragraph of Section 4 of P.D. No.
1606, without regard to the succeeding paragraphs of the said provision.
The rule is well-established in this jurisdiction that statutes should receive a sensible construction so as to avoid an unjust
or an absurd conclusion.33 Interpretatio talis in ambiguis semper fienda est, ut evitetur inconveniens et absurdum. Where
there is ambiguity, such interpretation as will avoid inconvenience and absurdity is to be adopted. Kung saan mayroong
kalabuan, ang pagpapaliwanag ay hindi dapat maging mahirap at katawa-tawa.
Every section, provision or clause of the statute must be expounded by reference to each other in order to arrive at the
effect contemplated by the legislature.34 The intention of the legislator must be ascertained from the whole text of the law
and every part of the act is to be taken into view. 35 In other words, petitioners interpretation lies in direct opposition to
the rule that a statute must be interpreted as a whole under the principle that the best interpreter of a statute is the statute
itself.36 Optima statuti interpretatrix est ipsum statutum. Ang isang batas ay marapat na bigyan ng kahulugan sa
kanyang kabuuan sa ilalim ng prinsipyo na ang pinakamainam na interpretasyon ay ang mismong batas.
Section 4(B) of P.D. No. 1606 reads:
B. Other offenses or felonies whether simple or complexed with other crimes committed by the public officials
and employees mentioned in subsection a of this section in relation to their office.
Evidently, the Sandiganbayan has jurisdiction over other felonies committed by public officials in relation to their office.
We see no plausible or sensible reason to exclude estafa as one of the offenses included in Section 4(bB) of P.D. No.

The National Parks Development Committee was created originally as an Executive Committee on January 14,
1963, for the development of the Quezon Memorial, Luneta and other national parks (Executive Order No.
30). It was later designated as the National Parks Development Committee (NPDC) on February 7, 1974 (E.O.
No. 69). On January 9, 1966, Mrs. Imelda R. Marcos and Teodoro F. Valencia were designated Chairman and
Vice-Chairman respectively (E.O. No. 3). Despite an attempt to transfer it to the Bureau of Forest
Development, Department of Natural Resources, on December 1, 1975 (Letter of Implementation No. 39,
issued pursuant to PD No. 830, dated November 27, 1975), the NPDC has remained under the Office of the
President (E.O. No. 709, dated July 27, 1981).
Since 1977 to 1981, the annual appropriations decrees listed NPDC as a regular government agency under the
Office of the President and allotments for its maintenance and operating expenses were issued direct to NPDC
(Exh. 10-A, Perlas, Item Nos. 2, 3).
The Sandiganbayans jurisdiction over estafa was reiterated
Sandiganbayan.38Pertinent parts of the Courts ruling in Bondoc read:

with

greater

firmness

in Bondoc

v.

Furthermore, it is not legally possible to transfer Bondocs cases to the Regional Trial Court, for the simple
reason that the latter would not have jurisdiction over the offenses. As already above intimated, the inability of
the Sandiganbayan to hold a joint trial of Bondocs cases and those of the government employees separately
charged for the same crimes, has not altered the nature of the offenses charged, as estafa thru falsification
punishable by penalties higher than prision correccional or imprisonment of six years, or a fine of P6,000.00,
committed by government employees in conspiracy with private persons, including Bondoc. These crimes are
within the exclusive, original jurisdiction of the Sandiganbayan. They simply cannot be taken cognizance of
by the regular courts, apart from the fact that even if the cases could be so transferred, a joint trial would
nonetheless not be possible.
Petitioner UP student regent
is a public officer.
Petitioner also contends that she is not a public officer. She does not receive any salary or remuneration as a UP student
regent. This is not the first or likely the last time that We will be called upon to define a public officer. In Khan, Jr. v.
Office of the Ombudsman, We ruled that it is difficult to pin down the definition of a public officer. 39The 1987
Constitution does not define who are public officers. Rather, the varied definitions and concepts are found in different
statutes and jurisprudence.
In Aparri v. Court of Appeals,40 the Court held that:

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 46
A public office is the right, authority, and duty created and conferred by law, by which for a given period,
either fixed by law or enduring at the pleasure of the creating power, an individual is invested with some
portion of the sovereign functions of the government, to be exercise by him for the benefit of the public
([Mechem Public Offices and Officers,] Sec. 1). The right to hold a public office under our political system is
therefore not a natural right. It exists, when it exists at all only because and by virtue of some law expressly or
impliedly creating and conferring it (Mechem Ibid., Sec. 64). There is no such thing as a vested interest or an
estate in an office, or even an absolute right to hold office. Excepting constitutional offices which provide for
special immunity as regards salary and tenure, no one can be said to have any vested right in an office or its
salary (42 Am. Jur. 881).
In Laurel v. Desierto,41 the Court adopted the definition of Mechem of a public office:

Petitioner likewise argues that even assuming that she is a public officer, the Sandiganbayan would still not have
jurisdiction over the offense because it was not committed in relation to her office.
According to petitioner, she had no power or authority to act without the approval of the BOR. She adds there was no
Board Resolution issued by the BOR authorizing her to contract with then President Estrada; and that her acts were not
ratified by the governing body of the state university. Resultantly, her act was done in a private capacity and not in
relation to public office.
It is axiomatic that jurisdiction is determined by the averments in the information. 51 More than that, jurisdiction is not
affected by the pleas or the theories set up by defendant or respondent in an answer, a motion to dismiss, or a motion to
quash.52 Otherwise, jurisdiction would become dependent almost entirely upon the whims of defendant or respondent. 53

"A public office is the right, authority and duty, created and conferred by law, by which, for a given period,
either fixed by law or enduring at the pleasure of the creating power, an individual is invested with some
portion of the sovereign functions of the government, to be exercised by him for the benefit of the public. The
individual so invested is a public officer." 42

In the case at bench, the information alleged, in no uncertain terms that petitioner, being then a student regent of U.P.,
"while in the performance of her official functions, committing the offense in relation to her office and taking advantage
of her position, with intent to gain, conspiring with her brother, JADE IAN D. SERANA, a private individual, did then
and there wilfully, unlawfully and feloniously defraud the government x x x." (Underscoring supplied)

Petitioner claims that she is not a public officer with Salary Grade 27; she is, in fact, a regular tuition fee-paying student.
This is likewise bereft of merit. It is not only the salary grade that determines the jurisdiction of the Sandiganbayan. The
Sandiganbayan also has jurisdiction over other officers enumerated in P.D. No. 1606. InGeduspan v. People,43 We held
that while the first part of Section 4(A) covers only officials with Salary Grade 27 and higher, its second part specifically
includes other executive officials whose positions may not be of Salary Grade 27 and higher but who are by express
provision of law placed under the jurisdiction of the said court. Petitioner falls under the jurisdiction of the
Sandiganbayan as she is placed there by express provision of law.44

Clearly, there was no grave abuse of discretion on the part of the Sandiganbayan when it did not quash the information
based on this ground.

Section 4(A)(1)(g) of P.D. No. 1606 explictly vested the Sandiganbayan with jurisdiction over Presidents, directors or
trustees, or managers of government-owned or controlled corporations, state universities or educational institutions or
foundations. Petitioner falls under this category. As the Sandiganbayan pointed out, the BOR performs functions similar
to those of a board of trustees of a non-stock corporation. 45 By express mandate of law, petitioner is, indeed, a public
officer as contemplated by P.D. No. 1606.
Moreover, it is well established that compensation is not an essential element of public office. 46 At most, it is merely
incidental to the public office.47
Delegation of sovereign functions is essential in the public office. An investment in an individual of some portion of the
sovereign functions of the government, to be exercised by him for the benefit of the public makes one a public officer. 48
The administration of the UP is a sovereign function in line with Article XIV of the Constitution. UP performs a
legitimate governmental function by providing advanced instruction in literature, philosophy, the sciences, and arts, and
giving professional and technical training. 49 Moreover, UP is maintained by the Government and it declares no dividends
and is not a corporation created for profit.50
The offense charged was committed
in relation to public office, according
to the Information.

Source of funds is a defense that should

be raised during trial on the merits.
It is contended anew that the amount came from President Estradas private funds and not from the government coffers.
Petitioner insists the charge has no leg to stand on.
We cannot agree. The information alleges that the funds came from the Office of the President and not its then occupant,
President Joseph Ejercito Estrada. Under the information, it is averred that "petitioner requested the amount of Fifteen
Million Pesos (P15,000,000.00), Philippine Currency, from the Office of the President, and the latter relying and
believing on said false pretenses and misrepresentation gave and delivered to said accused Land Bank Check No. 91353
dated October 24, 2000 in the amount of Fifteen Million Pesos (P15,000,000.00)."
Again, the Court sustains the Sandiganbayan observation that the source of the P15,000,000 is a matter of defense that
should be ventilated during the trial on the merits of the instant case. 54
A lawyer owes candor, fairness
and honesty to the Court.
As a parting note, petitioners counsel, Renato G. dela Cruz, misrepresented his reference to Section 4 of P.D. No. 1606
as a quotation from Section 4 of R.A. No. 3019. A review of his motion to quash, the instant petition forcertiorari and his
memorandum, unveils the misquotation. We urge petitioners counsel to observe Canon 10 of the Code of Professional
Responsibility, specifically Rule 10.02 of the Rules stating that "a lawyer shall not misquote or misrepresent."
The Court stressed the importance of this rule in Pangan v. Ramos,55 where Atty Dionisio D. Ramos used the name Pedro
D.D. Ramos in connection with a criminal case. The Court ruled that Atty. Ramos resorted to deception by using a name

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 47
different from that with which he was authorized. We severely reprimanded Atty. Ramos and warned that a repetition
may warrant suspension or disbarment.56
We admonish petitioners counsel to be more careful and accurate in his citation. A lawyers conduct before the court
should be characterized by candor and fairness. 57 The administration of justice would gravely suffer if lawyers do not act
with complete candor and honesty before the courts.58
WHEREFORE, the petition is DENIED for lack of merit.
SO ORDERED.
Ynares-Santiago, Chairperson, Austria-Martinez, Corona*, Nachura, JJ., concur.

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 48

THIRD DIVISION
G.R. No. 198755

June 5, 2013

ALBERTO PAT-OG, SR., Petitioner,

vs.
CIVIL SERVICE COMMISSION, Respondent.
DECISION
MENDOZA, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, which seeks to set aside the
April 6, 2011 Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 101700, affirming the April 11, 2007
Decision2 of the Civil Service Commission (CSC), which ordered the dismissal of petitioner Alberto Pat-og, Sr. (Pat-og)
from the service for grave misconduct.
The Facts
On September 13, 2003, Robert Bang-on (Bang-on), then a 14-year old second year high school student of the Antadao
National High School in Sagada, Mountain Province, tiled an affidavit-complaint against Pat-og, a third year high school
teacher of the same school, before the Civil Service Commission-Cordillera Administrative Region (CSC-CAR).
Bang-on alleged that on the morning of August 26, 2003, he attended his class at the basketball court of the school,
where Pat-og and his third year students were also holding a separate class; that he and some of his classmates joined
Pat-ogs third year students who were practicing basketball shots; that Pat-og later instructed them to form two lines; that
thinking that three lines were to be formed, he stayed in between the two lines; that Pat-og then held his right arm and
punched his stomach without warning for failing to follow instructions; and that as a result, he suffered stomach pain for
several days and was confined in a hospital from September 10-12, 2003, as evidenced by a medico-legal certificate,
which stated that he sustained a contusion hematoma in the hypogastric area.
Regarding the same incident, Bang-on filed a criminal case against Pat-og for the crime of Less Serious Physical Injury
with the Regional Trial Court (RTC) of Bontoc, Mountain Province.
Taking cognizance of the administrative case, the CSC-CAR directed Pat-og to file his counter-affidavit. He denied the
charges hurled against him and claimed that when he was conducting his Music, Arts, Physical Education and Health
(MAPEH) class, composed of third year students, he instructed the girls to play volleyball and the boys to play
basketball; that he later directed the boys to form two lines; that after the boys failed to follow his repeated instructions,
he scolded them in a loud voice and wrested the ball from them; that while approaching them, he noticed that there were
male students who were not members of his class who had joined the shooting practice; that one of those male students
was Bang-on, who was supposed to be having his own MAPEH class under another teacher; that he then glared at them,
continued scolding them and dismissed the class for their failure to follow instructions; and that he offered the sworn
statement of other students to prove that he did not box Bang-on.

On June 1, 2004, the CSC-CAR found the existence of a prima faciecase for misconduct and formally charged Pat-og.
While the proceedings of the administrative case were ongoing, the RTC rendered its judgment in the criminal case and
found Pat-og guilty of the offense of slight physical injury. He was meted the penalty of imprisonment from eleven (11)
to twenty (20) days. Following his application for probation, the decision became final and executory and judgment was
entered.
Meanwhile, in the administrative case, a pre-hearing conference was conducted after repeated postponement by Pat-og.
With the approval of the CSC-CAR, the prosecution submitted its position paper in lieu of a formal presentation of
evidence and formally offered its evidence, which included the decision in the criminal case. It offered the affidavits of
Raymund Atuban, a classmate of Bang-on; and James Domanog, a third year high school student, who both witnessed
Pat-og hit Bang-on in the stomach.
For his defense, Pat-og offered the testimonies of his witnesses - Emiliano Dontongan (Dontongan), a teacher in another
school, who alleged that he was a member of the Municipal Council for the Protection of Children, and that, in such
capacity, he investigated the incident and came to the conclusion that it did not happen at all; and Ernest Kimmot, who
testified that he was in the basketball court at the time but did not see such incident. Pat-og also presented the affidavits
of thirteen other witnesses to prove that he did not punch Bang-on.
Ruling of the CSC-CAR
In its Decision,3 dated September 19, 2006, the CSC-CAR found Pat-og guilty and disposed as follows:
WHEREFORE, all premises told, respondent Alberto Pat-og, Sr., Teacher Antadao National High School, is hereby
found guilty of Simple Misconduct.
Under the Uniform Rules on Administrative Cases in the Civil Service, the imposable penalty on the first offense of
Simple Misconduct is suspension of one (1) month and one (1) day to six (6) months.
Due to seriousness of the resulting injury to the fragile body of the minor victim, the CSC-CAR hereby imposed upon
respondent the maximum penalty attached to the offense which is six months suspension without pay.
The CSC-CAR gave greater weight to the version posited by the prosecution, finding that a blow was indeed inflicted by
Pat-og on Bang-on. It found that Pat-og had a motive for doing so - his students failure to follow his repeated
instructions which angered him. Nevertheless, the CSCCAR ruled that a motive was not necessary to establish guilt if the
perpetrator of the offense was positively identified. The positive identification of Pat-og was duly proven by the
corroborative testimonies of the prosecution witnesses, who were found to be credible and disinterested. The testimony
of defense witness, Dontongan, was not given credence considering that the students he interviewed for his investigation
claimed that Pat-og was not even angry at the time of the incident, contrary to the latters own admission.
The CSC-CAR held that the actions of Pat-og clearly transgressed the proper norms of conduct required of a public
official, and the gravity of the offense was further magnified by the seriousness of the injury of Bang-on which required a
healing period of more than ten (10) days. It pointed out that, being his teacher, Pat-ogs substitute parental authority did

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 49
not give him license to physically chastise a misbehaving student. The CSC-CAR added that the fact that Pat-og applied
for probation in the criminal case, instead of filing an appeal, further convinced it of his guilt.
The CSC-CAR believed that the act committed by Pat-og was sufficient to find him guilty of Grave Misconduct. It,
however, found the corresponding penalty of dismissal from the service too harsh under the circumstances. Thus, it
adjudged petitioner guilty of Simple Misconduct and imposed the maximum penalty of suspension for six (6) months.
On December 11, 2006, the motion for reconsideration filed by Pat-og was denied for lack of merit. 4
The Ruling of the CSC
In its Resolution,5 dated April 11, 2007, the CSC dismissed Pat-ogs appeal and affirmed with modification the decision
of the CSC-CAR as follows:

Ruling of the Court of Appeals

In its assailed April 6, 2011 Decision, 8 the CA affirmed the resolutions of the CSC. It agreed that Pat-og was estopped
from questioning the jurisdiction of the CSC as the records clearly showed that he actively participated in the
proceedings. It was of the view that Pat-og was not denied due process when he failed to cross-examine Bang-on and his
witnesses because he was given the opportunity to be heard and present his evidence before the CSC-CAR and the CSC.
The CA also held that the CSC committed no error in taking into account the conviction of Pat-og in the criminal case. It
stated that his conviction was not the sole basis of the CSC for his dismissal from the service because there was
substantial evidence proving that Pat-og had indeed hit Bang-on.
In its assailed Resolution,9 dated September 13, 2011, the CA denied the motion for reconsideration filed by Pat-og.
Hence, the present petition with the following

WHEREFORE, foregoing premises considered, the instant appeal is hereby DISMISSED. The decision of the CSC-CAR
is affirmed with the modification that Alberto Pat-og, Sr., is adjudged guilty of grave misconduct, for which he is meted
out the penalty of dismissal from the service with all its accessory penalties of cancellation of eligibilities, perpetual
disqualification from reemployment in the government service, and forfeiture of retirement benefits. 6
After evaluating the records, the CSC sustained the CSC-CARs conclusion that there existed substantial evidence to
sustain the finding that Pat-og did punch Bang-on in the stomach. It gave greater weight to the positive statements of
Bang-on and his witnesses over the bare denial of Patog. It also highlighted the fact that Pat-og failed to adduce evidence
of any ill motive on the part of Bang-on in filing the administrative case against him. It likewise gave credence to the
medico-legal certificate showing that Bang-on suffered a hematoma contusion in his hypogastric area.
The CSC ruled that the affidavits of Bang-ons witnesses were not bereft of evidentiary value even if Pat-og was not
afforded a chance to cross-examine the witnesses of Bang-on. It is of no moment because the cross- examination of
witnesses is not an indispensable requirement of administrative due process.
The CSC noted that Pat-og did not question but, instead, fully acquiesced in his conviction in the criminal case for slight
physical injury, which was based on the same set of facts and circumstances, and involved the same parties and issues. It,
thus, considered his prior criminal conviction as evidence against him in the administrative case.

Assignment of Errors
WHETHER OR NOT RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION
WHEN IT AFFIRMED THE SUPREME PENALTY OF DISMISSAL FROM SERVICE WITH FORFEITURE OF
RETIREMENT BENEFITS AGAINST THE PETITIONER WITHOUT CONSIDERING PETITIONERS LONG
YEARS OF GOVERNMENT SERVICE?
WHETHER OR NOT RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION
WHEN IT RULED THAT PETITIONER IS ESTOPPED FROM QUESTIONING THE JURISDICTION OF THE
CIVIL SERVICE COMMISSION TO HEAR AND DECIDE THE ADMINISTRATIVE CASE AGAINST HIM?
WHETHER OR NOT RESPONDENT COURT OF APPEALS SERIOUSLY ERRED AND COMMITTED GRAVE
ABUSE OF DISCRETION IN DISMISSING THE APPEAL DESPITE LACK OF SUBSTANTIAL EVIDENCE?
On Jurisdiction

Finding that his act of punching his student displayed a flagrant and wanton disregard of the dignity of a person,
reminiscent of corporal punishment that had since been outlawed for being harsh, unjust, and cruel, the CSC upgraded
Pat-ogs offense from Simple Misconduct to Grave Misconduct and ordered his dismissal from the service.

Pat-og contends that Section 9 of Republic Act (R.A.) No. 4670, otherwise known as the Magna Carta for Public School
Teachers, provides that administrative charges against a public school teacher shall be heard initially by a committee
constituted under said section. As no committee was ever formed, the petitioner posits that he was denied due process
and that the CSC did not have the jurisdiction to hear and decide his administrative case. He further argues that
notwithstanding the fact that the issue of jurisdiction was raised for the first time on appeal, the rule remains that estoppel
does not confer jurisdiction on a tribunal that has no jurisdiction over the cause of action or subject matter of the case.

Pat-og filed a motion for reconsideration, questioning for the first time the jurisdiction of CSC over the case. He
contended that administrative charges against a public school teacher should have been initially heard by a committee to
be constituted pursuant to the Magna Carta for Public School Teachers.

The Court cannot sustain his position.

On November 5, 2007, the CSC denied his motion for reconsideration. 7 It ruled that Pat-og was estopped from
challenging its jurisdiction considering that he actively participated in the administrative proceedings against him, raising
the issue of jurisdiction only after his appeal was dismissed by the CSC.

The petitioners argument that the administrative case against him can only proceed under R.A. No. 4670 is misplaced.

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 50
In Puse v. Santos-Puse,10 it was held that the CSC, the Department of Education (DepEd) and the Board of Professional
Teachers-Professional Regulatory Commission (PRC) have concurrent jurisdiction over administrative cases against
public school teachers.
Under Article IX-B of the 1987 Constitution, the CSC is the body charged with the establishment and administration of a
career civil service which embraces all branches and agencies of the government. 11 Executive Order (E.O.) No. 292 (the
Administrative Code of 1987)12 and Presidential Decree (P.D.) No. 807 (the Civil Service Decree of the
Philippines)13 expressly provide that the CSC has the power to hear and decide administrative disciplinary cases
instituted with it or brought to it on appeal. Thus, the CSC, as the central personnel agency of the government, has the
inherent power to supervise and discipline all members of the civil service, including public school teachers.
Indeed, under Section 9 of R.A. No. 4670, the jurisdiction over administrative cases of public school teachers is lodged
with the investigating committee constituted therein.14 Also, under Section 23 of R.A. No. 7836 (the Philippine Teachers
Professionalization Act of 1994), the Board of Professional Teachers is given the power, after due notice and hearing, to
suspend or revoke the certificate of registration of a professional teacher for causes enumerated therein. 15
Concurrent jurisdiction is that which is possessed over the same parties or subject matter at the same time by two or more
separate tribunals. When the law bestows upon a government body the jurisdiction to hear and decide cases involving
specific matters, it is to be presumed that such jurisdiction is exclusive unless it be proved that another body is likewise
vested with the same jurisdiction, in which case, both bodies have concurrent jurisdiction over the matter. 16
Where concurrent jurisdiction exists in several tribunals, the body that first takes cognizance of the complaint shall
exercise jurisdiction to the exclusion of the others. In this case, it was CSC which first acquired jurisdiction over the case
because the complaint was filed before it. Thus, it had the authority to proceed and decide the case to the exclusion of the
DepEd and the Board of Professional Teachers.17
In CSC v. Alfonso,18 it was held that special laws, such as R.A. No. 4670, do not divest the CSC of its inherent power to
supervise and discipline all members of the civil service, including public school teachers. Pat-og, as a public school
teacher, is first and foremost, a civil servant accountable to the people and answerable to the CSC for complaints lodged
against him as a public servant. To hold that R.A. No. 4670 divests the CSC of its power to discipline public school
teachers would negate the very purpose for which the CSC was established and would impliedly amend the Constitution
itself.
To further drive home the point, it was ruled in CSC v. Macud 19 that R.A. No. 4670, in imposing a separate set of
procedural requirements in connection with administrative proceedings against public school teachers, should be
construed to refer only to the specific procedure to be followed in administrative investigations conducted by the DepEd.
By no means, then, did R.A. No. 4670 confer an exclusive disciplinary authority over public school teachers on the
DepEd.
At any rate, granting that the CSC was without jurisdiction, the petitioner is indeed estopped from raising the issue.
Although the rule states that a jurisdictional question may be raised at any time, such rule admits of the exception where,
as in this case, estoppel has supervened. 20 Here, instead of opposing the CSCs exercise of jurisdiction, the petitioner
invoked the same by actively participating in the proceedings before the CSC-CAR and by even filing his appeal before
the CSC itself; only raising the issue of jurisdiction later in his motion for reconsideration after the CSC denied his
appeal. This Court has time and again frowned upon the undesirable practice of a party submitting his case for decision
and then accepting the judgment only if favorable, but attacking it for lack of jurisdiction when adverse. 21

On Administrative Due Process

On due process, Pat-og asserts that the affidavits of the complainant and his witnesses are of questionable veracity having
been subscribed in Bontoc, which is nearly 30 kilometers from the residences of the parties. Furthermore, he claimed that
considering that the said affiants never testified, he was never afforded the opportunity to cross-examine them. Therefore,
their affidavits were mere hearsay and insufficient to prove his guilt.
The petitioner does not persuade.
The essence of due process is simply to be heard, or as applied to administrative proceedings, a fair and reasonable
opportunity to explain ones side, or an opportunity to seek a reconsideration of the action or ruling complained
of.22 Administrative due process cannot be fully equated with due process in its strict judicial sense. In administrative
proceedings, a formal or trial-type hearing is not always necessary 23 and technical rules of procedure are not strictly
applied. Hence, the right to cross-examine is not an indispensable aspect of administrative due process. 24 The petitioner
cannot, therefore, argue that the affidavit of Bang-on and his witnesses are hearsay and insufficient to prove his guilt.
At any rate, having actively participated in the proceedings before the CSC-CAR, the CSC, and the CA, the petitioner
was apparently afforded every opportunity to explain his side and seek reconsideration of the ruling against him.1wphi1
As to the issue of the veracity of the affidavits, such is a question of fact which cannot now be raised before the Court
under Rule 45 of the Rules of Court. The CSC-CAR, the CSC and the CA did not, therefore, err in giving credence to the
affidavits of the complainants and his witnesses, and in consequently ruling that there was substantial evidence to support
the finding of misconduct on the part of the petitioner.
On the Penalty
Assuming that he did box Bang-on, Pat-og argues that there is no substantial evidence to prove that he did so with a clear
intent to violate the law or in flagrant disregard of the established rule, as required for a finding of grave misconduct. He
insists that he was not motivated by bad faith or ill will because he acted in the belief that, as a teacher, he was exercising
authority over Bang-on in loco parentis, and was, accordingly, within his rights to discipline his student. Citing his 33
years in the government service without any adverse record against him and the fact that he is at the edge of retirement,
being already 62 years old, the petitioner prays that, in the name of substantial and compassionate justice, the CSCCARs finding of simple misconduct and the concomitant penalty of suspension should be upheld, instead of dismissal.
The Court agrees in part.
Misconduct means intentional wrongdoing or deliberate violation of a rule of law or standard of behavior. To constitute
an administrative offense, misconduct should relate to or be connected with the performance of the official functions and
duties of a public officer. In grave misconduct, as distinguished from simple misconduct, the elements of corruption,
clear intent to violate the law or t1agrant disregard of an established rule must be manifest. 25
Teachers are duly licensed professionals who must not only be competent in the practice of their noble profession, but
must also possess dignity and a reputation with high moral values. They must strictly adhere to, observe, and practice the
set of ethical and moral principles, standards, and values laid down in the Code of Ethics of Professional Teachers, which
apply to all teachers in schools in the Philippines, whether public or private, as provided in the preamble of the said

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 51
Code.26 Section 8 of Article VIII of the same Code expressly provides that "a teacher shall not inflict corporal punishment
on offending learners."
Clearly then, petitioner cannot argue that in punching Bang-on, he was exercising his right as a teacher in loco parentis to
discipline his student. It is beyond cavil that the petitioner, as a public school teacher, deliberately violated his Code of
Ethics. Such violation is a flagrant disregard for the established rule contained in the said Code tantamount to grave
misconduct.
Under Section 52(A)(2) of Rule IV of the Uniform Rules on Administrative Cases in the Civil Service, the penalty for
grave misconduct is dismissal from the service, which carries with it the cancellation of eligibility, forfeiture of
retirement benefits and perpetual disqualification from reemployment in the government service. 27 This penalty must,
however, be tempered with compassion as there was sut1icient provocation on the part of Bang-on. Considering further
the mitigating circumstances that the petitioner has been in the government service for 33 years, that this is his first
offense and that he is at the cusp of retirement, the Court finds the penalty of suspension for six months as appropriate
under the circumstances.
WHEREFORE, the Court PARTIALLY GRANTS the petition and MODIFIES the April 6, 2011 Decision of the Court of
Appeals in CA-G.R. SP No. 101700. Accordingly, Alberto Pat-og, Sr. is found GUlLTY of Grave Misconduct, but the
penalty is reduced from dismissal from the service to SUSPENSION for SIX MONTHS.
SO ORDERED.

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 52

EN BANC
G.R. No. 168539

1.06 of the Concession Agreement, which terms are more beneficial to PIATCO while manifestly and grossly
disadvantageous to the government of the Republic of the Philippines. 4

March 25, 2014

The case was docketed as Criminal Case No. 28090.

PEOPLE OF THE PHILIPPINES, Petitioner,

vs.
HENRY T. GO, Respondent.

On March 10, 2005, the SB issued an Order, to wit:

The prosecution is given a period of ten (10) days from today within which to show cause why this case should not be
dismissed for lack of jurisdiction over the person of the accused considering that the accused is a private person and the
public official Arturo Enrile, his alleged co-conspirator, is already deceased, and not an accused in this case. 5

DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari assailing the Resolution 1 of the Third Division2 of the
Sandiganbayan (SB) dated June 2, 2005 which quashed the Information filed against herein respondent for alleged
violation of Section 3 (g) of Republic Act No. 3019 (R.A. 3019), otherwise known as the Anti-Graft and Corrupt
Practices Act.
3

The Information filed against respondent is an offshoot of this Court's Decision in Agan, Jr. v. Philippine International
Air Terminals Co., Inc. which nullified the various contracts awarded by the Government, through the Department of
Transportation and Communications (DOTC), to Philippine Air Terminals, Co., Inc. (PIATCO) for the construction,
operation and maintenance of the Ninoy Aquino International Airport International Passenger Terminal III (NAIA IPT
III). Subsequent to the above Decision, a certain Ma. Cecilia L. Pesayco filed a complaint with the Office of the
Ombudsman against several individuals for alleged violation of R.A. 3019. Among those charged was herein respondent,
who was then the Chairman and President of PIATCO, for having supposedly conspired with then DOTC Secretary
Arturo Enrile (Secretary Enrile) in entering into a contract which is grossly and manifestly disadvantageous to the
government.
On September 16, 2004, the Office of the Deputy Ombudsman for Luzon found probable cause to indict, among others,
herein respondent for violation of Section 3(g) of R.A. 3019. While there was likewise a finding of probable cause
against Secretary Enrile, he was no longer indicted because he died prior to the issuance of the resolution finding
probable cause.
Thus, in an Information dated January 13, 2005, respondent was charged before the SB as follows:
On or about July 12, 1997, or sometime prior or subsequent thereto, in Pasay City, Metro Manila, Philippines and within
the jurisdiction of this Honorable Court, the late ARTURO ENRILE, then Secretary of the Department of Transportation
and Communications (DOTC), committing the offense in relation to his office and taking advantage of the same, in
conspiracy with accused, HENRY T. GO, Chairman and President of the Philippine International Air Terminals, Co., Inc.
(PIATCO), did then and there, willfully, unlawfully and criminally enter into a Concession Agreement, after the project
for the construction of the Ninoy Aquino International Airport International Passenger Terminal III (NAIA IPT III) was
awarded to Paircargo Consortium/PIATCO, which Concession Agreement substantially amended the draft Concession
Agreement covering the construction of the NAIA IPT III under Republic Act 6957, as amended by Republic Act 7718
(BOT law), specifically the provision on Public Utility Revenues, as well as the assumption by the government of the
liabilities of PIATCO in the event of the latter's default under Article IV, Section 4.04 (b) and (c) in relation to Article

The prosecution complied with the above Order contending that the SB has already acquired jurisdiction over the person
of respondent by reason of his voluntary appearance, when he filed a motion for consolidation and when he posted bail.
The prosecution also argued that the SB has exclusive jurisdiction over respondent's case, even if he is a private person,
because he was alleged to have conspired with a public officer.6
On April 28, 2005, respondent filed a Motion to Quash 7 the Information filed against him on the ground that the
operative facts adduced therein do not constitute an offense under Section 3(g) of R.A. 3019. Respondent, citing the
show cause order of the SB, also contended that, independently of the deceased Secretary Enrile, the public officer with
whom he was alleged to have conspired, respondent, who is not a public officer nor was capacitated by any official
authority as a government agent, may not be prosecuted for violation of Section 3(g) of R.A. 3019.
The prosecution filed its Opposition.8
On June 2, 2005, the SB issued its assailed Resolution, pertinent portions of which read thus:
Acting on the Motion to Quash filed by accused Henry T. Go dated April 22, 2005, and it appearing that Henry T. Go, the
lone accused in this case is a private person and his alleged co-conspirator-public official was already deceased long
before this case was filed in court, for lack of jurisdiction over the person of the accused, the Court grants the Motion to
Quash and the Information filed in this case is hereby ordered quashed and dismissed. 9
Hence, the instant petition raising the following issues, to wit:
I
WHETHER OR NOT THE COURT A QUO GRAVELY ERRED AND DECIDED A QUESTION OF SUBSTANCE IN
A MANNER NOT IN ACCORD WITH LAW OR APPLICABLE JURISPRUDENCE IN GRANTING THE
DEMURRER TO EVIDENCE AND IN DISMISSING CRIMINAL CASE NO. 28090 ON THE GROUND THAT IT
HAS NO JURISDICTION OVER THE PERSON OF RESPONDENT GO.
II

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WHETHER OR NOT THE COURT A QUO GRAVELY ERRED AND DECIDED A QUESTION OF SUBSTANCE IN
A MANNER NOT IN ACCORD WITH LAW OR APPLICABLE JURISPRUDENCE, IN RULING THAT IT HAS NO
JURISDICTION OVER THE PERSON OF RESPONDENT GO DESPITE THE IRREFUTABLE FACT THAT HE HAS
ALREADY POSTED BAIL FOR HIS PROVISIONAL LIBERTY
III
WHETHER OR NOT THE COURT A QUO GRAVELY ERRED WHEN, IN COMPLETE DISREGARD OF THE
EQUAL PROTECTION CLAUSE OF THE CONSTITUTION, IT QUASHED THE INFORMATION AND
DISMISSED CRIMINAL CASE NO. 2809010
The Court finds the petition meritorious.
Section 3 (g) of R.A. 3019 provides:
Sec. 3. Corrupt practices of public officers. In addition to acts or omissions of public officers already penalized by
existing law, the following shall constitute corrupt practices of any public officer and are hereby declared to be unlawful:
xxxx
(g) Entering, on behalf of the Government, into any contract or transaction manifestly and grossly disadvantageous to the
same, whether or not the public officer profited or will profit thereby.

The Court is not persuaded.

It is true that by reason of Secretary Enrile's death, there is no longer any public officer with whom respondent can be
charged for violation of R.A. 3019. It does not mean, however, that the allegation of conspiracy between them can no
longer be proved or that their alleged conspiracy is already expunged. The only thing extinguished by the death of
Secretary Enrile is his criminal liability. His death did not extinguish the crime nor did it remove the basis of the charge
of conspiracy between him and private respondent. Stated differently, the death of Secretary Enrile does not mean that
there was no public officer who allegedly violated Section 3 (g) of R.A. 3019. In fact, the Office of the Deputy
Ombudsman for Luzon found probable cause to indict Secretary Enrile for infringement of Sections 3 (e) and (g) of R.A.
3019.14 Were it not for his death, he should have been charged.
The requirement before a private person may be indicted for violation of Section 3(g) of R.A. 3019, among others, is that
such private person must be alleged to have acted in conspiracy with a public officer. The law, however, does not require
that such person must, in all instances, be indicted together with the public officer. If circumstances exist where the
public officer may no longer be charged in court, as in the present case where the public officer has already died, the
private person may be indicted alone.
Indeed, it is not necessary to join all alleged co-conspirators in an indictment for conspiracy. 15 If two or more persons
enter into a conspiracy, any act done by any of them pursuant to the agreement is, in contemplation of law, the act of each
of them and they are jointly responsible therefor.16 This means that everything said, written or done by any of the
conspirators in execution or furtherance of the common purpose is deemed to have been said, done, or written by each of
them and it makes no difference whether the actual actor is alive or dead, sane or insane at the time of trial. 17 The death
of one of two or more conspirators does not prevent the conviction of the survivor or survivors. 18 Thus, this Court held
that:

The elements of the above provision are:

(1) that the accused is a public officer;
(2) that he entered into a contract or transaction on behalf of the government; and
(3) that such contract or transaction is grossly and manifestly disadvantageous to the government. 11
At the outset, it bears to reiterate the settled rule that private persons, when acting in conspiracy with public officers, may
be indicted and, if found guilty, held liable for the pertinent offenses under Section 3 of R.A. 3019, in consonance with
the avowed policy of the anti-graft law to repress certain acts of public officers and private persons alike constituting
graft or corrupt practices act or which may lead thereto. 12 This is the controlling doctrine as enunciated by this Court in
previous cases, among which is a case involving herein private respondent. 13
The only question that needs to be settled in the present petition is whether herein respondent, a private person, may be
indicted for conspiracy in violating Section 3(g) of R.A. 3019 even if the public officer, with whom he was alleged to
have conspired, has died prior to the filing of the Information.
Respondent contends that by reason of the death of Secretary Enrile, there is no public officer who was charged in the
Information and, as such, prosecution against respondent may not prosper.

x x x [a] conspiracy is in its nature a joint offense. One person cannot conspire alone. The crime depends upon the joint
act or intent of two or more persons. Yet, it does not follow that one person cannot be convicted of conspiracy. So long as
the acquittal or death of a co-conspirator does not remove the bases of a charge for conspiracy, one defendant may be
found guilty of the offense.19
The Court agrees with petitioner's contention that, as alleged in the Information filed against respondent, which is
deemed hypothetically admitted in the latter's Motion to Quash, he (respondent) conspired with Secretary Enrile in
violating Section 3 (g) of R.A. 3019 and that in conspiracy, the act of one is the act of all. Hence, the criminal liability
incurred by a co-conspirator is also incurred by the other co-conspirators.
Moreover, the Court agrees with petitioner that the avowed policy of the State and the legislative intent to repress "acts of
public officers and private persons alike, which constitute graft or corrupt practices," 20 would be frustrated if the death of
a public officer would bar the prosecution of a private person who conspired with such public officer in violating the
Anti-Graft Law.
In this regard, this Court's disquisition in the early case of People v. Peralta 21 as to the nature of and the principles
governing conspiracy, as construed under Philippine jurisdiction, is instructive, to wit:
x x x A conspiracy exists when two or more persons come to an agreement concerning the commission of a felony and
decide to commit it. Generally, conspiracy is not a crime except when the law specifically provides a penalty therefor as

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 54
in treason, rebellion and sedition. The crime of conspiracy known to the common law is not an indictable offense in the
Philippines. An agreement to commit a crime is a reprehensible act from the view-point of morality, but as long as the
conspirators do not perform overt acts in furtherance of their malevolent design, the sovereignty of the State is not
outraged and the tranquility of the public remains undisturbed.

This is not to say, however, that private respondent should be found guilty of conspiring with Secretary Enrile. It is
settled that the absence or presence of conspiracy is factual in nature and involves evidentiary matters. 23 Hence, the
allegation of conspiracy against respondent is better left ventilated before the trial court during trial, where respondent
can adduce evidence to prove or disprove its presence.

However, when in resolute execution of a common scheme, a felony is committed by two or more malefactors, the
existence of a conspiracy assumes pivotal importance in the determination of the liability of the perpetrators. In stressing
the significance of conspiracy in criminal law, this Court in U.S. vs. Infante and Barreto opined that

Respondent claims in his Manifestation and Motion 24 as well as in his Urgent Motion to Resolve 25 that in a different case,
he was likewise indicted before the SB for conspiracy with the late Secretary Enrile in violating the same Section 3 (g) of
R.A. 3019 by allegedly entering into another agreement (Side Agreement) which is separate from the Concession
Agreement subject of the present case. The case was docketed as Criminal Case No. 28091. Here, the SB, through a
Resolution, granted respondent's motion to quash the Information on the ground that the SB has no jurisdiction over the
person of respondent. The prosecution questioned the said SB Resolution before this Court via a petition for review on
certiorari. The petition was docketed as G.R. No. 168919. In a minute resolution dated August 31, 2005, this Court
denied the petition finding no reversible error on the part of the SB. This Resolution became final and executory on
January 11, 2006. Respondent now argues that this Court's resolution in G.R. No. 168919 should be applied in the instant
case.

While it is true that the penalties cannot be imposed for the mere act of conspiring to commit a crime unless the statute
specifically prescribes a penalty therefor, nevertheless the existence of a conspiracy to commit a crime is in many cases a
fact of vital importance, when considered together with the other evidence of record, in establishing the existence, of the
consummated crime and its commission by the conspirators.
Once an express or implied conspiracy is proved, all of the conspirators are liable as co-principals regardless of the
extent and character of their respective active participation in the commission of the crime or crimes perpetrated in
furtherance of the conspiracy because in contemplation of law the act of one is the act of all. The foregoing rule is
anchored on the sound principle that "when two or more persons unite to accomplish a criminal object, whether through
the physical volition of one, or all, proceeding severally or collectively, each individual whose evil will actively
contributes to the wrong-doing is in law responsible for the whole, the same as though performed by himself alone."
Although it is axiomatic that no one is liable for acts other than his own, "when two or more persons agree or conspire to
commit a crime, each is responsible for all the acts of the others, done in furtherance of the agreement or conspiracy."
The imposition of collective liability upon the conspirators is clearly explained in one case where this Court held that x x
x it is impossible to graduate the separate liability of each (conspirator) without taking into consideration the close and
inseparable relation of each of them with the criminal act, for the commission of which they all acted by common
agreement x x x. The crime must therefore in view of the solidarity of the act and intent which existed between the x x x
accused, be regarded as the act of the band or party created by them, and they are all equally responsible x x x
Verily, the moment it is established that the malefactors conspired and confederated in the commission of the felony
proved, collective liability of the accused conspirators attaches by reason of the conspiracy, and the court shall not
speculate nor even investigate as to the actual degree of participation of each of the perpetrators present at the scene of
the crime. Of course, as to any conspirator who was remote from the situs of aggression, he could be drawn within the
enveloping ambit of the conspiracy if it be proved that through his moral ascendancy over the rest of the conspirators the
latter were moved or impelled to carry out the conspiracy.
In fine, the convergence of the wills of the conspirators in the scheming and execution of the crime amply justifies the
imputation to all of them the act of any one of them. It is in this light that conspiracy is generally viewed not as a separate
indictable offense, but a rule for collectivizing criminal liability.
xxxx
x x x A time-honored rule in the corpus of our jurisprudence is that once conspiracy is proved, all of the conspirators who
acted in furtherance of the common design are liable as co-principals. This rule of collective criminal liability emanates
from the ensnaring nature of conspiracy. The concerted action of the conspirators in consummating their common
purpose is a patent display of their evil partnership, and for the consequences of such criminal enterprise they must be
held solidarily liable.22

The Court does not agree. Respondent should be reminded that prior to this Court's ruling in G.R. No. 168919, he already
posted bail for his provisional liberty. In fact, he even filed a Motion for Consolidation 26 in Criminal Case No. 28091.
The Court agrees with petitioner's contention that private respondent's act of posting bail and filing his Motion for
Consolidation vests the SB with jurisdiction over his person. The rule is well settled that the act of an accused in posting
bail or in filing motions seeking affirmative relief is tantamount to submission of his person to the jurisdiction of the
court.27
Thus, it has been held that:
When a defendant in a criminal case is brought before a competent court by virtue of a warrant of arrest or otherwise, in
order to avoid the submission of his body to the jurisdiction of the court he must raise the question of the courts
jurisdiction over his person at the very earliest opportunity. If he gives bail, demurs to the complaint or files any dilatory
plea or pleads to the merits, he thereby gives the court jurisdiction over his person. (State ex rel. John Brown vs.
Fitzgerald, 51 Minn., 534)
xxxx
As ruled in La Naval Drug vs. CA [236 SCRA 78, 86]:
"[L]ack of jurisdiction over the person of the defendant may be waived either expressly or impliedly. When a defendant
voluntarily appears, he is deemed to have submitted himself to the jurisdiction of the court. If he so wishes not to waive
this defense, he must do so seasonably by motion for the purpose of objecting to the jurisdiction of the court; otherwise,
he shall be deemed to have submitted himself to that jurisdiction."
Moreover, "[w]here the appearance is by motion for the purpose of objecting to the jurisdiction of the court over the
person, it must be for the sole and separate purpose of objecting to said jurisdiction. If the appearance is for any other
purpose, the defendant is deemed to have submitted himself to the jurisdiction of the court. Such an appearance gives the
court jurisdiction over the person."

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 55
Verily, petitioners participation in the proceedings before the Sandiganbayan was not confined to his opposition to the
issuance of a warrant of arrest but also covered other matters which called for respondent courts exercise of its
jurisdiction. Petitioner may not be heard now to deny said courts jurisdiction over him. x x x. 28
In the instant case, respondent did not make any special appearance to question the jurisdiction of the SB over his person
prior to his posting of bail and filing his Motion for Consolidation. In fact, his Motion to Quash the Information in
Criminal Case No. 28090 only came after the SB issued an Order requiring the prosecution to show cause why the case
should not be dismissed for lack of jurisdiction over his person.
As a recapitulation, it would not be amiss to point out that the instant case involves a contract entered into by public
officers representing the government. More importantly, the SB is a special criminal court which has exclusive original
jurisdiction in all cases involving violations of R.A. 3019 committed by certain public officers, as enumerated in P.D.
1606 as amended by R.A. 8249. This includes private individuals who are charged as co-principals, accomplices or
accessories with the said public officers. In the instant case, respondent is being charged for violation of Section 3(g) of
R.A. 3019, in conspiracy with then Secretary Enrile. Ideally, under the law, both respondent and Secretary Enrile should
have been charged before and tried jointly by the Sandiganbayan. However, by reason of the death of the latter, this can
no longer be done. Nonetheless, for reasons already discussed, it does not follow that the SB is already divested of its
jurisdiction over the person of and the case involving herein respondent. To rule otherwise would mean that the power of
a court to decide a case would no longer be based on the law defining its jurisdiction but on other factors, such as the
death of one of the alleged offenders.
Lastly, the issues raised in the present petition involve matters which are mere incidents in the main case and the main
case has already been pending for over nine (9) years. Thus, a referral of the case to the Regional Trial Court would
further delay the resolution of the main case and it would, by no means, promote respondent's right to a speedy trial and a
speedy disposition of his case.
WHEREFORE, the petition is GRANTED. The Resolution of the Sandiganbayan dated June 2, 2005, granting
respondent's Motion to Quash, is hereby REVERSED and SET ASIDE. The Sandiganbayan is forthwith DIRECTED to
proceed with deliberate dispatch in the disposition of Criminal Case No. 28090.
SO ORDERED.

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 56
SECOND DIVISION
G.R. No. 184203
November 26, 2014
CITY OF LAPU-LAPU, Petitioner,
vs.
PHILIPPINE ECONOMIC ZONE AUTHORITY, Respondent.
x-----------------------x
G.R. No. 187583
PROVINCE OF BATAAN, represented by GOVERNOR ENRIQUE T. GARCIA, JR., and EMERLINDA S.
TALENTO, in her capacity as Provincial Treasurer of Bataan, Petitioners,
vs.
PHILIPPINE ECONOMIC ZONE AUTHORITY, Respondent.
DECISION
LEONEN, J.:
The Philippine Economic Zone Authority is exempt from payment of real property taxes.
These are consolidated 1 petitions for review on certiorari the City of Lapu-Lapu and the Province of Bataan separately
filed against the Philippine Economic Zone Authority (PEZA).
In G.R. No. 184203, the City of Lapu-Lapu (the City) assails the Court of Appeals decision 2 dated January 11, 2008 and
resolution3 dated August 6, 2008, dismissing the Citys appeal for being the wrong mode of appeal. The City appealed the
Regional Trial Court,Branch 111, Pasay Citys decision finding the PEZA exempt from payment of real property taxes.
In G.R. No. 187583, the Province of Bataan (the Province) assails the Court of Appeals decision 4 dated August 27, 2008
and resolution5 dated April 16, 2009, granting the PEZAs petition for certiorari. The Court of Appeals ruled that the
Regional Trial Court, Branch 115, Pasay City gravely abused its discretion in finding the PEZA liable for real property
taxes to the Province of Bataan.
Facts common to the consolidated petitions
In the exercise of his legislative powers, 6 President Ferdinand E. Marcos issued Presidential Decree No. 66 in 1972,
declaring as government policy the establishment of export processing zones in strategic locations in the Philippines.
Presidential Decree No. 66 aimed "to encourage and promote foreign commerce as a means of making the Philippines a
center of international trade, of strengthening our export trade and foreign exchange position, of hastening
industrialization,of reducing domestic unemployment, and of accelerating the development of the country." 7
To carry out this policy, the Export Processing Zone Authority (EPZA) was created to operate, administer, and manage
the export processing zones established in the Port of Mariveles, Bataan 8 and such other export processing zones that
may be created by virtue of the decree.9
The decree declared the EPZA non-profit in character 10 with all its revenues devoted to its development, improvement,
and maintenance.11 To maintain this non-profit character, the EPZA was declared exempt from all taxes that may be due
to the Republic of the Philippines, its provinces, cities, municipalities, and other government agencies and
instrumentalities.12 Specifically, Section 21 of Presidential Decree No. 66 declared the EPZA exempt from payment of
real property taxes:
Section 21. Non-profit Character of the Authority; Exemption from Taxes. The Authority shall be non-profit and shall
devote and use all its returns from its capital investment, as well as excess revenues from its operations, for the
development, improvement and maintenance and other related expenditures of the Authority to pay its indebtedness and
obligations and in furtherance and effective implementation of the policy enunciated in Section 1 of this Decree. In
consonance therewith, the Authority is hereby declared exempt:
....
(b) From all income taxes, franchise taxes, realty taxes and all other kinds of taxes and licenses to be paid to the National
Government, its provinces, cities, municipalities and other government agenciesand instrumentalities[.]

In 1979, President Marcos issued Proclamation No. 1811, establishing the Mactan Export Processing Zone. Certain
parcels of land of the public domain located in the City of Lapu-Lapuin Mactan, Cebu were reserved to serve as site of
the Mactan Export Processing Zone.
In 1995, the PEZA was created by virtue of Republic Act No. 7916 or "the Special Economic Zone Act of 1995" 13 to
operate, administer, manage, and develop economic zones in the country. 14 The PEZA was granted the power to register,
regulate, and supervise the enterprises located in the economic zones. 15 By virtue of the law, the export processing zone
in Mariveles, Bataan became the Bataan Economic Zone 16 and the Mactan Export Processing Zone the Mactan Economic
Zone.17
As for the EPZA, the law required it to "evolve into the PEZA in accordance with the guidelines and regulations set forth
in an executive order issued for [the] purpose." 18
On October 30, 1995, President Fidel V. Ramos issued Executive Order No. 282, directing the PEZA to assume and
exercise all of the EPZAs powers, functions, and responsibilities "as provided in Presidential Decree No. 66, as
amended, insofar as they are not inconsistent with the powers, functions, and responsibilities of the PEZA, as mandated
under [the Special Economic Zone Act of 1995]." 19 All of EPZAs properties, equipment, and assets, among others, were
ordered transferred to the PEZA.20
Facts of G.R. No. 184203
In the letter21 dated March 25, 1998, the City of Lapu-Lapu, through the Office of the Treasurer, demanded from the
PEZA 32,912,350.08 in real property taxes for the period from 1992 to 1998 on the PEZAs properties located in the
Mactan Economic Zone.
The City reiterated its demand in the letter 22 dated May 21, 1998. It cited Sections 193 and 234 of the Local Government
Code of 1991 that withdrew the real property tax exemptions previously granted to or presently enjoyed by all persons.
The City pointed out that no provision in the Special Economic Zone Act of 1995 specifically exempted the PEZA from
payment of real property taxes, unlike Section 21 of Presidential Decree No. 66 that explicitly provided for EPZAs
exemption. Since no legal provision explicitly exempted the PEZA from payment of real property taxes, the City argued
that it can tax the PEZA.
The City made subsequent demands 23 on the PEZA. In its last reminder 24 dated May 13, 2002, the City assessed the
PEZA 86,843,503.48 as real property taxes for the period from 1992 to 2002.
On September 11, 2002, the PEZAfiled a petition for declaratory Relief 25 with the Regional Trial Court of Pasay City,
praying that the trial court declare it exempt from payment ofreal property taxes. The case was raffled to Branch 111.
The City answered26 the petition, maintaining that the PEZA is liable for real property taxes. To support its argument, the
City cited a legal opinion dated September 6, 1999 issued by the Department of Justice, 27 which stated that the PEZA is
not exempt from payment of real property taxes. The Department of Justice based its opinion on Sections 193 and 234 of
the Local Government Code that withdrew the tax exemptions, including real property tax exemptions, previously
granted to all persons.
A reply28 was filed by the PEZA to which the City filed a rejoinder.29
Pursuant to Rule 63, Section 3 of Rules of Court, 30 the Office of the Solicitor General filed a comment 31 on the PEZAs
petition for declaratory relief. It agreed that the PEZA is exempt from payment of real property taxes, citing Sections 24
and 51 of the Special Economic Zone Act of 1995.
The trial court agreed with the Solicitor General. Section 24 of the Special Economic Zone Act of 1995 provides:
SEC. 24. Exemption from National and Local Taxes. Except for real property taxes on land owned by developers, no
taxes, local and national, shall be imposed on business establishments operating within the ECOZONE. In lieu thereof,
five percent (5%) of the gross income earned by all business enterprises within the ECOZONE shall be paid and remitted
as follows:
a. Three percent (3%) to the National Government;
b. Two percent (2%) which shall be directly remitted by the business establishments to the treasurers office of
the municipality or city where the enterprise is located.
Section 51 of the law, on the other hand, provides:

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 57
SEC. 51. Ipso-Facto Clause. All privileges, benefits, advantages or exemptions granted to special economic zones
under Republic Act No. 7227, shall ipso-facto be accorded to special economic zones already created or to be created
under this Act. The free port status shall not be vested upon new special economic zones.
Based on Section 51, the trial court held that all privileges, benefits, advantages, or exemptions granted tospecial
economic zones created under the Bases Conversion and Development Act of 1992 apply to special economic zones
created under the Special Economic ZoneAct of 1995.
Since these benefits include exemption from payment of national or local taxes, these benefits apply to special economic
zones owned by the PEZA.
According to the trial court, the PEZA remained tax-exempt regardless of Section 24 of the Special Economic Zone Act
of 1995. It ruled that Section 24, which taxes real property owned by developers of economic zones, only applies to
private developers of economic zones, not to public developers like the PEZA. The PEZA, therefore, is not liable for real
property taxes on the land it owns.
Characterizing the PEZA as an agency of the National Government, the trial court ruled that the City had no authority to
tax the PEZA under Sections 133(o) and 234(a) of the Local Government Code of 1991.
In the resolution32 dated June 14, 2006, the trial court granted the PEZAs petition for declaratory relief and declared it
exempt from payment of real property taxes.
The City filed a motion for reconsideration,33 which the trial court denied in its resolution 34 dated September 26, 2006.
The City then appealed35 to the Court of Appeals.
The Court of Appeals noted the following issues the City raised in its appellants brief: (1) whether the trial court had
jurisdiction over the PEZAs petition for declaratory relief; (2) whether the PEZA is a government agency performing
governmental functions; and (3) whether the PEZA is exempt from payment of real property taxes.
The issues presented by the City, according to the Court of Appeals, are pure questions of law which should have been
raised in a petition for review on certiorari directly filed before this court. Since the City availed itself of the wrong mode
of appeal, the Court of Appeals dismissed the Citys appeal in the decision 36 dated January 11, 2008.
The City filed a motion for extension of time to file a motion for reconsideration, 37 which the Court of Appeals denied in
the resolution38 dated April 11, 2008.
Despite the denial of its motion for extension, the City filed a motion for reconsideration. 39 In the resolution40 dated
August 6, 2008, the Court of Appeals denied that motion.
In its petition for review on certiorari with this court, 41 the City argues that the Court of Appeals "hid under the skirts of
technical rules"42 in resolving its appeal. The City maintains that its appeal involved mixed questions of fact and law.
According to the City, whether the PEZA performed governmental functions "cannot completely be addressed by law but
[by] the factual and actual activities [the PEZA is] carrying out." 43
Even assuming that the petition involves pure questions of law, the City contends that the subject matter of the case "is of
extreme importance with [far-reaching] consequence that [its magnitude] would surely shape and determine the course
ofour nations future."44 The Court of Appeals, the City argues, should have resolved the case on the merits.
The City insists that the trial court had no jurisdiction to hear the PEZAs petition for declaratory relief. According to the
City, the case involves real property located in the City of Lapu-Lapu. The petition for declaratory relief should have
been filed before the Regional Trial Court of the City of Lapu-Lapu. 45
Moreover, the Province of Bataan, the City of Baguio, and the Province of Cavite allegedly demanded real property taxes
from the PEZA. The City argues that the PEZA should have likewise impleaded these local government units as
respondents in its petition for declaratory relief. For its failure to do so, the PEZA violated Rule 63, Section 2 of the
Rules of Court, and the trial court should have dismissed the petition. 46
This court ordered the PEZA to comment on the Citys petition for review on certiorari. 47
At the outset of its comment, the PEZA argues that the Court of Appeals decision dated January 11, 2008 had become
final and executory. After the Court of Appeals had denied the Citys appeal, the City filed a motion for extension of time
to file a motion for reconsideration. Arguing that the time to file a motion for reconsideration is not extendible, the PEZA
filed its motion for reconsideration out of time. The Cityhas no more right to appeal to this court. 48

The PEZA maintains that the City availed itself of the wrong mode of appeal before the Court of Appeals. Since the City
raised pure questions of law in its appeal, the PEZA argues that the proper remedy is a petition for review on certiorari
with this court, not an ordinary appeal before the appellate court. The Court of Appeals, therefore, correctly dismissed
outright the Citys appeal under Rule 50, Section 2 of the Rules of Court. 49
On the merits, the PEZA argues that it is an agency and instrumentality of the National Government. It is therefore
exempt from payment of real property taxes under Sections 133(o) and 234(a) of the Local Government Code. 50 It adds
that the tax privileges under Sections 24 and 51 of the Special Economic Zone Act of 1995 applied to it. 51
Considering that the site of the Mactan Economic Zoneis a reserved land under Proclamation No. 1811, the PEZA claims
that the properties sought to be taxed are lands of public dominion exempt from real property taxes. 52
As to the jurisdiction issue, the PEZA counters that the Regional Trial Court of Pasay had jurisdiction to hear its petition
for declaratory relief under Rule 63, Section 1 of the Rules of Court.[53]] It also argued that it need not implead the
Province of Bataan, the City of Baguio, and the Province of Cavite as respondents considering that their demands came
after the PEZA had already filed the petition in court.54
Facts of G.R. No. 187583
After the City of Lapu-Lapu had demanded payment of real property taxes from the PEZA, the Province of Bataan
followed suit. In its letter55 dated May 29, 2003, the Province, through the Office of the Provincial Treasurer, informed
the PEZA that it would be sending a real property tax billing to the PEZA. Arguing that the PEZA is a developer of
economic zones, the Province claimed that the PEZA is liable for real property taxes under Section 24 of the Special
Economic Zone Act of 1995.
In its reply letter56 dated June 18, 2003, the PEZA requested the Province to suspend the service of the real property tax
billing. It cited its petition for declaratory relief against the City of Lapu-Lapu pending before the Regional Trial Court,
Branch 111, Pasay City as basis.
The Province argued that serving a real property tax billing on the PEZA "would not in any way affect [its] petition for
declaratory relief before [the Regional Trial Court] of Pasay City." 57 Thus, in its letter58 dated June 27, 2003, the Province
notified the PEZAof its real property tax liabilities for June 1, 1995 to December 31, 2002 totallingP110,549,032.55.
After having been served a tax billing, the PEZA again requested the Province to suspend collecting its alleged real
property tax liabilities until the Regional Trial Court of Pasay Cityresolves its petition for declaratory relief. 59
The Province ignored the PEZAs request. On January 20, 2004, the Province served on the PEZA a statement of unpaid
real property tax for the period from June 1995 to December 2004. 60
The PEZA again requested the Province to suspend collecting its alleged real property taxes. 61 The Province denied the
request in its letter62 dated January 29, 2004, then servedon the PEZA a warrant of levy 63 covering the PEZAs real
properties located in Mariveles, Bataan.
The PEZAs subsequent requests64 for suspension of collection were all denied by the Province. 65 The Province then
served on the PEZA a notice of delinquency in the payment of real property taxes 66 and a notice of sale of real property
for unpaid real property tax.67 The Province finally sent the PEZA a notice of public auction of the latters properties in
Mariveles, Bataan.68
On June 14, 2004, the PEZA filed a petition for injunction 69 with prayer for issuance of a temporary restraining order
and/or writ of preliminary injunction before the Regional Trial Court of Pasay City, arguing that it is exempt from
payment ofreal property taxes. It added that the notice of sale issued by the Province was void because it was not
published in a newspaper ofgeneral circulation asrequired by Section 260 of the Local Government Code. 70
The case was raffled to Branch 115.
In its order71 dated June 18, 2004, the trial court issued a temporary restraining order against the Province. After the
PEZA had filed a P100,000.00 bond,72 the trial court issued a writ of preliminary injunction, 73 enjoining the Province
from selling the PEZAs real properties at public auction.
On March 3, 2006, the PEZA and Province both manifested that each would file a memorandum after which the case
would be deemed submitted for decision. The parties then filed their respective memoranda. 74

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In the order75 dated January 31, 2007, the trial court denied the PEZAs petition for injunction. The trial court ruled that
the PEZA is not exempt from payment of real property taxes. According to the trial court, Sections 193 and 234 of the
Local Government Code had withdrawn the real property tax exemptions previously granted to all persons, whether
natural or juridical.76 As to the tax exemptions under Section 51 of the Special Economic Zone Act of 1995, the trial
court ruled that the provision only applies to businesses operating within the economic zones, not to the PEZA. 77
The PEZA filed before the Court of Appeals a petition for certiorari 78 with prayer for issuance of a temporary restraining
order.
The Court of Appeals issued a temporary restraining order, enjoining the Province and its Provincial Treasurer from
selling PEZA's properties at public auction scheduled on October 17, 2007. 79 It also ordered the Province to comment on
the PEZAs petition.
In its comment,80 the Province alleged that it received a copy of the temporary restraining order only on October 18, 2007
when it had already sold the PEZAs properties at public auction. Arguing that the act sought to be enjoined was already
fait accompli, the Province prayed for the dismissal of the petition for certiorari.
The PEZA then filed a supplemental petition for certiorari, prohibition, and mandamus 81 against the Province, arguing
that the Provincial Treasurer of Bataan acted with grave abuse of discretion in issuing the notice of delinquency and
notice of sale. It maintained that it is exempt from payment of real property taxes because it is a government
instrumentality. It added that its lands are property of public dominion which cannot be sold at public auction.
The PEZA also filed a motion82 for issuance of an order affirming the temporary restraining order and a writ of
preliminary injunction to enjoin the Province from consolidating title over the PEZAs properties.
In its resolution83 dated January 16, 2008,the Court of Appeals admitted the supplemental petition for certiorari,
prohibition, and mandamus. It required the Province to comment on the supplemental petition and to file a memorandum
on the PEZAs prayer for issuance of temporary restraining order.
The Province commented84 on the PEZAs supplemental petition, to which the PEZA replied.85
The Province then filed a motion 86 for leave to admit attached rejoinder with motion to dismiss. In the rejoinder with
motion to dismiss,87 the Province argued for the first time that the Court of Appeals had no jurisdiction over the subject
matter of the action.
According to the Province, the PEZA erred in filing a petition for certiorari. Arguing that the PEZA sought to reverse a
Regional Trial Court decision in a local tax case, the Province claimed that the court with appellate jurisdiction over the
action is the Court of Tax Appeals. The PEZA then prayed that the Court of Appeals dismiss the petition for certiorari for
lack of jurisdiction over the subject matter of the action.
The Court of Appeals held that the issue before it was whether the trial court judge gravely abused his discretion in
dismissing the PEZAs petition for prohibition. This issue, according to the Court of Appeals, is properly addressed in a
petition for certiorari over which it has jurisdiction to resolve. It, therefore, maintained jurisdiction to resolve the PEZAs
petition for certiorari.88
Although it admitted that appeal, not certiorari, was the PEZAs proper remedy to reverse the trial courts decision, 89 the
Court of Appeals proceeded to decide the petition for certiorari in "the broader interest of justice." 90
The Court of Appeals ruled that the trial court judge gravely abused his discretion in dismissing the PEZAs petition for
prohibition. It held that Section 21 of Presidential Decree No. 66 and Section 51 of the Special Economic Zone Act of
1995 granted the PEZA exemption from payment of real property taxes. 91 Based on the criteria set in Manila
International Airport Authority v. Court of Appeals, 92 the Court of Appeals found that the PEZA is an instrumentality of
the national government. No taxes, therefore, could be levied on it by local government units. 93
In the decision94 dated August 27, 2008, the Court of Appeals granted the PEZAs petition for certiorari. It set aside the
trial courts decision and nullified all the Provinces proceedings with respect to the collection of real property taxes from
the PEZA.
The Province filed a motion for reconsideration, 95 which the Court of Appeals denied in the resolution 96 dated April 16,
2009 for lack of merit.

In its petition for review on certiorari with this court, 97 the Province of Bataan insists that the Court of Appeals had no
jurisdiction to take cognizance of the PEZAs petition for certiorari. The Province maintains that the Court of Tax
Appeals had jurisdiction to hear the PEZAs petition since it involved a local tax case decided by a Regional Trial Court. 98
The Province reiterates that the PEZA is not exempt from payment of real property taxes. The Province points out that
the EPZA, the PEZAs predecessor, had to be categorically exempted from payment of real property taxes. The EPZA,
therefore, was not inherently exempt from payment of real property taxes and so is the PEZA. Since Congress omitted
from the Special Economic Zone Act of 1995 a provision specifically exempting the PEZA from payment of real
property taxes, the Province argues that the PEZA is a taxable entity. It cited the rule in statutory construction that
provisions omitted in revised statutes are deemed repealed. 99
With respect to Sections 24 and 51 of the Special Economic Zone Act of 1995 granting tax exemptions and benefits, the
Province argues that these provisions only apply to business establishments operating within special economic
zones,100 not to the PEZA.
This court ordered the PEZA tocomment on the Provinces petition for review on certiorari. 101 In its comment,102 the
PEZA argues that the Court of Appeals had jurisdiction to hear its petition for certiorari since the issue was whether the
trial court committed grave abuse of discretion in denying its petition for injunction. The PEZA maintains thatit is
exempt from payment of real property taxes under Section 21 of Presidential Decree No. 66 and Section 51 of the Special
Economic Zone Act of 1995.
The Province filed its reply,103 reiterating its arguments in its petition for review on certiorari. On the PEZAs
motion,104 this court consolidated the petitions filed by the City of Lapu-Lapu and the Province of Bataan. 105
The issues for our resolution are the following:
I. Whether the Court of Appeals erred in dismissing the City of Lapu-Lapus appeal for raising pure questions
of law;
II. Whether the Regional Trial Court, Branch 111, Pasay City had jurisdiction to hear, try, and decide the City
of Lapu-Lapus petition for declaratory relief;
III. Whether the petition for injunction filed before the Regional Trial Court, Branch 115, Pasay City, is a local
tax case appealable to the Court of Tax Appeals; and
IV. Whether the PEZA is exempt from payment of real property taxes.
We deny the consolidated petitions.
I.
The Court of Appeals did not err in
dismissing the City of Lapu-Lapus
appeal for raising pure questions of law
Under the Rules of Court, there are three modes of appeal from Regional Trial Court decisions. The first mode is through
an ordinary appeal before the Court of Appeals where the decision assailed was rendered in the exercise of the Regional
Trial Courts original jurisdiction. Ordinary appeals are governed by Rule 41, Sections 3 to 13 of the Rules of Court. In
ordinary appeals, questions of fact or mixed questions of fact and law may be raised. 106
The second mode is through a petition for review before the Court of Appeals where the decision assailed was rendered
by the Regional Trial Court in the exercise of its appellate jurisdiction. Rule 42 of the Rules of Court governs petitions
for review before the Court of Appeals. In petitions for review under Rule 42, questions of fact, of law, or mixed
questions of fact and law may be raised.107
The third mode is through an appealby certiorari before this court under Rule 45 where only questions of law shall be
raised.108
A question of fact exists when there is doubt as to the truth or falsity of the alleged facts. 109 On the other hand, there is a
question of law if the appeal raises doubt as to the applicable law on a certain set of facts. 110
Under Rule 50, Section 2, an improper appeal before the Court of Appeals is dismissed outright and shall not be referred
to the proper court:

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SEC. 2. Dismissal of improper appeal to the Court of Appeals. An appeal under Rule 41 taken from the Regional Trial
Court to the Court of Appeals raising only questions of law shall be dismissed, issues purely of law not being reviewable
by said court. Similarly, an appeal by notice of appeal instead of by petition for review from the appellate judgment of a
Regional Trial Court shall be dismissed.
An appeal erroneously taken to the Court of Appeals shall not be transferred to the appropriate court but shall be
dismissed outright.
Rule 50, Section 2 repealed Rule 50, Section 3 of the 1964 Rules of Court, which provided that improper appeals to the
Court of Appeals shall not be dismissed but shall be certified to the proper court for resolution:
Sec. 3. Where appealed case erroneously, brought. Where the appealed case has been erroneously brought to the Court
of Appeals, it shall not dismiss the appeal, but shall certify the case to the proper court, with a specific and clear
statement of the grounds therefor.
With respect to appeals by certiorari directly filed before this court but which raise questions of fact, paragraph 4(b) of
Circular No. 2-90 dated March 9, 1990 states that this court "retains the option, in the exercise of its sound discretion and
considering the attendant circumstances, either itself to take cognizance of and decide such issues or to refer them to the
Court of Appeals for determination." In Indoyon, Jr. v. Court of Appeals, 111 we said that this court "cannot tolerate
ignorance of the law on appeals."112 It is not this courts task to determine for litigants their proper remedies under the
Rules.113
We agree that the City availed itself of the wrong mode of appeal before the Court of Appeals. The City raised pure
questions of law in its appeal. The issue of whether the Regional Trial Court of Pasay had jurisdiction over the PEZAs
petition for declaratory relief is a question of law, jurisdiction being a matter of law. 114 The issue of whether the PEZA is
a government instrumentality exempt from payment of real property taxes is likewise a question of law since this
question is resolved by examining the provisions of the PEZAs charter as well as other laws relating to the PEZA. 115
The Court of Appeals, therefore, did not err in dismissing the Citys appeal pursuant to Rule 50, Section 2 of the Rules of
Court.
Nevertheless, considering the important questions involved in this case, we take cognizance of the Citys petition for
review on certiorari in the interest of justice.
In Municipality of Pateros v. The Honorable Court of Appeals, 116 the Municipality of Pateros filed an appeal under Rule
42 before the Court of Appeals, which the Court of Appeals denied outright for raising pure questions of law. This court
agreed that the Municipality of Pateros "committed a procedural infraction" 117 and should have directly filed a petition for
review on certiorari before this court. Nevertheless, "in the interest of justice and in order to write finisto [the]
controversy,"118 this court "opt[ed] to relax the rules"119 and proceeded to decide the case. This court said:
While it is true that rules of procedure are intended to promote rather than frustrate the ends of justice, and while the
swift unclogging of the dockets of the courts is a laudable objective, it nevertheless must not be met at the expense of
substantial justice.
The Court has allowed some meritorious cases to proceed despite inherent procedural defects and lapses. Thisis in
keeping with the principle that rules of procedure are mere tools designed to facilitate the attainment of justice, and that
strict and rigid application ofrules which should result in technicalities that tend to frustrate rather than promote
substantial justice must always be avoided. It is a far better and more prudent cause of action for the court to excuse a
technical lapse and afford the parties a review of the case to attain the ends of justice, rather than dispose of the case on
technicality and cause grave injustice to the parties, giving a false impression of speedy disposal of cases while actually
resulting in more delay, if not a miscarriage of justice. 120
Similar to Municipality of Pateros, we opt to relax the rules in this case. The PEZA operates or otherwise administers
special economic zones all over the country. Resolving the substantive issue of whether the PEZA is taxable for real
property taxes will clarify the taxing powers of all local government units where special economic zones are operated.
This case, therefore, should be decided on the merits.
II.

The Regional Trial Court of Pasay had no

jurisdiction to hear, try, and decide the
PEZAs petition for declaratory relief
against the City of Lapu-Lapu
Rule 63 of the Rules of Court governs actions for declaratory relief. Section 1 of Rule 63 provides:
SECTION 1. Who may file petition. Any person interested under a deed, will, contract or other written instrument, or
whose rights are affected by a statute, executive order or regulation, ordinance, or any other governmental regulation
may, before breach or violation, thereof, bring an action in the appropriate Regional Trial Court to determine any
question of construction or validity arising, and for a declaration of his rights or duties, thereunder.
An action for reformation of an instrument, to quiet title to real property or remove clouds therefrom, or to consolidate
ownership under Article 1607 of the Civil Code, may be brought under this Rule.
The court with jurisdiction over petitions for declaratory relief is the Regional Trial Court, the subject matter of litigation
in an action for declaratory relief being incapable of pecuniary estimation. 121 Section 19 of the Judiciary Reorganization
Act of 1980 provides:
SEC. 19. Jurisdiction in Civil Cases. Regional Trial Courts shall exercise exclusive original jurisdiction:
(1) In all civil actions in which the subject of litigation is incapable of pecuniary estimation[.]
Consistent with the law, the Rules state that a petition for declaratory relief is filed "in the appropriate Regional Trial
Court."122
A special civil action for declaratory relief is filed for a judicial determination of any question of construction or validity
arising from, and for a declaration of rights and duties, under any of the following subject matters: a deed, will, contract
or other written instrument, statute, executive order or regulation, ordinance, orany other governmental
regulation.123 However, a declaratory judgment may issue only if there has been "no breach of the documents in
question."124 If the contract or statute subject matter of the action has already been breached, the appropriate ordinary
civil action must be filed. 125 If adequate relief is available through another form of action or proceeding, the other action
must be preferred over an action for declaratory relief. 126
In Ollada v. Central Bank of the Philippines, 127 the Central Bank issued CB-IED Form No. 5 requiring certified public
accountants to submit an accreditation under oath before they were allowed to certify financial statements submitted to
the bank. Among those financial statements the Central Bank disallowed were those certified by accountant Felipe B.
Ollada.128 Claiming that the requirement "restrained the legitimate pursuit of ones trade," 129
Ollada filed a petition for declaratory relief against the Central Bank.
This court ordered the dismissal of Olladas petition "without prejudice to [his] seeking relief in another appropriate
action."130 According to this court, Olladas right had already been violated when the Central Bank refused to accept the
financial statements he prepared. Since there was already a breach, a petition for declaratory relief was not proper. Ollada
must pursue the "appropriate ordinary civil action or proceeding." 131 This court explained:
Petitioner commenced this action as, and clearly intended it to be one for Declaratory Relief under the provisions of Rule
66 of the Rules of Court. On the question of when a special civil action of this nature would prosper, we have already
held that the complaint for declaratory relief will not prosper if filed after a contract, statute or right has been breached or
violated. In the present case such is precisely the situation arising from the facts alleged in the petition for declaratory
relief. As vigorously claimed by petitioner himself, respondent had already invaded or violated his right and caused him
injury all these giving him a complete cause of action enforceable in an appropriate ordinary civil action or
proceeding. The dismissal of the action was, therefore, proper in the lightof our ruling in De Borja vs. Villadolid, 47 O.G.
(5) p. 2315, and Samson vs. Andal, G.R. No. L-3439, July 31, 1951, where we held that an action for declaratory relief
should be filed before there has been a breach of a contract, statutes or right, and that it is sufficient tobar such action,
that there had been a breach which would constitute actionable violation. The rule is that an action for Declaratory
Relief is proper only if adequate relief is not available through the means of other existing forms of action or proceeding
(1 C.J.S. 1027-1028).132

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It is also required that the parties to the action for declaratory relief be those whose rights or interests are affected by the
contract or statute in question. 133 "There must be an actual justiciable controversy or the ripening seeds of
one"134 between the parties. The issue between the parties "must be ripe for judicial determination." 135 An action for
declaratory relief based on theoreticalor hypothetical questions cannot be filed for our courts are not advisory courts. 136
In Republic v. Roque,137 this court dismissed respondents petition for declaratory relief for lack of justiciable
controversy. According to this court, "[the respondents] fear of prospective prosecution [under the Human Security Act]
was solely based on remarks of certain government officials which were addressed to the general public." 138
In Velarde v. Social Justice Society,139 this court refused to resolve the issue of "whether or not [a religious leaders
endorsement] of a candidate for elective office or in urging or requiring the members of his flock to vote for a specific
candidate is violative [of the separation clause]." 140 According to the court, there was no justiciable controversy and
ordered the dismissal of the Social Justice Societys petition for declaratory relief. This court explained: Indeed, SJS
merely speculated or anticipated without factual moorings that, as religious leaders, the petitioner and his co-respondents
below had endorsed or threatened to endorse a candidate or candidates for elective offices; and that such actual or
threatened endorsement "will enable [them] to elect men to public office who [would] in turn be forever beholden to their
leaders, enabling them to control the government"[;] and "pos[ing] a clear and present danger ofserious erosion of the
peoples faith in the electoral process[;] and reinforc[ing] their belief that religious leaders determine the ultimate result
of elections," which would then be violative of the separation clause.
Such premise is highly speculative and merely theoretical, to say the least. Clearly, it does not suffice to constitute a
justiciable controversy. The Petition does not even allege any indication or manifest intent on the part of any of the
respondents below to champion an electoral candidate, or to urge their so-called flock to vote for, or not to vote for, a
particular candidate. It is a time-honored rule that sheer speculation does not give rise to an actionable right.
Obviously, there is no factual allegation that SJS rights are being subjected to any threatened, imminent and inevitable
violation that should be prevented by the declaratory relief sought. The judicial power and duty of the courts to settle
actual controversies involving rights that are legally demandable and enforceable cannot be exercised when there is no
actual or threatened violation of a legal right.
All that the 5-page SJS Petition prayed for was "that the question raised in paragraph 9 hereof be resolved." In other
words, it merely sought an opinion of the trial court on whether the speculated acts of religious leaders endorsing elective
candidates for political offices violated the constitutional principle on the separation of church and state. SJS did not ask
for a declaration of its rights and duties; neither did it pray for the stoppage of any threatened violation of its declared
rights. Courts, however, are proscribed from rendering an advisory opinion. 141In sum, a petition for declaratory relief
must satisfy six requisites:
[F]irst, the subject matter of the controversy must be a deed, will, contract or other written instrument, statute, executive
order or regulation, or ordinance; second, the terms of said documents and the validity thereof are doubtful and require
judicial construction; third, there must have been no breach of the documents in question; fourth, there must be an actual
justiciable controversy or the "ripening seeds" of one between persons whose interests are adverse; fifth, the issue must
be ripe for judicial determination; and sixth, adequate relief is not available through other means or other forms of action
or proceeding.142 (Emphases omitted)
We rule that the PEZA erred in availing itself of a petition for declaratory relief against the City. The City had already
issued demand letters and real property tax assessment against the PEZA, in violation of the PEZAs alleged tax-exempt
status under its charter. The Special Economic Zone Act of 1995, the subject matter of PEZAs petition for declaratory
relief, had already been breached. The trial court, therefore, had no jurisdiction over the petition for declaratory relief.
There are several aspects of jurisdiction. 143 Jurisdiction over the subject matter is "the power to hear and determine cases
of the general class to which the proceedings in question belong." 144 It is conferred by law, which may either be the
Constitution or a statute.145 Jurisdiction over the subject matter means "the nature of the cause of action and the relief
sought."146 Thus, the cause of action and character of the relief sought as alleged in the complaint are examinedto
determine whether a court had jurisdiction over the subject matter. 147 Any decision rendered by a court without
jurisdiction over the subjectmatter of the action is void. 148

Another aspect of jurisdiction is jurisdiction over the person. It is "the power of [a] court to render a personal judgment
or to subject the parties in a particular action to the judgment and other rulings rendered in the action." 149 A court
automatically acquires jurisdiction over the person of the plaintiff upon the filing of the initiatory pleading. 150 With
respect to the defendant, voluntary appearance in court or a valid service of summons vests the court with jurisdiction
over the defendants person.151 Jurisdiction over the person of the defendant is indispensable in actions in personamor
those actions based on a partys personal liability.152 The proceedings in an action in personamare void if the court had no
jurisdiction over the person of the defendant.153
Jurisdiction over the resor the thing under litigation is acquired either "by the seizure of the property under legal process,
whereby it is brought into actual custody of the law; or asa result of the institution of legal proceedings, in which the
power of the court is recognized and made effective." 154 Jurisdiction over the res is necessary in actions in remor those
actions "directed against the thing or property or status of a person and seek judgments with respect thereto as against the
whole world."155 The proceedings in an action in rem are void if the court had no jurisdiction over the thing under
litigation.156
In the present case, the Regional Trial Court had no jurisdiction over the subject matter of the action, specifically, over
the remedy sought. As this court explained in Malana v. Tappa: 157
. . . an action for declaratory relief presupposes that there has been no actual breach of the instruments involved or of
rights arising thereunder. Since the purpose of an action for declaratory relief is to secure an authoritative statement of
the rights and obligations of the parties under a statute, deed, or contract for their guidance in the enforcement thereof, or
compliance therewith, and not to settle issues arising from an alleged breach thereof, it may be entertained only before
the breach or violation of the statute, deed, or contract to which it refers. A petition for declaratory relief gives a practical
remedy for ending controversies that have not reached the state where another relief is immediately available; and
supplies the need for a form of action that will set controversies at rest before they lead to a repudiation of obligations, an
invasion of rights, and a commission of wrongs.
Where the law or contract has already been contravened prior to the filing of an action for declaratory relief, the courts
can no longer assume jurisdiction over the action. In other words, a court has no more jurisdiction over an action for
declaratory relief if its subject has already been infringed or transgressed before the institution of the action. 158 (Emphasis
supplied)
The trial court should have dismissed the PEZAs petition for declaratory relief for lack of jurisdiction.
Once an assessment has already been issued by the assessor, the proper remedy of a taxpayer depends on whether the
assessment was erroneous or illegal.
An erroneous assessment "presupposes that the taxpayer is subject to the tax but is disputing the correctness of the
amount assessed."159 With an erroneous assessment, the taxpayer claims that the local assessor erred in determining any
of the items for computing the real property tax, i.e., the value of the real property or the portion thereof subject to tax
and the proper assessment levels. In case of an erroneous assessment, the taxpayer must exhaust the administrative
remedies provided under the Local Government Code before resorting to judicial action.
The taxpayer must first pay the realproperty tax under protest. Section 252 of the Local Government Code provides:
SECTION 252. Payment Under Protest. -(a) No protest shall be entertained unless the taxpayer first paysthe tax. There
shall be annotated on the tax receipts the words "paid under protest". The protest in writing must be filed within thirty
(30) days from payment of the tax to the provincial, city treasurer or municipal treasurer, in the case of a municipality
within Metropolitan Manila Area, who shall decide the protest within sixty (60) days from receipt.
(b) The tax or a portion thereof paidunder protest, shall be held in trust by the treasurer concerned.
(c) In the event that the protest is finally decided in favor of the taxpayer, the amount or portion of the tax
protested shall be refunded to the protestant, or applied as tax credit against his existing or future tax liability.
(d) In the event that the protest is denied or upon the lapse of the sixty day period prescribed in subparagraph
(a), the taxpayer may avail of the remedies as provided for in Chapter 3, Title II, Book II of this Code.
Should the taxpayer find the action on the protest unsatisfactory, the taxpayer may appeal with the Local Board of
Assessment Appeals within 60 days from receipt of the decision on the protest:

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SECTION 226. Local Board of Assessment Appeals. - Any owner or person having legal interest in the property who is
not satisfied with the action of the provincial, city or municipal assessor in the assessment of his property may, within
sixty (60) days from the date of receipt of the written notice of assessment, appeal to the Board of Assessment Appeals of
the provincial or city by filing a petition under oath in the form prescribed for the purpose, together with copies of the tax
declarations and such affidavits or documents submitted in support of the appeal.
Payment under protest and appeal to the Local Board of Assessment Appeals are "successive administrative remedies to a
taxpayer who questions the correctness of an assessment." 160 The Local Board Assessment Appeals shall not entertain an
appeal "without the action of the local assessor" 161 on the protest.
If the taxpayer is still unsatisfied after appealing with the Local Board of Assessment Appeals, the taxpayer may appeal
with the Central Board of Assessment Appeals within 30 days from receipt of the Local Boards decision:
SECTION 229. Action by the Local Board of Assessment Appeals. - (a) The Board shall decide the appeal within one
hundred twenty (120) days from the date of receipt of such appeal. The Board, after hearing, shall render its decision
based on substantial evidence or such relevant evidence on record as a reasonable mind might accept as adequate to
support the conclusion. (b) In the exercise ofits appellate jurisdiction, the Board shall have the power to summon
witnesses, administer oaths, conduct ocular inspection, take depositions, and issue subpoena and subpoena duces tecum.
The proceedings of the Board shall be conducted solely for the purpose of ascertaining the facts without necessarily
adhering to technical rules applicable in judicial proceedings.
(c) The secretary of the Board shall furnish the owner of the property or the person having legal interest therein and the
provincial or city assessor with a copy of the decision of the Board. In case the provincial or city assessor concurs in the
revision or the assessment, it shall be his duty to notify the owner of the property or the person having legal interest
therein of such factusing the form prescribed for the purpose. The owner of the property or the person having legal
interest therein or the assessor who is not satisfied with the decision of the Board, may, within thirty (30) days after
receipt of the decision of said Board, appeal to the Central Board of Assessment Appeals, as herein provided. The
decision of the Central Board shall be final and executory. (Emphasis supplied)
On the other hand, an assessment is illegal if it was made without authority under the law. 162 In case of an illegal
assessment, the taxpayer may directly resort to judicial action without paying under protest the assessed tax and filing an
appeal with the Local and Central Board of Assessment Appeals.
In Ty v. Trampe,163 the Municipal Assessor of Pasig sent Alejandro B. Ty a notice of assessment with respect to Tys real
properties in Pasig. Without resorting to the administrative remedies under the Local Government Code, Ty filed before
the Regional Trial Court a petition, praying that the trial court nullify the notice of assessment. In assessing the real
property taxes due, the Municipal Assessor used a schedule of market values solely prepared by him. This, Ty argued,
was void for being contrary to the Local Government Code requiring that the schedule of market values be jointly
prepared by the provincial, city, and municipal assessors of the municipalities within the Metropolitan Manila Area.
This court ruled that the assessmentwas illegal for having been issued without authority of the Municipal Assessor.
Reconciling provisions of the Real Property Tax Code and the Local Government Code, this court held that the schedule
of market valuesmust be jointly prepared by the provincial, city, and municipal assessors of the municipalities within the
Metropolitan Manila Area.
As to the issue of exhaustion of administrative remedies, this court held that Ty did not err in directly resorting to judicial
action. According to this court, payment under protest is required only "where there is a question as to the reasonableness
of the amount assessed."164 As to appeals before the Local and Central Board of Assessment Appeals, they are "fruitful
only where questions of fact are involved."165
Ty raised the issue of the legality of the notice of assessment, an issue that did not go into the reasonableness of the
amount assessed. Neither did the issue involve a question of fact. Ty raised a question of law and, therefore, need not
resort to the administrative remedies provided under the Local Government Code.
In the present case, the PEZA did not avail itself of any of the remedies against a notice of assessment. A petition for
declaratory relief is not the proper remedy once a notice of assessment was already issued.

Instead of a petition for declaratory relief, the PEZA should have directly resorted to a judicial action. The PEZA should
have filed a complaint for injunction, the "appropriate ordinary civil action" 166 to enjoin the City from enforcing its
demand and collecting the assessed taxes from the PEZA. After all, a declaratory judgment as to the PEZAs tax-exempt
status is useless unless the City isenjoined from enforcing its demand.
Injunction "is a judicial writ, process or proceeding whereby a party is ordered to do or refrain from doing a certain
act."167 "It may be the main action or merely a provisional remedy for and as incident in the main action." 168 The essential
requisites of a writ of injunction are: "(1) there must be a right in esseor the existence of a right to be protected; and (2)
the act against which the injunction is directed to constitute a violation of such right." 169
We note, however, that the City confused the concepts of jurisdiction and venue in contending that the Regional Trial
Court of Pasay had no jurisdiction because the real properties involved in this case are located in the City of Lapu-Lapu.
On the one hand, jurisdiction is "the power to hear and determine cases of the general class to which the proceedings in
question belong."170 Jurisdiction is a matter of substantive law.171 Thus, an action may be filed only with the court or
tribunal where the Constitution or a statute says it can be brought. 172 Objections to jurisdiction cannot be waived and may
be brought at any stage of the proceedings, even on appeal. 173 When a case is filed with a court which has no jurisdiction
over the action, the court shall motu propriodismiss the case. 174
On the other hand, venue is "the place of trial or geographical location in which an action or proceeding should be
brought." 175 In civil cases, venue is a matter of procedural law.176 A partys objections to venue must be brought at the
earliest opportunity either in a motion to dismiss or in the answer; otherwise the objection shall be deemed
waived.177 When the venue of a civil action is improperly laid, the court cannot motu propriodismiss the case. 178
The venue of an action depends on whether the action is a real or personal action. Should the action affect title to or
possession of real property, or interest therein, it is a real action. The action should be filed in the proper court which has
jurisdiction over the area wherein the real property involved, or a portion thereof, is situated. 179 If the action is a personal
action, the action shall be filed with the proper court where the plaintiff or any of the principal plaintiffs resides, or where
the defendant or any of the principal defendants resides, or in the case of a non-resident defendant where he may be
found, at the election of the plaintiff.180
The City was objecting to the venue of the action, not to the jurisdiction of the Regional Trial Court of Pasay. In essence,
the City was contending that the PEZAs petition is a real action as it affects title to or possession of real property, and,
therefore, the PEZA should have filed the petition with the Regional Trial Court of Lapu-Lapu City where the real
properties are located. However, whatever objections the City has against the venue of the PEZAs action for declaratory
relief are already deemed waived. Objections to venue must be raised at the earliest possible opportunity. 181 The City did
not file a motion to dismiss the petition on the ground that the venue was improperly laid. Neither did the City raise this
objection in its answer.
In any event, the law sought to be judicially interpreted in this case had already been breached. The Regional Trial Court
of Pasay, therefore, had no jurisdiction over the PEZAs petition for declaratory relief against the City.
III.
The Court of Appeals had no jurisdiction
over the PEZAs petition for certiorari
against the Province of Bataan
Appeal is the remedy "to obtain a reversal or modification of a judgment on the merits." 182 A judgment on the merits is
one which "determines the rights and liabilities of the parties based on the disclosed facts, irrespective of the formal,
technical or dilatory objections." 183 It is not even necessary that the case proceeded to trial. 184 So long as the "judgment is
general"185 and "the parties had a full legal opportunity to be heard on their respective claims and contentions," 186 the
judgment is on the merits.
On the other hand, certiorari is a special civil action filed to annul or modify a proceeding of a tribunal, board, or officer
exercising judicial or quasi-judicial functions. 187 Certiorari, which in Latin means "to be more fully informed," 188 was
originally a remedy in the common law. This court discussed the history of the remedy of certiorari in Spouses Delos
Santos v. Metropolitan Bank and Trust Company:189

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In the common law, from which the remedy of certiorari evolved, the writ of certiorari was issued out of Chancery, or the
Kings Bench, commanding agents or officers of the inferior courts to return the record of a cause pending before them,
so as to give the party more sure and speedy justice, for the writ would enable the superior court to determine froman
inspection of the record whether the inferior courts judgment was rendered without authority. The errors were of such a
nature that, if allowed to stand, they would result in a substantial injury to the petitioner to whom no other remedy was
available. If the inferior court acted without authority, the record was then revised and corrected in matters of law. The
writ of certiorari was limited to cases in which the inferior court was said to be exceeding its jurisdiction or was not
proceeding according to essential requirements of law and would lie only to review judicial or quasi-judicial acts. 190
In our jurisdiction, the term "certiorari" is used in two ways. An appeal before this court raising pure questions of law is
commenced by filing a petition for reviewon certiorari under Rule 45 of the Rules of Court. An appeal by certiorari,
which continues the proceedings commenced before the lower courts, 191 is filed to reverse or modify judgments or final
orders.192 Under the Rules, an appeal by certiorarimust be filed within 15 days from notice of the judgment or final order,
or of the denial of the appellants motion for new trial or reconsideration. 193
A petition for certiorari under Rule 65, on the other hand, is an independent and original action filed to set aside
proceedings conducted without or in excess of jurisdiction or with grave abuse of discretion amounting to lack or excess
of jurisdiction.194 Under the Rules, a petition for certiorari may only be filed if there is no appeal or any plain, speedy, or
adequate remedy in the ordinary course of law.195 The petition must be filed within 60 days from notice of the judgment,
order, or resolution.196
Because of the longer period to file a petition for certiorari, some litigants attempt to file petitions for certiorari as
substitutes for lost appeals by certiorari. However, Rule 65 is clear that a petition for certiorari will not prosper if appeal
is available. Appealis the proper remedy even if the error, or one of the errors, raised is grave abuse of discretion on the
part of the court rendering judgment.197 If appeal is available, a petition for certiorari cannot be filed.
In this case, the trial courts decision dated January 31, 2007 is a judgment on the merits. Based on the facts disclosed by
the parties, the trial court declared the PEZA liable to the Province of Bataan for real property taxes. The PEZAs proper
remedy against the trial courts decision, therefore, is appeal.
Since the PEZA filed a petition for certiorari against the trial courts decision, it availed itself of the wrong remedy. As
the Province of Bataan contended, the trial courts decision dated January 31, 2007 "is only an error of judgment
appealable to the higher level court and may not be corrected by filing a petition for certiorari." 198 That the trial court
judge allegedly committed grave abuse of discretion does not make the petition for certiorari the correct remedy. The
PEZA should haveraised this ground in an appeal filed within 15 days from notice of the assailed resolution.
This court, "in the liberal spirit pervading the Rules of Court and in the interest of substantial justice," 199 has treated
petitions for certiorari as an appeal: "(1) if the petition for certiorari was filed within the reglementary period within
which to file a petition for review on certiorari; (2) when errors of judgment are averred; and (3) when there is sufficient
reason to justify the relaxation of the rules." 200 Considering that "the nature of an action is determined by the
allegationsof the complaint or the petition and the character of the relief sought," 201 a petition which "actually avers errors
of judgment rather than errors than that of jurisdiction" 202 may be considered a petition for review.
However, suspending the application of the Rules has its disadvantages. Relaxing procedural rules may reduce the
"effective enforcement of substantive rights," 203 leading to "arbitrariness, caprice, despotism, or whimsicality in the
settlement of disputes."204 Therefore, for this court to suspend the application of the Rules, the accomplishment of
substantial justice must outweigh the importance of predictability of court procedures.
The PEZAs petition for certiorari may be treated as an appeal. First, the petition for certiorari was filed withinthe 15-day
reglementary period for filing an appeal. The PEZA filed its petition for certiorari before the Court of Appeals on October
15, 2007,205 which was 12 days from October 3, 2007206 when the PEZA had notice of the trial courts order denying the
motion for reconsideration.
Second, the petition for certiorari raised errors of judgment. The PEZA argued that the trial court erred in ruling that it is
not exempt from payment of real property taxes given Section 21 of Presidential Decree No. 66 and Sections 11 and 51
of the Special Economic Zone Act of 1995.207

Third, there is sufficient reason to relax the rules given the importance of the substantive issue presented in this case.
However, the PEZAs petition for certiorari was filed before the wrong court. The PEZA should have filed its petition
before the Court of Tax Appeals.
The Court of Tax Appeals has the exclusive appellate jurisdiction over local tax cases decided by Regional Trial Courts.
Section 7, paragraph (a)(3) of Republic Act No. 1125, as amended by Republic Act No. 9282, provides:
Sec. 7. Jurisdiction. The [Court of Tax Appeals] shall exercise:
a. Exclusive appellate jurisdiction to review by appeal, as herein provided:
....
3. Decisions, orders or resolutions of the Regional Trial Courts in local tax cases originally decided or resolved
by them in the exercise of their original or appellate jurisdiction[.]
The local tax cases referred to in Section 7, paragraph (a)(3) of Republic Act No. 1125, as amended, include cases
involving real property taxes. Real property taxation is governed by Book II of the Local Government Code on "Local
Taxation and Fiscal Matters." Real property taxes are collected by the Local Treasurer, 208 not by the Bureau of Internal
Revenue in charge of collecting national internal revenue taxes, fees, and charges. 209
Section 7, paragraph (a)(5) of Republic Act No. 1125, as amended by Republic Act No. 9282, separately provides for the
exclusive appellate jurisdiction of the Court of Tax Appeals over decisions of the Central Board of Assessment Appeals
involving the assessment or collection of real property taxes:
Sec. 7. Jurisdiction. The [Court of Tax Appeals] shall exercise:
a. Exclusive appellate jurisdiction to review by appeal, as herein provided:
....
5. Decisions of the Central Board of Assessment Appeals in the exercise of its appellate jurisdiction over cases involving
the assessment and taxation of real property originally decided by the provincial or city board of assessment appeals[.]
This separate provision, nevertheless, does not bar the Court of Tax Appeals from taking cognizance of trial court
decisions involving the collection of real property tax cases. Sections 256 210 and 266211 of the Local Government Code
expressly allow localgovernment units to file "in any court of competent jurisdiction" civil actions to collect basic real
property taxes. Should the trial court rule against them, local government units cannot be barred from appealing before
the Court of Tax Appeals the "highly specialized body specifically created for the purpose of reviewing tax cases." 212
We have also ruled that the Court of Tax Appeals, not the Court of Appeals, has the exclusive original jurisdiction over
petitions for certiorari assailing interlocutory orders issued by Regional Trial Courts in a local tax case. We explained in
The City of Manila v. Hon. Grecia-Cuerdo 213 that while the Court of Tax Appeals has no express grant of power to issue
writs of certiorari under Republic Act No. 1125, 214 as amended, the tax courts judicial power as defined in the
Constitution215 includes the power to determine "whether or not there has been grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of the [Regional Trial Court] in issuing an interlocutory order of jurisdiction in
cases falling within the exclusive appellate jurisdiction of the tax court." 216 We further elaborated:
Indeed, in order for any appellate court to effectively exercise its appellate jurisdiction, it must have the authority to
issue, among others, a writ of certiorari. In transferring exclusive jurisdiction over appealed tax cases to the CTA, it can
reasonably be assumed that the law intended to transfer also such power as is deemed necessary, if not indispensable, in
aid of such appellate jurisdiction. There is no perceivable reason why the transfer should only be considered as partial,
not total.
....
If this Court were to sustain petitioners' contention that jurisdiction over their certiorari petition lies with the CA, this
Court would be confirming the exercise by two judicial bodies, the CA and the CTA, of jurisdiction over basically the
same subject matter precisely the split-jurisdiction situation which is anathema to the orderly administration of
justice.The Court cannot accept that such was the legislative motive, especially considering that the law expressly
confers on the CTA, the tribunal with the specialized competence over tax and tariff matters, the role of judicial review
over local tax cases without mention of any other court that may exercise such power. Thus, the Court agrees with the
ruling of the CA that since appellate jurisdiction over private respondents' complaint for tax refund is vested in the CTA,

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it follows that a petition for certiorari seeking nullification of an interlocutory order issued in the said case should,
likewise, be filed with the same court. To rule otherwise would lead to an absurd situation where one court decides an
appeal in the main case while another court rules on an incident in the very same case.
Stated differently, it would be somewhat incongruent with the pronounced judicial abhorrence to split jurisdiction to
conclude that the intention of the law is to divide the authority over a local tax case filed with the RTC by giving to the
CA or this Court jurisdiction to issue a writ of certiorari against interlocutory orders of the RTC but giving to the CTA the
jurisdiction over the appeal from the decision of the trial court in the same case. It is more in consonance with logic and
legal soundness to conclude that the grant of appellate jurisdiction to the CTA over tax cases filed in and decided by the
RTC carries withit the power to issue a writ of certiorari when necessary in aid of such appellate jurisdiction. The
supervisory power or jurisdiction of the CTA to issue a writ of certiorari in aid of its appellate jurisdiction should co-exist
with, and be a complement to, its appellate jurisdiction to review, by appeal, the final orders and decisionsof the RTC, in
order to have complete supervision over the acts of the latter.217(Citations omitted)
In this case, the petition for injunction filed before the Regional Trial Court of Pasay was a local tax case originally
decided by the trial court in its original jurisdiction. Since the PEZA assailed a judgment, not an interlocutory order, of
the Regional Trial Court, the PEZAs proper remedy was an appeal to the Court of Tax Appeals.
Considering that the appellate jurisdiction of the Court of Tax Appeals is to the exclusion of all other courts, the Court of
Appeals had no jurisdiction to take cognizance of the PEZAs petition. The Court of Appeals acted without jurisdiction in
rendering the decision in CA-G.R. SP No. 100984. Its decision in CA-G.R. SP No. 100984 is void. 218
The filing of appeal in the wrong court does not toll the period to appeal. Consequently, the decision of the Regional Trial
Court, Branch 115, Pasay City, became final and executory after the lapse of the 15th day from the PEZAs receipt of the
trial courts decision.219 The denial of the petition for injunction became final and executory.
IV.
The remedy of a taxpayer depends on the
stage in which the local government unit
is enforcing its authority to impose real
property taxes
The proper remedy of a taxpayer depends on the stage in which the local government unit is enforcing its authority to
collect real property taxes. For the guidance of the members of the bench and the bar, we reiterate the taxpayers
remedies against the erroneous or illegal assessment of real property taxes.
Exhaustion of administrative remedies under the Local Government Code is necessary in cases of erroneous assessments
where the correctness of the amount assessed is assailed. The taxpayer must first pay the tax then file a protest with the
Local Treasurer within 30 days from date of payment of tax. 220 If protest is denied or upon the lapse of the 60-day period
to decide the protest, the taxpayer may appeal to the Local Board of Assessment Appeals within 60 days from the denial
of the protest or the lapse of the 60-day period to decide the protest. 221The Local Board of Assessment Appeals has 120
days to decide the appeal.222
If the taxpayer is unsatisfied withthe Local Boards decision, the taxpayer may appeal before the Central Board of
Assessment Appeals within 30 days from receipt of the Local Boards decision. 223
The decision of the Central Board of Assessment Appeals is appealable before the Court of Tax Appeals En Banc. 224 The
appeal before the Court of Tax Appeals shall be filed following the procedure under Rule 43 of the Rules of Court. 225
The Court of Tax Appeals decision may then be appealed before this court through a petition for review on certiorari
under Rule 45 of the Rules of Court raising pure questions of law.226
In case of an illegal assessment where the assessment was issued without authority, exhaustion of administrative
remedies is not necessary and the taxpayer may directly resort to judicial action. 227 The taxpayer shall file a complaint for
injunction before the Regional Trial Court228 to enjoin the local government unit from collecting real property taxes.
The party unsatisfied with the decision of the Regional Trial Court shall file an appeal, not a petition for certiorari, before
the Court of Tax Appeals, the complaint being a local tax case decided by the Regional Trial Court. 229 The appeal shall be
filed within fifteen (15) days from notice of the trial courts decision.

The Court of Tax Appeals decision may then be appealed before this court through a petition for review on certiorari
under Rule 45 of the Rules of Court raising pure questions of law.230
In case the local government unit has issued a notice of delinquency, the taxpayer may file a complaint for injunction to
enjoin the impending sale of the real property at public auction. In case the local government unit has already sold the
property at public auction, the taxpayer must first deposit with the court the amount for which the real property was sold,
together with interest of 2% per month from the date ofsale to the time of the institution of action. The taxpayer may then
file a complaint to assail the validity of the public auction. 231 The decisions of the Regional Trial Court in these cases
shall be appealable before the Court of Tax Appeals, 232 and the latters decisions appealable before this court through a
petition for review on certiorari under Rule 45 of the Rules of Court. 233
V.
The PEZA is exempt from payment of
real property taxes
The jurisdictional errors in this case render these consolidated petitions moot. We do not review void decisions rendered
without jurisdiction.
However, the PEZA alleged that several local government units, including the City of Baguio and the Province of Cavite,
have issued their respective real property tax assessments against the PEZA. Other local government units will likely
follow suit, and either the PEZA or the local government units taxing the PEZA may file their respective actions against
each other.
In the interest of judicial economy 234 and avoidance of conflicting decisions involving the same issues, 235 we resolve the
substantive issue of whether the PEZA is exempt from payment of real property taxes.
Real property taxes are annual taxes levied on real property such as lands, buildings, machinery, and other improvements
not otherwise specifically exempted under the Local Government Code. 236 Real property taxes are ad valorem, with the
amount charged based on a fixed proportion of the value of the property. 237 Under the law, provinces, cities, and
municipalities within the Metropolitan Manila Area have the power to levy real property taxes within their respective
territories.238
The general rule is that real properties are subject to real property taxes. This is true especially since the Local
Government Code has withdrawn exemptions from real property taxes of all persons, whether natural or juridical:
SEC. 234. Exemptions from Real Property Tax. The following are exempted from payment of real property tax:
(a) Real property owned by the Republic of the Philippines or any of its political subdivisions except when the
beneficial use thereof has been granted, for consideration or otherwise, to a taxable person;
(b) Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques, nonprofit or
religious cemeteries and all lands, buildings, and improvements actually, directly, and exclusively used for
religious, charitable or educational purposes;
(c) All machineries and equipment that are actually, directly and exclusively used by local water districts and
government-owned or controlled corporations engaged in the supply and distribution of water and/or
generation and transmission of electric power;
(d) All real property owned by duly registered cooperatives as provided under R.A. No. 6938; and
(e) Machinery and equipment usedfor pollution control and environmental protection.
Except as provided herein, any exemption from payment of real property taxes previously granted to, or presently
enjoyed by, all persons, whether natural or juridical, including government-owned or -controlled corporations are hereby
withdrawn upon the effectivity of this Code. (Emphasis supplied)
The person liable for real property taxes is the "taxable person who had actual or beneficial use and possession [of the
real property for the taxable period,] whether or not [the person owned the property for the period he or she is being
taxed]."239
The exceptions to the rule are provided in the Local Government Code. Under Section 133(o), local government units
have no power to levy taxes of any kind on the national government, its agencies and instrumentalities and local
government units:

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SEC. 133. Common Limitations on the Taxing Powers of Local Government Units. Unless otherwise provided herein,
the exercise of taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the
following:
....
(o) Taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities and local
government units.
Specifically on real property taxes, Section 234 enumerates the persons and real property exempt from real property
taxes:
SEC. 234. Exemptions from Real Property Tax. The following are exempted from payment of real property tax:
(a) Real property owned by the Republic of the Philippines or any of its political subdivisions except when the
beneficial use thereof has been granted, for consideration or otherwise, to a taxable person;
(b) Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques, nonprofitor
religious cemeteries and all lands, buildings, and improvements actually, directly, and exclusively used for
religious, charitable or educational purposes;
(c) All machineries and equipment that are actually, directly and exclusively used by local water districts and
government-owned or controlled corporations engaged in the supply and distribution of water and/or
generation and transmission of electric power;
(d) All real property owned by duly registered cooperatives as provided under R.A. No. 6938; and
(e) Machinery and equipment used for pollution control and environmental protection.
Except as provided herein, any exemption from payment of real property tax previously granted to, or presently enjoyed
by, all persons, whether natural or juridical, including all government-owned or -controlled corporations are hereby
withdrawn upon the effectivity of this Code. (Emphasis supplied)
For persons granted tax exemptions or incentives before the effectivity of the Local Government Code, Section 193
withdrew these tax exemption privileges. These persons consist of both natural and juridical persons, including
government-owned or controlled corporations:
SEC. 193. Withdrawal of Tax Exemption Privileges. Unless otherwise provided in this code, tax exemptions or
incentives granted to or presently enjoyed by all persons, whether natural or juridical, including government-owned or
controlled corporations, except local water districts, cooperatives duly registered under R.A. 6938, non stock and non
profit hospitals and educational institutions, are hereby withdrawn upon effectivity of this Code.
As discussed, Section 234 withdrew all tax privileges with respect to real property taxes. Nevertheless, local government
units may grant tax exemptions under such terms and conditions asthey may deem necessary:
SEC. 192. Authority to Grant Tax Exemption Privileges. Local government units may, through ordinances duly
approved, grant tax exemptions, incentives or reliefs under such terms and conditions as they may deem necessary.
In Mactan Cebu International Airport Authority v. Hon. Marcos, 240 this court classified the exemptions from real property
taxes into ownership, character, and usage exemptions. Ownership exemptions are exemptions based on the ownership of
the real property. The exemptions of real property owned by the Republic of the Philippines, provinces, cities,
municipalities, barangays, and registered cooperatives fall under this classification. 241 Character exemptions are
exemptions based on the character of the real property. Thus, no real property taxes may be levied on charitable
institutions, houses and temples of prayer like churches, parsonages, or convents appurtenant thereto, mosques, and non
profitor religious cemeteries.242
Usage exemptions are exemptions based on the use of the real property. Thus, no real property taxes may be levied on
real property such as: (1) lands and buildings actually, directly, and exclusively used for religious, charitable or
educational purpose; (2) machineries and equipment actually, directly and exclusively used by local water districts or by
government-owned or controlled corporations engaged in the supply and distribution of water and/or generation and
transmission of electric power; and (3) machinery and equipment used for pollution control and environmental
protection.243

Persons may likewise be exempt from payment of real properties if their charters, which were enacted or reenacted after
the effectivity of the Local Government Code, exempt them payment of real property taxes. 244
V.
(A) The PEZA is an instrumentality of the national government
An instrumentality is "any agency of the National Government, not integrated within the department framework, vested
with special functions or jurisdiction by law, endowed with some if not all corporate powers, administering special funds,
and enjoying operational autonomy, usually through a charter." 245
Examples of instrumentalities of the national government are the Manila International Airport Authority, 246 the Philippine
Fisheries Development Authority,247 the Government Service Insurance System,248 and the Philippine Reclamation
Authority.249 These entities are not integrated within the department framework but are nevertheless vested with special
functions to carry out a declared policy of the national government.
Similarly, the PEZA is an instrumentality of the national government. It is not integrated within the department
framework but is an agency attached to the Department of Trade and Industry. 250 Book IV, Chapter 7, Section 38(3)(a) of
the Administrative Code of 1987 defines "attachment": SEC. 38. Definition of Administrative Relationship. Unless
otherwise expressly stated in the Code or in other laws defining the special relationships of particular agencies,
administrative relationships shall be categorized and defined as follows:
....
(3) Attachment. (a) This refers to the lateral relationship between the department or its equivalent and the attached
agency or corporation for purposes of policy and program coordination. The coordination may be accomplished by
having the department represented in the governing board of the attached agency or corporation, either as chairman or as
a member, with or without voting rights, if this is permitted by the charter; having the attached corporation or agency
comply with a system of periodic reporting which shall reflect the progress of the programs and projects; and having the
department or its equivalent provide general policies through its representative in the board, which shall serve as the
framework for the internal policies of the attached corporation or agency[.]
Attachment, which enjoys "a larger measure of independence" 251 compared with other administrative relationships such
as supervision and control, is further explained in Beja, Sr. v. Court of Appeals: 252
An attached agency has a larger measure of independence from the Department to which it is attached than one which is
under departmental supervision and control or administrative supervision. This is borne out by the "lateral relationship"
between the Department and the attached agency. The attachment is merely for "policy and program coordination." With
respect to administrative matters, the independence of an attached agency from Departmental control and supervision is
further reinforced by the fact that even an agency under a Departments administrative supervision is free from
Departmental interference with respect to appointments and other personnel actions "in accordance with the
decentralization of personnel functions" under the Administrative Code of 1987. Moreover, the Administrative Code
explicitly provides that Chapter 8 of Book IV on supervision and control shall not apply to chartered institutions attached
to a Department.253
With the PEZA as an attached agency to the Department of Trade and Industry, the 13-person PEZA Board is chaired by
the Department Secretary.254 Among the powers and functions of the PEZA is its ability to coordinate with the
Department of Trade and Industry for policy and program formulation and implementation. 255 In strategizing and
prioritizing the development of special economic zones, the PEZA coordinates with the Department of Trade and
Industry.256
The PEZA also administers its own funds and operates autonomously, with the PEZA Board formulating and approving
the PEZAs annual budget.257 Appointments and other personnel actions in the PEZA are also free from departmental
interference, with the PEZA Board having the exclusive and final authority to promote, transfer, assign and reassign
officers of the PEZA.258
As an instrumentality of the national government, the PEZA is vested with special functions or jurisdiction by law.
Congress created the PEZA to operate, administer, manage and develop special economic zones in the
Philippines.259 Special economic zones are areas with highly developed or which have the potential to be developed into

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agro-industrial, industrial tourist/recreational, commercial, banking, investment and financial centers. 260 By operating,
administering, managing, and developing special economic zones which attract investments and promote use of domestic
labor, the PEZA carries out the following policy of the Government: SECTION 2. Declaration of Policy. It is the
declared policy of the government to translate into practical realities the following State policies and mandates in the
1987 Constitution, namely:
(a) "The State recognizes the indispensable role of the private sector, encourages private enterprise, and
provides incentives to needed investments." (Sec. 20, Art. II)
(b) "The State shall promote the preferential use of Filipino labor, domestic materials and locally produced
goods, and adopt measures that help make them competitive." (Sec. 12, Art. XII) In pursuance of these
policies, the government shall actively encourage, promote, induce and accelerate a sound and balanced
industrial, economic and social development of the country in order to provide jobs to the people especially
those in the rural areas, increase their productivity and their individual and family income, and thereby
improve the level and quality of their living condition through the establishment, among others, of special
economic zones in suitable and strategic locations in the country and through measures that shall effectively
attract legitimate and productive foreign investments. 261
Being an instrumentality of the national government, the PEZA cannot be taxed by local government units.
Although a body corporate vested with some corporate powers, 262 the PEZA is not a government-owned or controlled
corporation taxable for real property taxes.
Section 2(13) of the Introductory Provisions of the Administrative Code of 1987 defines the term "government-owned or
controlled corporation":
SEC. 2. General Terms Defined. Unless the specific words of the text, or the context as a whole, or a particular statute,
shall require a different meaning:
....
(13) Government-owned or controlled corporation refers to any agency organized as a stock or non-stock corporation,
vested with functions relating to public needs whether governmental or proprietary in nature, and owned by the
Government directly or through its instrumentalities either wholly, or, where applicable as in the case of stock
corporations, to the extent of at least fifty-one (51) per cent of its capital stock: Provided, That government owned or
controlled corporations may be further categorized by the Department of the Budget, the Civil Service Commission, and
the Commission on Audit for purposes of the exercise and discharge of their respective powers, functions and
responsibilities with respect to such corporations.
Government entities are created by law, specifically, by the Constitution or by statute. In the case of government-owned
or controlled corporations, they are incorporated by virtue of special charters 263 to participate in the market for special
reasons which may be related to dysfunctions or inefficiencies of the market structure. This is to adjust reality as against
the concept of full competition where all market players are price takers. Thus, under the Constitution, governmentowned or controlled corporations are created in the interest of the common good and should satisfy the test of economic
viability.264 Article XII, Section 16 of the Constitution provides:
Section 16. The Congress shall not, except by general law, provide for the formation, organization, or regulation of
private corporations. Government-owned or controlled corporations may be created or established by special charters in
the interest of the common good and subject to the test of economic viability.
Economic viability is "the capacity to function efficiently in business." 265 To be economically viable, the entity "should
not go into activities which the private sector can do better." 266
To be considered a government-owned or controlled corporation, the entity must have been organized as a stock or nonstock corporation.267
Government instrumentalities, on the other hand, are also created by law but partake of sovereign functions. When a
government entity performs sovereign functions, it need not meet the test of economic viability. In Manila International
Airport Authority v. Court of Appeals,268 this court explained:

In contrast, government instrumentalities vested with corporate powers and performing governmental orpublic functions
need not meet the test of economic viability. These instrumentalities perform essential public services for the common
good, services that every modern State must provide its citizens. These instrumentalities need not be economically viable
since the government may even subsidize their entire operations. These instrumentalities are not the "government-owned
or controlled corporations" referred to in Section 16, Article XII of the 1987 Constitution.
Thus, the Constitution imposes no limitation when the legislature creates government instrumentalities vested with
corporate powers but performing essential governmental or public functions. Congress has plenary authority to create
government instrumentalities vested with corporate powers provided these instrumentalities perform essential
government functions or public services. However, when the legislature creates through special charters corporations that
perform economic or commercial activities, such entities known as "government-owned or controlled corporations"
must meetthe test of economic viability because they compete in the market place.
....
Commissioner Blas F. Ople, proponent of the test of economic viability, explained to the Constitutional Commission the
purpose of this test, as follows:
MR. OPLE: Madam President, the reason for this concern is really that when the government creates a corporation, there
is a sense in which this corporation becomes exempt from the test of economic performance. We know what happened in
the past. If a government corporation loses, then it makes its claim upon the taxpayers' money through new equity
infusions from the government and what is always invoked is the common good. That is the reason why this year, out of
a budget of P115 billion for the entire government, about P28 billion of this will go into equity infusions to support a few
government financial institutions. And this is all taxpayers' money which could have been relocated to agrarian reform, to
social services like health and education, to augment the salaries of grossly underpaid public employees. And yet this is
all going down the drain.
Therefore, when we insert the phrase "ECONOMIC VIABILITY" together with the "common good," this becomes a
restraint on future enthusiasts for state capitalism to excuse themselves from the responsibility of meeting the market test
so that they become viable. And so, Madam President, I reiterate, for the committee's consideration and I am glad that I
am joined in this proposal by Commissioner Foz, the insertion of the standard of "ECONOMIC VIABILITY OR THE
ECONOMIC TEST," together with the common good.
....
Clearly, the test of economic viability does not apply to government entities vested with corporate powers and
performing essential public services. The State is obligated to render essential public services regardless of the economic
viability of providing such service. The noneconomic viability of rendering such essential public service does not excuse
the State from withholding such essential services from the public. 269 (Emphases and citations omitted)
The law created the PEZAs charter. Under the Special Economic Zone Act of 1995, the PEZA was established primarily
to perform the governmental function of operating,administering, managing, and developing special economic zones to
attract investments and provide opportunities for preferential use of Filipino labor.
Under its charter, the PEZA was created a body corporate endowed with some corporate powers. However, it was not
organized as a stock270 or non-stock271 corporation. Nothing in the PEZAs charter provides that the PEZAs capital is
divided into shares.272 The PEZA also has no members who shall share in the PEZAs profits.
The PEZA does not compete with other economic zone authorities in the country. The government may even subsidize
the PEZAs operations. Under Section 47 of the Special Economic Zone Act of 1995, "any sum necessary to augment
[the PEZAs] capital outlay shall be included in the General Appropriations Act to be treated as an equity of the national
government."273
The PEZA, therefore, need not be economically viable. It is not a government-owned or controlled corporation liable for
real property taxes.
V. (B)
The PEZA assumed the non-profit character, including the tax exempt status, of the EPZA

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The PEZAs predecessor, the EPZA, was declared non-profit in character with all its revenues devoted for its
development, improvement, and maintenance. Consistent with this non-profit character, the EPZA was explicitly
declared exempt from real property taxes under its charter. Section 21 of Presidential Decree No. 66 provides:
Section 21. Non-profit Character of the Authority; Exemption from Taxes. The Authority shall be non-profit and shall
devote and use all its returns from its capital investment, as well as excess revenues from its operations, for the
development, improvement and maintenance and other related expenditures of the Authority to pay its indebtedness and
obligations and in furtherance and effective implementation of the policy enunciated in Section 1 of this Decree. In
consonance therewith, the Authority is hereby declared exempt:
....
(b) From all income taxes, franchise taxes, realty taxes and all other kinds of taxes and licenses to be paid to the National
Government, its provinces, cities, municipalities and other government agencies and instrumentalities[.]
The Special Economic Zone Act of 1995, on the other hand, does not specifically exempt the PEZA from payment of real
property taxes.
Nevertheless, we rule that the PEZA is exempt from real property taxes by virtue of its charter. A provision in the Special
Economic Zone Act of 1995 explicitly exempting the PEZA is unnecessary. The PEZA assumed the real property
exemption of the EPZA under Presidential Decree No. 66.
Section 11 of the Special Economic Zone Act of 1995 mandated the EPZA "to evolve into the PEZA in accordance with
the guidelines and regulations set forth in an executive order issued for this purpose." President Ramos then issued
Executive Order No. 282 in 1995, ordering the PEZA to assume the EPZAs powers, functions, and responsibilities under
Presidential Decree No. 66 not inconsistent with the Special Economic Zone Act of 1995:
SECTION 1. Assumption of EPZAs Powers and Functions by PEZA. All the powers, functions and responsibilities of
EPZA as provided under its Charter, Presidential Decree No. 66, as amended, insofar as they are not inconsistent with the
powers,functions and responsibilities of the PEZA, as mandated under Republic Act No. 7916, shall hereafter be
assumed and exercised by the PEZA. Henceforth, the EPZA shall be referred to as the PEZA.
The following sections of the Special Economic Zone Act of 1995 provide for the PEZAs powers,functions, and
responsibilities:
SEC. 5. Establishment of ECOZONES. To ensure the viability and geographical dispersal of ECOZONES through a
system of prioritization, the following areas are initially identified as ECOZONES, subject to the criteria specified in
Section 6:
....
The metes and bounds of each ECOZONE are to be delineated and more particularly described in a proclamation to be
issued by the President of the Philippines, upon the recommendation of the Philippine Economic Zone Authority
(PEZA), which shall be established under this Act, in coordination with the municipal and / or city council, National
Land Use Coordinating Committee and / or the Regional Land Use Committee.
SEC. 6. Criteria for the Establishment of Other ECOZONES. In addition to the ECOZONES identified in Section 5 of
this Act, other areas may be established as ECOZONES in a proclamation to be issued by the President of the Philippines
subject to the evaluation and recommendation of the PEZA, based on a detailed feasibility and engineering study which
must conform to the following criteria:
(a) The proposed area must be identified as a regional growth center in the Medium-Term Philippine
Development Plan or by the Regional Development Council;
(b) The existence of required infrastructure in the proposed ECOZONE, such as roads, railways, telephones,
ports, airports, etc., and the suitability and capacity of the proposed site to absorb such improvements;
(c) The availability of water source and electric power supply for use of the ECOZONE;
(d) The extent of vacant lands available for industrial and commercial development and future expansion of
the ECOZONE as well as of lands adjacent to the ECOZONE available for development of residential areas
for the ECOZONE workers;
(e) The availability of skilled, semi-skilled and non-skilled trainable labor force in and around the ECOZONE;

(f) The area must have a significant incremental advantage over the existing economic zones and its potential
profitability can be established;
(g) The area must be strategically located; and
(h) The area must be situated where controls can easily be established to curtail smuggling activities.
Other areas which do not meet the foregoing criteria may be established as ECOZONES: Provided, That the said area
shall be developed only through local government and/or private sector initiative under any of the schemes allowed in
Republic Act No. 6957 (the build-operate-transfer law), and without any financial exposure on the part of the national
government: Provided, further, That the area can be easily secured to curtail smuggling activities: Provided, finally, That
after five (5) years the area must have attained a substantial degree of development, the indicators of which shall be
formulated by the PEZA.
SEC. 7. ECOZONE to be a Decentralized Agro-Industrial, Industrial, Commercial / Trading, Tourist, Investment and
Financial Community. - Within the framework of the Constitution, the interest of national sovereignty and territorial
integrity of the Republic, ECOZONE shall be developed, as much as possible, into a decentralized, self-reliant and selfsustaining industrial, commercial/trading, agro-industrial, tourist, banking, financial and investment center with
minimum government intervention. Each ECOZONE shall be provided with transportation, telecommunications, and
other facilities needed to generate linkage with industries and employment opportunitiesfor its own inhabitants and those
of nearby towns and cities.
The ECOZONE shall administer itself on economic, financial, industrial, tourism development and such other matters
within the exclusive competence of the national government.
The ECOZONE may establish mutually beneficial economic relations with other entities within the country, or, subject to
the administrative guidance of the Department of Foreign Affairs and/or the Department of Trade and Industry, with
foreign entities or enterprises.
Foreign citizens and companies owned by non-Filipinos in whatever proportion may set up enterprises in the ECOZONE,
either by themselves or in joint venture with Filipinos in any sector of industry, international trade and commerce within
the ECOZONE. Their assets, profits and other legitimate interests shall be protected: Provided, That the ECOZONE
through the PEZA may require a minimum investment for any ECOZONE enterprises in freely convertible currencies:
Provided, further, That the new investment shall fall under the priorities, thrusts and limits provided for in the Act.
SEC. 8. ECOZONE to be Operated and Managed as Separate Customs Territory. The ECOZONE shall be managed and
operated by the PEZA as separate customs territory.
The PEZA is hereby vested with the authority to issue certificate of origin for products manufactured or processed in
each ECOZONE in accordance with the prevailing rules or origin, and the pertinent regulations of the Department of
Trade and Industry and/or the Department of Finance.
SEC. 9. Defense and Security. The defense of the ECOZONE and the security of its perimeter fence shall be the
responsibility of the national government in coordination with the PEZA. Military forces sent by the national government
for the purpose of defense shall not interfere in the internal affairs of any of the ECOZONE and expenditure for these
military forces shall be borne by the national government. The PEZA may provide and establish the ECOZONES
internal security and firefighting forces.
SEC. 10. Immigration. Any investor within the ECOZONE whose initial investment shall not be less than One Hundred
Fifty Thousand Dollars ($150,000.00), his/her spouse and dependent children under twenty-one (21) years of age shall be
granted permanent resident status within the ECOZONE. They shall have freedom of ingress and egress to and from the
ECOZONE without any need of special authorization from the Bureau of Immigration.
The PEZA shall issue working visas renewable every two (2) years to foreign executives and other aliens, processing
highly-technical skills which no Filipino within the ECOZONE possesses, as certified by the Department of Labor and
Employment. The names of aliens granted permanent resident status and working visas by the PEZA shall be reported to
the Bureau of Immigration within thirty (30) days after issuance thereof.
SEC. 13. General Powers and Functions of the Authority. The PEZA shall have the following powers and functions:

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(a) To operate, administer, manage and develop the ECOZONE according to the principles and provisions set
forth in this Act;
(b) To register, regulate and supervise the enterprises in the ECOZONE in an efficient and decentralized
manner;
(c) To coordinate with local government units and exercise general supervision over the development, plans,
activities and operations of the ECOZONES, industrial estates, export processing zones, free trade zones, and
the like;
(d) In coordination with local government units concerned and appropriate agencies, to construct,acquire, own,
lease, operate and maintain on its own or through contract, franchise, license, bulk purchase from the private
sector and build-operate-transfer scheme or joint venture, adequate facilities and infrastructure, such as light
and power systems, water supply and distribution systems, telecommunication and transportation, buildings,
structures, warehouses, roads, bridges, ports and other facilities for the operation and development of the
ECOZONE;
(e) To create, operate and/or contractto operate such agencies and functional units or offices of the authority as
it may deem necessary;
(f) To adopt, alter and use a corporate seal; make contracts, lease, own or otherwise dispose of personal or real
property; sue and be sued; and otherwise carry out its duties and functions as provided for in this Act;
(g) To coordinate the formulation and preparation of the development plans of the different entities mentioned
above;
(h) To coordinate with the National Economic Development Authority (NEDA), the Department of Trade and
Industry (DTI), the Department of Science and Technology (DOST), and the local government units and
appropriate government agencies for policy and program formulation and implementation; and
(i) To monitor and evaluate the development and requirements of entities in subsection (a) and recommend to
the local government units or other appropriate authorities the location, incentives, basic services, utilities and
infrastructure required or to be made available for said entities.
SEC. 17. Investigation and Inquiries. Upon a written formal complaint made under oath, which on its face provides
reasonable basis to believe that some anomaly or irregularity might have been committed, the PEZA or the administrator
of the ECOZONE concerned, shall have the power to inquire into the conduct of firms or employees of the ECOZONE
and to conduct investigations, and for that purpose may subpoena witnesses, administer oaths, and compel the production
of books, papers, and other evidences: Provided, That to arrive at the truth, the investigator(s) may grant immunity from
prosecution to any person whose testimony or whose possessions of documents or other evidence is necessary or
convenient to determine the truth in any investigation conducted by him or under the authority of the PEZA or the
administrator of the ECOZONE concerned.
SEC. 21. Development Strategy of the ECOZONE. - The strategy and priority of development of each ECOZONE
established pursuant to this Act shall be formulated by the PEZA, in coordination with the Department of Trade and
Industry and the National Economic and Development Authority; Provided, That such development strategy is consistent
with the priorities of the national government as outlined in the medium-term Philippine development plan. It shall be the
policy of the government and the PEZA to encourage and provide Incentives and facilitate private sector participation in
the construction and operation of public utilities and infrastructure in the ECOZONE, using any of the schemes allowed
in Republic Act No. 6957 (the build-operate-transfer law).
SEC. 22. Survey of Resources. The PEZA shall, in coordination with appropriate authorities and neighboring cities and
municipalities, immediately conduct a survey of the physical, natural assets and potentialities of the ECOZONE areas
under its jurisdiction.
SEC. 26. Domestic Sales. Goods manufactured by an ECOZONE enterprise shall be made available for immediate
retail sales in the domestic market, subject to payment of corresponding taxes on the raw materials and other regulations
that may be adopted by the Board of the PEZA. However, in order to protect the domestic industry, there shall be a

negative list of Industries that willbe drawn up by the PEZA. Enterprises engaged in the industries included in the
negative list shall not be allowed to sell their products locally. Said negative list shall be regularly updated by the PEZA.
The PEZA, in coordination with the Department of Trade and Industry and the Bureau of Customs, shall jointly issue the
necessary implementing rules and guidelines for the effective Implementation of this section.
SEC. 29. Eminent Domain. The areas comprising an ECOZONE may be expanded or reduced when necessary. For this
purpose, the government shall have the power to acquire, either by purchase, negotiation or condemnation proceedings,
any private lands within or adjacent to the ECOZONE for:
a. Consolidation of lands for zone development purposes;
b. Acquisition of right of way to the ECOZONE; and
c. The protection of watershed areas and natural assets valuable to the prosperity of the ECOZONE.
If in the establishment of a publicly-owned ECOZONE, any person or group of persons who has been occupying a parcel
of land within the Zone has to be evicted, the PEZA shall provide the person or group of persons concerned with proper
disturbance compensation: Provided, however, That in the case of displaced agrarian reform beneficiaries, they shall be
entitled to the benefits under the Comprehensive Agrarian Reform Law, including but not limited to Section 36 of
Republic Act No. 3844, in addition to a homelot in the relocation site and preferential employment in the project being
undertaken.
SEC. 32. Shipping and Shipping Register. Private shipping and related business including private container terminals
may operate freely in the ECOZONE, subject only to such minimum reasonable regulations of local application which
the PEZA may prescribe.
The PEZA shall, in coordination with the Department of Transportation and Communications, maintain a shipping
register for each ECOZONE as a business register of convenience for ocean-going vessels and issue related certification.
Ships of all sizes, descriptions and nationalities shall enjoy access to the ports of the ECOZONE, subject only to such
reasonable requirement as may be prescribed by the PEZA In coordination with the appropriate agencies of the national
government.
SEC. 33. Protection of Environment. - The PEZA, in coordination with the appropriate agencies, shall take concrete and
appropriate steps and enact the proper measure for the protection of the local environment.
SEC. 34. Termination of Business. - Investors In the ECOZONE who desire to terminate business or operations shall
comply with such requirements and procedures which the PEZA shall set, particularly those relating to the clearing of
debts. The assets of the closed enterprise can be transferred and the funds con be remitted out of the ECOZONE subject
to the rules, guidelines and procedures prescribed jointly by the Bangko Sentral ng Pilipinas, the Department of Finance
and the PEZA.
SEC. 35. Registration of Business Enterprises. - Business enterprises within a designated ECOZONE shall register with
the PEZA to avail of all incentives and benefits provided for in this Act.
SEC. 36. One Stop Shop Center. - The PEZA shall establish a one stop shop center for the purpose of facilitating the
registration of new enterprises in the ECOZONE. Thus, all appropriate government agencies that are Involved In
registering, licensing or issuing permits to investors shall assign their representatives to the ECOZONE to attend to
Investors requirements.
SEC. 39. Master Employment Contracts. - The PEZA, in coordination with the Department of Tabor and Employment,
shall prescribe a master employment contract for all ECOZONE enterprise staff members and workers, the terms of
which provide salaries and benefits not less than those provided under this Act, the Philippine Labor Code, as amended,
and other relevant issuances of the national government.
SEC. 41. Migrant Worker. - The PEZA, in coordination with the Department of Labor and Employment, shall promulgate
appropriate measures and programs leading to the expansion of the services of the ECOZONE to help the local
governments of nearby areas meet the needs of the migrant workers.
SEC. 42. Incentive Scheme. - An additional deduction equivalent to one- half (1/2) of the value of training expenses
incurred in developing skilled or unskilled labor or for managerial or other management development programs incurred

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by enterprises in the ECOZONE can be deducted from the national government's share of three percent (3%) as provided
In Section 24.
The PEZA, the Department of Labor and Employment, and the Department of Finance shall jointly make a review of the
incentive scheme provided In this section every two (2) years or when circumstances so warrant.
SEC. 43. Relationship with the Regional Development Council. - The PEZA shall determine the development goals for
the ECOZONE within the framework of national development plans, policies and goals, and the administrator shall, upon
approval by the PEZA Board, submit the ECOZONE plans, programs and projects to the regional development council
for inclusion in and as inputs to the overall regional development plan.
SEC. 44. Relationship with the Local Government Units. - Except as herein provided, the local government units
comprising the ECOZONE shall retain their basic autonomy and identity. The cities shall be governed by their respective
charters and the municipalities shall operate and function In accordance with Republic Act No. 7160, otherwise known as
the Local Government Code of 1991.
SEC. 45. Relationship of PEZA to Privately-Owned Industrial Estates. Privately-owned industrial estates shall retain
their autonomy and independence and shall be monitored by the PEZA for the implementation of incentives.
SEC. 46. Transfer of Resources. - The relevant functions of the Board of Investments over industrial estates and agriexport processing estates shall be transferred to the PEZA. The resources of government owned Industrial estates and
similar bodies except the Bases Conversion Development Authority and those areas identified under Republic Act No.
7227, are hereby transferred to the PEZA as the holding agency. They are hereby detached from their mother agencies
and attached to the PEZA for policy, program and operational supervision.
The Boards of the affected government-owned industrial estates shall be phased out and only the management level and
an appropriate number of personnel shall be retained.
Government personnel whose services are not retained by the PEZA or any government office within the ECOZONE
shall be entitled to separation pay and such retirement and other benefits theyare entitled to under the laws then in force
at the time of their separation: Provided, That in no case shall the separation pay be less than one and one-fourth (1 1/4)
month of every year of service.
The non-profit character of the EPZA under Presidential Decree No. 66 is not inconsistent with any of the powers,
functions, and responsibilities of the PEZA. The EPZAs non-profit character, including the EPZAs exemption from real
property taxes, must be deemed assumed by the PEZA.
In addition, the Local Government Code exempting instrumentalities of the national government from real property taxes
was already in force 274 when the PEZAs charter was enacted in 1995. It would have been redundant to provide for the
PEZAs exemption in its charter considering that the PEZA is already exempt by virtue of Section 133(o) of the Local
Government Code.
As for the EPZA, Commonwealth Act No. 470 or the Assessment Law was in force when the EPZAs charter was
enacted. Unlike the Local Government Code, Commonwealth Act No. 470 does not contain a provision specifically
exempting instrumentalities of the national government from payment of real property taxes. 275 It was necessary to put an
exempting provision in the EPZAs charter.
Contrary to the PEZAs claim, however, Section 24 of the Special Economic Zone Act of 1995 is not a basis for the
PEZAs exemption. Section 24 of the Special Economic Zone Act of 1995 provides:
Sec. 24. Exemption from National and Local Taxes. Except for real property taxes on land owned by developers, no
taxes, local and national, shall be imposed on business establishments operating within the ECOZONE. In lieu thereof,
five percent (5%) of the gross income earned by all business enterprises within the ECOZONEshall be paid and remitted
as follows:
(a) Three percent (3%) to the National Government;
(b) Two percent (2%) which shall be directly remitted by the business establishments to the treasurer's office
of the municipality or city where the enterprise is located. (Emphasis supplied)
Tax exemptions provided under Section 24 apply only to business establishments operating within economic zones.
Considering that the PEZA is not a business establishment but an instrumentality performing governmental functions,

Section 24 is inapplicable to the PEZA. Also, contrary to the PEZAs claim, developers ofeconomic zones, whether
public or private developers, are liable for real property taxes on lands they own. Section 24 does not distinguish between
a public and private developer. Thus, courts cannot distinguish. 276 Unless the public developer is exempt under the Local
Government Code or under its charter enacted after the Local Government Codes effectivity, the public developer must
pay real property taxes on their land.
At any rate, the PEZA cannot be taxed for real property taxes even if it acts as a developer or operator of special
economic zones. The PEZA is an instrumentality of the national government exempt from payment of real property taxes
under Section 133(o) of the Local Government Code. As this court said in Manila International Airport Authority, "there
must be express language in the law empowering local governments to tax national government instrumentalities. Any
doubt whether such power exists is resolved against local governments." 277
V. (C)
Real properties under the PEZAs title are owned by the Republic of the Philippines
Under Section 234(a) of the LocalGovernment Code, real properties owned by the Republic of the Philippines are
exempt from real property taxes:
SEC. 234. Exemptions from Real Property Tax. The following are exempted from payment of real property tax:
(a) Real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial
use thereof has been granted, for consideration or otherwise, to a taxable person[.]
Properties owned by the state are either property of public dominion or patrimonial property. Article 420 of the Civil
Code of the Philippines enumerates property of public dominion:
Art. 420. The following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the
State, banks, shores, roadsteads, and others of similar character;
(2) Those which belong to the State, without belonging for public use, and are intended for some public
service or for the development of the national wealth.
Properties of public dominion are outside the commerce of man. These properties are exempt from "levy, encumbrance
or disposition through public or private sale."278 As this court explained in Manila International Airport Authority:
Properties of public dominion, being for public use, are not subject to levy, encumbrance or disposition through public or
private sale. Any encumbrance, levy on execution or auction sale of any property of public dominion is void for being
contrary to public policy. Essential public services will stop if properties of public dominion are subject to encumbrances,
foreclosures and auction sale[.]279
On the other hand, all other properties of the state that are not intended for public use or are not intended for some public
service or for the development of the national wealth are patrimonial properties. Article 421 of the Civil Code of the
Philippines provides:
Art. 421. All other property of the State, which is not of the character stated in the preceding article, is patrimonial
property.
Patrimonial properties are also properties of the state, but the state may dispose of its patrimonial property similar to
private persons disposing of their property. Patrimonial properties are within the commerce of man and are susceptible to
prescription, unless otherwise provided.280
In this case, the properties sought to be taxed are located in publicly owned economic zones. These economic zones are
property of public dominion. The City seeks to tax properties located within the Mactan Economic Zone, 281 the site of
which was reserved by President Marcos under Proclamation No. 1811, Series of 1979. Reserved lands are lands of the
public domain set aside for settlement or public use, and for specific public purposes by virtue of a presidential
proclamation.282 Reserved lands are inalienable and outside the commerce of man, 283 and remain property of the Republic
until withdrawn from publicuse either by law or presidential proclamation. 284 Since no law or presidential proclamation
has been issued withdrawing the site of the Mactan Economic Zone from public use, the property remains reserved land.
As for the Bataan Economic Zone, the law consistently characterized the property as a port. Under Republic Act No.
5490, Congress declared Mariveles, Bataan "a principal port of entry" 285 to serve as site of a foreign trade zone where

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foreign and domestic merchandise may be brought in without being subject to customs and internal revenue laws and
regulations of the Philippines.286
Section 4 of Republic Act No. 5490 provided that the foreign trade zone in Mariveles, Bataan "shall at all times remain to
be owned by the Government":
SEC. 4. Powers and Duties. The Foreign Trade Zone Authority shall have the following powers and duties:
a. To fix and delimit the site of the Zone which at all times remain to be owned by the Government, and which shall have
a contiguous and adequate area with well defined and policed boundaries, with adequate enclosures to segregate the Zone
from the customs territory for protection of revenues, together with suitable provisions for ingress and egress of persons,
conveyance, vessels and merchandise sufficient for the purpose of this Act[.] (Emphasis supplied)
The port in Mariveles, Bataan then became the Bataan Economic Zone under the Special Economic Zone Act of
1995.287 Republic Act No. 9728 then converted the Bataan Economic Zone into the Freeport Area of Bataan. 288
A port of entry, where imported goods are unloaded then introduced in the market for public consumption, is considered
property for public use. Thus, Article 420 of the Civil Code classifies a port as property of public dominion. The Freeport
Area of Bataan, where the government allows tax and duty-free importation of goods, 289 is considered property of public
dominion. The Freeport Area of Bataan is owned by the state and cannot be taxed under Section 234(a) of the Local
Government Code.
Properties of public dominion, even if titled in the name of an instrumentality as in this case, remain owned by the
Republic of the Philippines. If property registered in the name of an instrumentality is conveyed to another person,the
property is considered conveyed on behalf of the Republic of the Philippines. Book I, Chapter 12, Section 48 of the
Administrative Code of 1987 provides:
SEC. 48. Official Authorized to Convey Real Property. Whenever real property of the government is authorized by law
to be conveyed, the deed of conveyance shall be executed in behalf of the government by the following:
....
(2) For property belonging to the Republic of the Philippines, but titled in the name of any political subdivision orof any
corporate agency or instrumentality, by the executive head of the agency or instrumentality. (Emphasis supplied)
In Manila International Airport Authority, this court explained:
[The exemption under Section 234(a) of the Local Government Code] should be read in relation with Section 133(o) of
the same Code, which prohibits local governments from imposing "[t]axes, fess or charges of any kind on the National
Government, its agencies and instrumentalitiesx x x." The real properties owned by the Republic are titled either in the
name of the Republic itself or in the name of agencies or instrumentalities of the National Government.The
Administrative Code allows real property owned by the Republic to be titled in the name of agencies or instrumentalities
of the national government. Such real properties remained owned by the Republic of the Philippines and continue to be
exempt from real estate tax.
The Republic may grant the beneficialuse of its real property to an agency or instrumentality of the national government.
This happens when title of the real property is transferred to an agency or instrumentality even as the Republic remains
the owner of the real property. Such arrangement does not result in the loss of the tax exemption/ Section 234(a) of the
Local Government Code states that real property owned by the Republic loses its tax exemption only if the "beneficial
use thereof has been granted, for consideration or otherwise, to a taxable person." . . . 290 (Emphasis in the original; italics
supplied)
Even the PEZAs lands and buildings whose beneficial use have been granted to other persons may not be taxed with real
property taxes. The PEZA may only lease its lands and buildings to PEZA-registered economic zone enterprises and
entities.291 These PEZA-registered enterprises and entities, which operate within economic zones, are not subject to real
property taxes. Under Section 24 of the Special Economic Zone Act of 1995, no taxes, whether local or national, shall be
imposed on all business establishments operating within the economic zones: SEC. 24. Exemption from National and
Local Taxes. Except for real property on land owned by developers, no taxes, local and national, shall be imposed on
business establishments operating within the ECOZONE. In lieu thereof, five percent (5%) of the gross income earned by
all business enterprises within the ECOZONE shall be paid and remitted as follows:

a. Three percent (3%) to the National Government;

b. Two percent (2%) which shall be directly remitted by the business establishments to the treasurers office of the
municipality or city where the enterprise is located.292 (Emphasis supplied)
In lieu of revenues from real property taxes, the City of Lapu-Lapu collects two-fifths of 5% final tax on gross income
paid by all business establishments operating withinthe Mactan Economic Zone:
SEC. 24. Exemption from National and Local Taxes. Except for real property on land owned by developers, no taxes,
local and national, shall be imposed on business establishments operating within the ECOZONE. In lieu thereof, five
percent (5%) of the gross income earned by all business enterprises within the ECOZONE shall be paid and remitted as
follows:
a. Three percent (3%) to the National Government;
b. Two percent (2%) which shall be directly remitted by the business establishments to the treasurers office of
the municipality or city where the enterprise is located. 293 (Emphasis supplied)
For its part, the Province of Bataan collects a fifth of the 5% final tax on gross income paid by all business
establishments operating within the Freeport Area of Bataan:
Section 6. Imposition of a Tax Rate of Five Percent (5%) on Gross Income Earned. - No taxes, local and national, shall
be imposed on business establishments operating withinthe FAB. In lieu thereof, said business establishments shall pay a
five percent (5%) final tax on their gross income earned in the following percentages:
(a) One per centum (1%) to the National Government;
(b) One per centum (1%) to the Province of Bataan;
(c) One per centum (1%) to the treasurer's office of the Municipality of Mariveles; and
(d) Two per centum (2%) to the Authority of the Freeport of Area of Bataan. 294 (Emphasis supplied)
Petitioners, therefore, are not deprived of revenues from the operations of economic zones within their respective
territorial jurisdictions.
The national government ensured that loeal government units comprising economic zones shall retain their basic
autonomy and identity.295
All told, the PEZA is an instrumentality of the national government.1wphi1 Furthermore, the lands owned by the PEZA
are real properties owned by the Republic of the Philippines. The City of Lapu-Lapu and the Province of Bataan cannot
collect real property taxes from the PEZA.
WHEREFORE, the consolidated petitions are DENIED.
SO ORDERED.

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 70

THIRD DIVISION
G.R. Nos. 203054-55

July 29, 2015

COMMISSIONER OF INTERNAL REVENUE, Petitioner,

vs.
COURT OF TAX APPEALS and CBK POWER COMPANY LIMITED, Respondents.
DECISION
PERALTA, J.:
Before us is a petition for certiorari under Rule 65 which seeks to annul and set aside the Resolutions of the Court of Tax
Appeals (CTA) dated December 23, 2011,1 April 19, 2012,2 and June 13, 20123 issued in CTA Case Nos. 8246 and 8302.
Private respondent CBK Power Company Limited is a special purpose entity engaged in all aspects of (1) design,
financing, construction, testing, commissioning, operation, maintenance, management, and ownership of Kalayaan II
pumped storage hydroelectric power plant, the new Caliraya Spillway in Laguna; and (2) the rehabilitation, expansion,
commissioning, operation, maintenance and management of the Caliraya, Botocan, and Kalayaan I hydroelectric power
plants and their related facilities in Laguna. Petitioner is the duly appointed Commissioner of Internal Revenue vested
with authority to act as such, inter alia, the power to decide, approve and grant refunds or tax credit of erroneously or
illegally collected internal revenue taxes as provided by law.
On March 30, 2011, private respondent filed with the CTA a judicial claim for the issuance of a tax credit certificate in
the amount of Seventeen Million Seven Hundred Eighty-Four Thousand Nine Hundred Sixty-Eight and 91/100 Pesos
(P17,784,968.91), representing unutilized input taxes on its local purchases and importations of goods other than capital
goods, local purchases of services, payment of services rendered by non-residents, including unutilized amortized input
taxes on capital goods exceeding one million for the period of January 1, 2009 to March 31, 2009, all attributable to zero
rated sales for the same period, pursuant to Section 112 (A) of the 1997 Tax Code. The case was docketed as CTA Case
No. 8246.
On May 30, 2011, petitioner received summons requiring it to answer. Petitioner through counsel, Atty. Christopher C.
Sandico, complied and filed the Answer. On June 29, 2011, petitioner received a notice of pre-trial conference set on July
21, 2011. Petitioner filed its pre-trial brief.
Earlier, on June 28, 2011, private respondent filed another judicial claim for the issuance of a tax credit certificate in the
amount of Thirty-One Million Six Hundred Eighty Thousand Two Hundred Ninety and 87 II 00 Pesos (P31,680,290.87),
representing unutilized input taxes on its local purchases and importations of goods other than capital goods, local
purchases of services, including unutilized amortized input taxes on capital goods exceeding one million for the period of
April 1, 2009 to June 30, 2009, all attributable to the zero rated sales for the same period. The case was docketed as CTA
Case No. 8302.

On July 19, 2011 petitioner received summons requiring it to answer the petition for review on CTA Case No. 8302.
Petitioner's lawyer, Atty. Leo D. Mauricio, filed his Answer. The pre-trial conference for CTA Case No. 8302 was set on
September 29, 2011. Thus, private respondent filed a motion for consolidation and postponement of the pre-trial
conference for CTA Case No. 8302.
In a Resolution4 dated October 14, 2011, the CTA granted the motion for consolidation and set the pre-trial conference on
November 3, 2011. Atty. Mauricio failed to appear at the scheduled pre-trial conference as he was on leave for health
reasons from October to December 2011. The pretrial was reset to December 1, 2011. Petitioner's counsel, Atty. Sandico,
who was then assigned to handle the consolidated cases, filed his consolidated pre-trial brief on November 15, 2011.
However, on the December 1, 2011 pre-trial conference, Atty. Sandico failed to appear, thus private respondent moved
that petitioner be declared in default.
On December 23, 2011, the CTA issued the first assailed Resolution, the dispositive portion of which reads:
WHEREFORE, petitioner is hereby allowed to present its evidence ex parte. Let the ex-parte presentation of evidence for
the petitioner to be set on January 26, 2012, at 1:30 p.m. Atty. Danilo B. Fernando is hereby appointed Court
Commissioner to receive the evidence for the petitioner.5
On January 6, 2012, petitioner filed a Motion to Lift Order of Default 6 alleging that the failure to attend the pre-trial
conference on November 3, 2011 was due to confusion in office procedure in relation to the consolidation of CTA Case
No. 8246 with CTA Case No. 8302 since the latter was being handled by a different lawyer; that when the pre-trial
conference was reset to December 1, 2011, petitioner's counsel, Atty. Sandico, had to attend the hearing of another case
in the CTA's First Division also at 9:00 a.m., hence, he unintentionally missed the pre-trial conference of the consolidated
cases. Private respondent was ordered to file its comment on the motion to lift order of default but failed to do so.
On April 19, 2012, the CTA issued the second assailed Resolution denying the motion to lift order of default, stating
among others:
Section 5 of Rule 18 of the Revised Rules of Court, provides:
Sec. 5. Effect of failure to appear. -The failure of the plaintiff to appear when so required pursuant to the next preceding
section shall be cause for dismissal of the action. The dismissal shall be with prejudice, unless otherwise ordered by the
court. A similar failure on the part of the defendant shall be cause to allow the plaintiff to present his evidence ex parte
and the court to render judgment on the basis thereof.
While the respondent elaborated on the confusion and negligence leading to the failure to appear at the pre-trial
conference, the rule on this matter is clear.
In view of the foregoing, respondent's "Motion to Lift Order of Default" is hereby DENIED. 7 Petitioner filed a motion for
reconsideration on April 27, 2012. The CTA directed private respondent to file its Comment thereto but failed to do so.
In a Resolution dated June 13, 2012, the CTA denied the motion for reconsideration.

Subsequently, private respondent filed a motion for consolidation and postponement of the pre-trial conference scheduled
for CTA Case No. 8246.

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 71
Petitioner files the instant petition for certiorari raising the following grounds for the allowance of the petition.
(A) THERE IS NO PLAIN, SPEEDY AND ADEQUATE REMEDY IN THE ORDINARY COURSE OF
LAW BUT THE FILING OF A PETITION FOR CERTIORARI UNDER RULE 65; (B) PUBLIC
RESPONDENT GRAVELY ABUSED ITS DISCRETION WHEN IT DECLARED PETITIONER IN
DEFAULT WHEN CLEARLY PETITIONER'S COUNSEL HAS BEEN ACTIVELY DEFENDING HER
CAUSE; [and]

In A.M. No. 05-11-07-CTA, the Revised CTA Rules, this Court delineated the jurisdiction of the CTA en bane and in
Divisions. Section 2, Rule 4 of the Revised CTA Rules recognizes the exclusive appellate jurisdiction of the CTA en bane
to review by appeal the following decisions, resolutions, or orders of the CTA Division:
SEC. 2. Cases within the jurisdiction of the Court en bane.-The Court en bane shall exercise exclusive appellate
jurisdiction to review by appeal the following:
(a) Decisions or resolutions on motions for reconsideration or new trial of the Court in Divisions in the
exercise of its exclusive appellate jurisdiction over:

(C) PUBLIC RESPONDENT GRAVELY ABUSED ITS DISCRETION WHEN IT DECLARED

PETITIONER IN DEFAULT AS THERE WAS NO INTENTION ON THE PART OF PETITIONER TO
DEFY OR REFUSE THE ORDER OF THE PUBLIC RESPONDENT.8

(1) Cases arising from administrative agencies Bureau of Internal Revenue, Bureau of Customs,
Department of Finance, Department of Trade and Industry, Department of Agriculture;

We first address the procedural issue raised by private respondent in its Comment. Private respondent claims that
petitioner chose an erroneous remedy when it filed a petition for certiorari with us since the proper remedy on any
adverse resolution of any division of the CTA is an appeal by way of a petition for review with the CTA en bane; that it is
provided under Section 2 (a)(l) of Rule 4 of the Revised Rules of the Court of Tax Appeals (RRCTA) that the Court en
bane shall exercise exclusive appellate jurisdiction to review by appeal the decision or resolutions on motions for
reconsideration or new trial of the Court in division in the exercise of its exclusive appellate jurisdiction over cases
arising from administrative agencies such as the Bureau of Internal Revenue.

(2) Local tax cases decided by the Regional Trial Courts in the exercise of their original jurisdiction;
and
(3) Tax collection cases decided by the Regional Trial Courts in the exercise of their original
jurisdiction involving final and executory assessments for taxes, fees, charges and penalties, where
the principal amount of taxes and penalties claimed is less than one million pesos;

We are not persuaded.

xxxx

In Santos v. People, et al.9 where petitioner argues that a resolution of a CTA Division denying a motion to quash, an
interlocutory order, is a proper subject of an appeal to the CTA en bane under Section 18 of Republic Act No. 1125, as
amended, we ruled in the negative and disposed the argument as follows:

(f) Decisions, resolutions or orders on motions for reconsideration or new trial of the Court in Division in the
exercise of its exclusive original jurisdiction over cases involving criminal offenses arising from violations of
the National Internal Revenue Code or the Tariff and Customs Code and other laws administered by the
Bureau of Internal Revenue or Bureau of Customs.

Petitioner is invoking a very narrow and literal reading of Section 18 of Republic Act No. 1125, as amended.

(g) Decisions, resolutions or order on motions for reconsideration or new trial of the Court in Division in the
exercise of its exclusive appellate jurisdiction over criminal offenses mentioned in the preceding
subparagraph; x x x.

Indeed, the filing of a petition for review with the CTA en bane from a decision, resolution, or order of a CTA Division is
a remedy newly made available in proceedings before the CTA, necessarily adopted to conform to and address the
changes in the CTA.
There was no need for such rule under Republic Act No. 1125, prior to its amendment, since the CTA then was composed
only of one Presiding Judge and two Associate Judges. Any two Judges constituted a quorum and the concurrence of two
Judges was necessary to promulgate any decision thereof.
The amendments introduced by Republic Act No. 9282 to Republic Act No. 1125 elevated the rank of the CTA to a
collegiate court, with the same rank as the Court of Appeals, and increased the number of its members to one Presiding
Justice and five Associate Justices. The CTA is now allowed to sit en bane or in two Divisions with each Division
consisting of three Justices. Four Justices shall constitute a quorum for sessions en bane, and the affirmative votes of four
members of the Court en bane are necessary for the rendition of a decision or resolution; while two Justices shall
constitute a quorum for sessions of a Division and the affirmative votes of two members of the Division shall be
necessary for the rendition of a decision or resolution.

Although the filing of a petition for review with the CTA en bane from a decision, resolution, or order of the CTA
Division, was newly made available to the CTA, such mode of appeal has long been available in Philippine courts of
general jurisdiction. Hence, the Revised CTA Rules no longer elaborated on it but merely referred to existing rules of
procedure on petitions for review and appeals, to wit:
RULE 7
PROCEDURE IN THE COURT OF TAX APPEALS
SEC. 1. Applicability of the Rules of the Court of Appeals. - The procedure in the Court en bane or in Divisions in
original and in appealed cases shall be the same as those in petitions for review and appeals before the Court of Appeals
pursuant to the applicable provisions of Rules 42, 43, 44 and 46 of the Rules of Court, except as otherwise provided for
in these Rules.

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 72
RULE 8
PROCEDURE IN CIVIL CASES
xxx

xxx

xxx

SEC. 4. Where to appeal; mode of appeal.

xxx

xxx

xxx

(b) An appeal from a decision or resolution of the Court in Division on a motion for reconsideration or new trial shall be
taken to the Court by petition for review as provided in Rule 4 3 of the Rules of Court. The Court en bane shall act on the
appeal.
xxx

xxx

xxx

According to Section 1, Rule 41 of the Revised Rules of Court, governing appeals from the Regional Trial Courts (RTCs)
to the Court of Appeals, an appeal may be taken only from a judgment or final order that completely disposes of the case
or of a matter therein when declared by the Rules to be appealable. Said provision, thus, explicitly states that no appeal
may be taken from an interlocutory order.10
It is, therefore, clear that the CTA en bane has jurisdiction over final order or judgment but not over interlocutory orders
issued by the CTA in division. In Denso (Phils.), Inc. v. Intermediate Appellate Court, 11 we expounded on the differences
between a "final judgment" and an "interlocutory order," to wit:
x x x A "final" judgment or order is one that finally disposes of a case, leaving nothing more to be done by the Court in
respect thereto, e.g., an adjudication on the merits which, on the basis of the evidence presented at the trial, declares
categorically what the rights and obligations of the parties are and which party is in the right; or a judgment or order that
dismisses an action on the ground, for instance, of res judicata or prescription. Once rendered, the task of the Court is
ended, as far as deciding the controversy or determining the rights and liabilities of the litigants is concerned. Nothing
more remains to be done by the Court except to await the parties' next move x x x and ultimately, of course, to cause the
execution of the judgment once it becomes "final" or, to use the established and more distinctive term, "final and
executory."

RULE 9
xxx

xxx

xxx

PROCEDURE IN CRIMINAL CASES

SEC. l. Review of cases in the Court. - The review of criminal cases in the Court en bane or in Division shall be
governed by the applicable provisions of Rule 124 of the Rules of Co mi.
xxx

xxx

xxx

SEC. 9. Appeal; period to appeal.

xxx

xxx

xxx

(b) An appeal to the Court en bane in criminal cases decided by the Court in Division shall be taken by filing a petition
for review as provided in Rule 43 of the Rules of Court within fifteen days from receipt of a copy of the decision or
resolution appealed from. The Court may, for good cause, extend the time for filing of the petition for review for an
additional period not exceeding fifteen days.
Given the foregoing, the petition for review to be filed with the CTA en bane as the mode for appealing a decision,
resolution, or order of the CTA Division, under Section 18 of Republic Act No. 1125, as amended, is not a totally new
remedy, unique to the CTA, with a special application or use therein. To the contrary, the CTA merely adopts the
procedure for petitions for review and appeals long established and practiced in other Philippine courts. Accordingly,
doctrines, principles, rules, and precedents laid down in jurisprudence by this Court as regards petitions for review and
appeals in courts of general jurisdiction should likewise bind the CTA, and it cannot depart therefrom.
xxxx

Conversely, an order that does not finally dispose of the case, and does not end the Court's task of adjudicating the
parties' contentions and determining their rights and liabilities as regards each other, but obviously indicates that other
things remain to be done by the Court, is "interlocutory," e.g., an order denying a motion to dismiss under Rule 16 of the
Rules x x x. Unlike a "final" judgment or order, which is appealable, as above pointed out, an "interlocutory" order may
not be questioned on appeal except only as part of an appeal that may eventually be taken from the final judgment
rendered in the case.12
Given the differences between a final judgment and an interlocutory order, there is no doubt that the CTA Order dated
December 23, 2011 granting private respondent's motion to declare petitioner as in default and allowing respondent to
present its evidence ex parte, is an interlocutory order as it did not finally dispose of the case on the merits but will
proceed for the reception of the former's evidence to determine its entitlement to its judicial claim for tax credit
certificates. Even the CTA's subsequent orders denying petitioner's motion to lift order of default and denying
reconsideration thereof are all interlocutory orders since they pertain to the order of default.
Since the CTA Orders are merely interlocutory, no appeal can be taken therefrom. Section 1, Rule 41 of the 1997 Rules
of Civil Procedure, as amended, which applies suppletorily to proceedings before the Court of Tax Appeals, provides:
Section 1. Subject of appeal. - An appeal may be taken from a judgment or final order that completely disposes of the
case, or of a paiticular matter therein when declared by these Rules to be appealable.
No appeal may be taken from:
xxxx
(c) An interlocutory order

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 73
In all the above instances where the judgment or final order is not appealable, the aggrieved party may file an appropriate
special civil action under Rule 65.
Hence, petitioner's filing of the instant petition for certiorari assailing the interlocutory orders issued by the CTA is in
conformity with the above-quoted provision.1wphi1
As to the merit of the petition, petitioner argues that the order declaring it as in default and allowing the ex-parte
presentation of private respondent's evidence was excessive as it has no intention of defying the scheduled pre-trial
conferences.
In Calalang v. Court of Appeals, 13 we held that unless a party's conduct is so negligent, irresponsible, contumacious, or
dilatory as to provide substantial grounds for dismissal for non-appearance, the courts should consider lesser sanctions
which would still amount into achieving the desired end. We apply the same criteria on a defendant who fails to appear at
a pre-trial conference.
In this case, there is no showing that petitioner intentionally disregarded the CTA's authority. CTA Case Nos. 8246 and
8302 were filed on different dates and were handled by different lawyers, i.e., Atty. Sandico and Atty. Mauricio,
respectively. The cases were later on consolidated per private respondent's motion and the pre-trial was set on November
3, 2011 but petitioner's counsel, Atty. Mauricio, was not able to attend for health reasons; and Atty. Sandico to whom the
consolidated cases were later on assigned was not able to attend the pre-trial on time on December 1, 2011 as he was
attending another case in another division of the CTA. We find nothing to show that petitioner had acted with the
deliberate intention of delaying the proceedings as petitioner had timely filed its pre-trial brief for the consolidated cases.
Also, after petitioner's receipt of the default Order dated December 23, 2011, petitioner, on January 6, 2012, immediately
filed a Motion to lift the order of default, i.e., 20 days before the scheduled ex-parte presentation of private respondent's
evidence on January 26, 2012.1avvphi1 The CTA should have been persuaded to reconsider its earlier order of default as
its lifting would not in any way prejudice or deprive private respondent of any substantive right, especially so
considering that the latter did not file any opposition or comment to petitioner's motion to lift order of default or to the
motion for reconsideration of the denial thereof.
It is not to say, however, that adherence to the Rules could be dispensed with lightly, but that, rather, exigencies and
situations might occasionally demand flexibility in their application. 14 It is within the CTA's sound judicial discretion to
give party-litigants every opportunity to properly present their conflicting claims on the merits of the controversy without
resorting to technicalities.15 It should always be predicated on the consideration that more than the mere convenience of
the courts or of the parties of the case, the ends of justice and fairness would be served thereby. Courts should be liberal
in setting aside orders of default, for default judgments are frowned upon, and unless it clearly appears that the reopening
of the case is intended for delay, it is best that trial courts give both parties every chance to fight their case fairly and in
the open, without resort to technicality.16
Moreover, Section 2, Rule 1 of the RRCTA expressly provides that:
SEC. 2. Liberal construction.- The Rules shall be liberally construed in order to promote their objective of securing a
just, speedy, and inexpensive determination of every action and proceeding before the Court. (RCTA, Rule I, sec. 2a)

It appears, however, that the CTA proceeded with the ex-parte reception of private respondent's evidence and had already
rendered its decision on the merits on June 10, 2014 ordering petitioner to issue a tax certificate in favor of private
respondent in the reduced amount of P22, 126,419.93 representing unutilized input VAT incurred in relation to its zero
rated sales of electricity to the NPC for the first and second quarters of 2009. Petitioner filed a motion for reconsideration
which the CTA had also denied. Petitioner then filed a petition for review ad cautelam with the CTA En Banc which is
now pending before it.
Considering our foregoing discussions, we find a need to give petitioner the opportunity to properly present her claims on
the merits of the case without resorting to technicalities. WHEREFORE, the petition for certiorari is GRANTED. The
Resolutions dated December 23, 2011, April 19, 2012 and June 13, 2012 issued by the Court of Tax Appeals in CTA Case
Nos. 8246 and 8302 are hereby SET ASIDE. The consolidated cases are hereby REMANDED to the CTA Third Division
to give petitioner the chance to present evidence, rebuttal and sur rebuttal evidence, if needed.
SO ORDERED.

C I V I L P R O C E D U R E - J U R I S D I C T I O N | 74

THIRD DIVISION
G.R. No. 192463

July 13, 2015

OMAIRA LOMONDOT and SARIPA LOMONDOT, Petitioners,

vs.
HON. RASAD G BALINDONG, Presiding Judge, Shari'a District Court, 4th Shari'a Judicial District, Marawi
City, Lanao del Sur and AMBOG PANGANDAMUAN and SIMBANATAO DIACA, Respondents.
DECISION
PERALTA, J.:
Before us is a petition for certiorari with prayer for the issuance of a writ of demolition seeking to annul the Order 1dated
November 9, 2009 of the Shari'a District Court (SDC), Fourth Shari'a Judicial District, Marawi City, issued in Civil Case
No. 055-91, denying petitioners' motion for the issuance of a writ of demolition, and the Orders 2 dated January 5, 2010
and February 10, 2010 denying petitioners' first and second motions for reconsideration, respectively.
The antecedent facts are as follows:
On August 16, 1991, petitioners Omaira and Saripa Lomondot filed with the SDC, Marawi City, a complaint for recovery
of possession and damages with prayer for mandatory injunction and temporary restraining order against respondents
Ambog Pangandamun (Pangandamun) and Simbanatao Diaca (Diaca). Petitioners claimed that they are the owners by
succession of a parcel of land located at Bangon, Marawi City, consisting an area of about 800 sq. meters; that
respondent Pangandamun illegally entered and encroached 100 sq. meter of their land, while respondent Diaca occupied
200 sq. meters, as indicated in Exhibits "A" and "K" submitted as evidence. Respondents filed their Answer arguing that
they are the owners of the land alleged to be illegally occupied. Trial thereafter ensued.
On January 31, 2005, the SDC rendered a Decision, 3 the dispositive portion of which reads: WHEREFORE, judgment is
rendered as follows:
1. DECLARING plaintiffs owners of the 800 square meter land borrowed and turned over by BPI and
described in the complaint and Exhibits "A" and "K";
2. ORDERING defendants to VACATE the portions or areas they illegally encroached as indicated in Exhibits
"A" and "K" and to REMOVE whatever improvements thereat introduced;
3. ORDERING defendants to jointly and severally pay plaintiffs (a) P50,000.00 as moral damages;
(b)P30,000.00 as exemplary damages; (C) P50,000.00 as attorney's fees and the costs of the suit.
SO ORDERED4

Respondents filed an appeal5 with us and petitioners were required to file their Comment thereto. In a Resolution 6dated
March 28, 2007, we dismissed the petition for failure of respondents to sufficiently show that a grave abuse of discretion
was committed by the SDC as the decision was in accord with the facts and the applicable law and jurisprudence.
Respondents' motion for reconsideration was denied with finality on September 17, 2007. 7 The SDC Decision dated
January 31, 2005 became final and executory on October 31, 2007 and an entry of judgment 8was subsequently made.
Petitioners filed a motion9 for issuance of a writ of execution with prayer for a writ of demolition.
On February 7, 2008, the SDC granted the motion 10 for a writ of execution and the writ was issued with the following
fallo:
NOW THEREFORE, you are hereby commanded to cause the execution of the aforesaid judgment. If defendants do not
vacate the premises and remove the improvements, you must secure a special order of the court to destroy, demolish or
remove the improvements on the property. The total amount awarded to and demanded by the prevailing party
is P150,000.00 (damages, attorney's fees and the cost) which defendants must satisfy, pursuant to Section 8 (d) and (e),
Rule 39, Rules of Court.11
The Sheriff then sent a demand letter12 to respondents for their compliance.
On February 3, 2009, petitioners filed a Motion 13 for the Issuance of a Writ of Demolition to implement the SDC
Decision dated January 31, 2005. The motion was set for hearing.
On March 4, 2009, the SDC issued an Order14 reading as follows:
The plaintiffs, the prevailing party, filed a Motion for Writ of Demolition and the motion was set for hearing on February
16, 2009. On this date, the plaintiffs, without counsel, appeared. The defendants failed to appear. Thus, the court issued
an order submitting the motion for resolution. Resolution of the motion for issuance of a Writ of Demolition should be
held in abeyance. First, defendant Ambog Pangandamun has filed on February 6, 2009 an Urgent Manifestation praying
deferment of the hearing on the motion for writ of execution. Second, Atty. Dimnatang T. Saro filed on February 13,
2009 a Notice of Appearance with Motion to Postpone the hearing set on February 16, 2009 to study the records of the
case as the records are not yet in his possession. Third, the recent periodic report dated January 26, 2009 of the Sheriff
shows Sultan Alioden of Kabasaran is negotiating the parties whereby the defendant Ambog Pangandamun will be made
to pay the five (5)-meter land of the plaintiffs encroached by him and that what remains to be ironed out is the fixing of
the amount.
WHEREFORE, the resolution on the Motion for Writ of Demolition is HELD IN ABEYANCE. The Sheriff is
DIRECTED to exert efforts to bring the parties back to the negotiating table seeing to it that Sultan Alioden of Kabasaran
is involved in the negotiation. Atty. Saro is REQUIRED to file his comment on the motion for writ of execution within
fifteen (15) days from notice to guide the court in resolving the incident in the event the negotiation fails.
SO ORDERED.15
On May 5, 2009, the SDC issued another Order 16 which held in abeyance the resolution of the motion for issuance of a
writ of demolition and granted an ocular inspection or actual measurement of petitioners' 800-sq.-meter land.

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The SDC issued another Order 17 dated May 14, 2009, which stated, among others, that: While the decision has become
final and executory and a Writ of Execution has been issued, there are instances when a Writ of Execution cannot be
enforced as when there is a supervening event that prevents the Sheriff to execute a Writ of Execution.

Undaunted, petitioners filed with the CA-Cagayan de Oro City a petition for certiorari assailing the Orders issued by the
SDC on November 9, 2009, January 5, 2010 and February 10, 2010. In a Resolution 23 dated April 27, 2010, the CA
dismissed the petition for lack of jurisdiction, saying, among others, that:

The defendants claimed they have not encroached as they have already complied with the Writ of Execution and their
buildings are not within the area claimed by the plaintiffs. This to the Court is the supervening event, thus the order
granting the request of Atty. Jimmy Saro, counsel for the defendants, to conduct a survey to determine whether there is
encroachment or not. Thus, the Order dated May 5, 2009.

xxxx

WHEREFORE, Engr. Hakim Laut Balt is hereby commissioned to conduct a survey of the 800 square meters claimed by
the plaintiffs. Said Eng. Balt is given a period of one (1) month from notice within which to conduct the survey in the
presence of the parties.18

However, the Shari'a Appellate Court has not yet been organized until the present. We, on our part, therefore, cannot take
cognizance of the instant case because it emanates from the Shari'a Courts, which is not among those courts, bodies or
tribunals enumerated under Chapter 1, Section 9 of [Batas] Pambansa Bilang 129, as amended over which We can
exercise appellate jurisdiction. Thus, the instant Petition should be filed directly with the Supreme Court. 24 Petitioners
filed the instant petition for certiorari assailing the SDC Orders, invoking the following grounds:

On November 9, 2009, the SDC issued the assailed Order 19 denying petitioners' motion for demolition. The Order reads
in full:
It was on February 3, 2009 that the plaintiffs filed a Motion for Issuance of a Writ of Demolition. The defendants filed
their comment thereto on March 24, 2009. They prayed that an ocular inspection and/or actual measurement of the 800
square meter land of the plaintiffs be made which the court granted, in the greater interest of justice, considering that
defendants claimed to have complied with the writ of execution, hence there is no more encroachment of plaintiffs land.
The intercession of concerned leaders to effect amicable settlement and the order to conduct a survey justified the
holding in abeyance of the resolution of the pending incident, motion for writ of demolition.
After attempts for settlement failed and after the commissioned Geodetic Engineer to conduct the needed survey asked
for relief, plaintiffs asked anew for a writ of demolition. Defendants opposed the grant of the motion, alleging
compliance with the writ of execution, and prayed for appointment of another Geodetic Engineer to conduct a survey and
actual measurement of plaintiffs' 800 square meter land.
At this point in time, the court cannot issue a special order to destroy, demolish or remove defendants' houses,
considering their claim that they no longer encroach any portion of plaintiffs land.
Gleaned from Engineer Hakim Laut Balt's Narrative Report, he could have conducted the required survey had not the
plaintiffs dictated him where to start the survey.
WHERFORE, the motion for issuance of a writ of demolition is DENIED. A survey is still the best way to find out if
indeed defendants' houses are within plaintiffs' 800 square meter land. Parties are, therefore, directed to choose and
submit to the court their preferred Geodetic Engineer to conduct the survey within ten (10) days from notice. 20
Petitioners filed their motion for reconsideration which the SDC denied in an Order 21 dated January 5, 2010 saying that
the motion failed to state the timeliness of the filing of said motion and failed to comply with the requirements of notice
of hearing. Petitioners' second motion for reconsideration was also denied in an Order 22 dated February10, 2010. The
SDC directed the parties to choose and submit their preferred Geodetic Engineer to conduct the survey within 15 days
from notice.

In pursuing the creation of Shari'a Appellate Court, the Supreme Court En Banc even approved A.M. No. 99-4-06,
otherwise known as Resolution Authorizing the Organization of the Shari'a Appellate Court.

RESPONDENT JUDGE, HONORABLE RASAD G. BALINDONG, COMMITTED GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OF JURISDICTION OR IN EXCESS OF JURISDICTION IN DENYING
THE MOTION FOR ISSUANCE OF THE WRIT OF DEMOLITION AFTERTHE WRIT OF EXECUTION ISSUED
BY THE COURT COULD NOT BE IMPLEMENTED AND INSTEAD DIRECT THE CONDUCT OF THE SURVEY.
RESPONDENT JUDGE HAD COMMITTED GRAVE ABUSE OF DISCRETION IN MAKING IT APPEAR THAT HE
WAS IN COURT AT HIS SALA IN MARAWI CITY LAST JANUARY 28, 2010 WHEN THE PARTIES WERE
PRESENT AND HE WAS NOT THERE.25
Preliminarily, we would deal with a procedural matter. Petitioners, after receipt of the SDC Order denying their second
motion for reconsideration of the Order denying their motion for the issuance of a writ of demolition, filed a petition for
certiorari with the CA. The CA dismissed the petition for lack of jurisdiction in a Resolution dated April 27, 2010 saying
that, under RA 9054, it is the Sharia Appellate Court (SAC) which shall exercise jurisdiction over petition for certiorari;
that, however, since SAC has not yet been organized, it cannot take cognizance of the case as it emanates from the
Sharia Courts, which is not among those courts, bodies or tribunals enumerated under Chapter 1, Section 9 of Batas
Pambansa Bilang 129, as amended, over which it can exercise appellate jurisdiction.
Under Republic Act No. 9054, An Act to Strengthen and Expand the Organic Act for the Autonomous Region in Muslim
Mindanao, amending for the purpose Republic Act No. 6734, entitled, "An Act Providing for the Autonomous Region in
Muslim Mindanao, as amended", the Shari'a Appellate Court shall exercise appellate jurisdiction over petitions for
certiorari of decisions of the Shari'a District Courts. In Villagracia v. Fifth (5th) Sharia District Court, 26 we said:
x x x We call for the organization of the court system created under Republic Act No. 9054 to effectively enforce the
Muslim legal system in our country. After all, the Muslim legal system a legal system complete with its own civil,
criminal, commercial, political, international, and religious laws is part of the law of the land, and Sharia courts are part
of the Philippine judicial system.
The Sharia Appellate Court created under Republic Act No. 9054 shall exercise appellate jurisdiction over all cases tried
in the Sharia District Courts.1avvphi1 It shall also exercise original jurisdiction over petitions for certiorari, prohibition,
mandamus, habeas corpus, and other auxiliary writs and processes in aid of its appellate jurisdiction. The decisions of the

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Sharia Appellate Court shall be final and executory, without prejudice to the original and appellate jurisdiction of this
court.27

final at some definite time fixed by law. Otherwise, there will be no end to litigations, thus negating the main role of
courts of justice to assist in the enforcement of the rule of law and the maintenance of peace and order by settling
justiciable controversies with finality.32

and
In Tomawis v. Hon. Balindong,28 we stated that:
x x x [t]he Sharia Appellate Court has yet to be organized with the appointment of a Presiding Justice and two Associate
Justices. Until such time that the Sharia Appellate Court shall have been organized, however, appeals or petitions from
final orders or decisions of the SDC filed with the CA shall be referred to a Special Division to be organized in any of the
CA stations preferably composed of Muslim CA Justices. 29

However, the SDC later found that while the decision has become final and executory and a writ of execution has been
issued, there are instances when a writ of execution cannot be enforced as when there is a supervening event that
prevents the sheriff to execute the writ of execution. It found that respondents' claim that their buildings are not within
the area claimed by petitioners is a supervening event and ordered a survey of the land, hence, denied the motion for a
writ of demolition.
We do not agree.

Notably, Tomawis case was decided on March 5, 2010, while the CA decision was rendered on April 27, 2010. The CA's
reason for dismissing the petition, i.e., the decision came from SDC which the CA has no appellate jurisdiction is
erroneous for failure to follow the Tomawis ruling. However, we need not remand the case, as we have, on several
occasions,30 passed upon and resolved petitions and cases emanating from Sharia courts.

It is settled that there are recognized exceptions to the execution as a matter of right of a final and immutable judgment,
and one of which is a supervening event.

Petitioners contend that their land was specific and shown by the areas drawn in Exhibits "A" and "K" and by oral and
documentary evidence on record showing that respondents have occupied portions of their land, i.e., respondent
Pangandamun's house encroached a 100 sq. meter portion, while respondent Diaca occupied 200 sq. meters; and that the
SDC had rendered a decision ordering respondents to vacate the portions or areas they had illegally encroached as
indicated in Exhibits "A" and "K" and to remove whatever improvements thereat introduced. Such decision had already
attained finality and a corresponding entry of judgment had been made and a writ of execution was issued. Petitioners'
claim that the SDC's order for a conduct of a survey to determine whether respondents' land are within petitioners' 800sq.-meter land would, in effect, be amending a final and executory decision.

We deem it highly relevant to point out that a supervening event is an exception to the execution as a matter of right of a
final and immutable judgment rule, only if it directly affects the matter already litigated and settled, or substantially
changes the rights or relations of the parties therein as to render the execution unjust, impossible or inequitable. A
supervening event consists of facts that transpire after the judgment became final and executory, or of new circumstances
that develop after the judgment attained finality, including matters that the parties were not aware of prior to or during the
trial because such matters were not yet in existence at that time. In that event, the interested party may properly seek the
stay of execution or the quashal of the writ of execution, or he may move the court to modify or alter the judgment in
order to harmonize it with justice and the supervening event. The party who alleges a supervening event to stay the
execution should necessarily establish the facts by competent evidence; otherwise, it would become all too easy to
frustrate the conclusive effects of a final and immutable judgment. 34 In this case, the matter of whether respondents'
houses intruded petitioners' land is the issue in the recovery of possession complaint filed by petitioners in the SDC
which was already ruled upon, thus cannot be considered a supervening event that would stay the execution of a final and
immutable judgment. To allow a survey as ordered by the SDC to determine whether respondents' houses are within
petitioners' land is tantamount to modifying a decision which had already attained finality.

Only respondent Pangandamun filed his Comment, arguing that petitioners' motion for the issuance of a writ of
demolition has no factual and legal basis because his houses are clearly outside the 800-sq.-meter land of petitioners; that
his house had been constructed in 1964 within full view of the petitioners but none of them ever questioned the same.
We find for the petitioners.
The SDC Decision dated January31, 2005 ordered respondents to vacate the portions or areas they had illegally
encroached as indicated in Exhibits "A" and "K" and to remove whatever improvements thereat introduced. Thus,
petitioners had established that they are recovering possession of 100 sq. meters of their land which was occupied by
respondent Pangandamun's house as indicated in Exhibit "K-1", and 200 sq. meter portion being occupied by Diaca as
indicated in Exhibit "K-2". Such decision had become final and executory after we affirmed the same and an entry of
judgment was made. Such decision can no longer be modified or amended. In Dacanay v. Yrastorza, Sr., 31 we explained
the concept of a final and executory judgment, thus:
Once a judgment attains finality, it becomes immutable and unalterable. A final and executory judgment may no longer
be modified in any respect, even if the modification is meant to correct what is perceived to be an erroneous conclusion
of factor law and regardless of whether the modification is attempted to be made by the court rendering it or by the
highest court of the land. This is the doctrine of finality of judgment. It is grounded on fundamental considerations of
public policy and sound practice that, at the risk of occasional errors, the judgments or orders of courts must become

In Abrigo v. Flores,33 we said:

We find that the SDC committed grave abuse of discretion when it denied petitioners' motion for the issuance a writ of
demolition. The issuance of a special order of demolition would certainly be the necessary and logical consequence of
the execution of the final and immutable decision. 35 Section 10(d) of Rule 39, Rules of Court provides:
Section 10. Execution of judgments for specific act.
xxxx
(d) Removal of improvements on property subject of execution. - when the property subject of the execution contains
improvements constructed or planted by the judgment obligor or his agent, the officer shall not destroy, demolish or
remove said improvements except upon special order of the court, issued upon motion of the judgment obligee after due
hearing and after the former has failed to remove the same within a reasonable time fixed by the court.

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Notably, this case was decided in 2005 and its execution has already been delayed for years now. It is almost trite to say
that execution is the fruit and end of the suit and is the life of law. 36 A judgment, if left unexecuted, would be nothing but
an empty victory for the prevailing party.37

Let a copy of this Decision be furnished the Presiding Justice of the Court of Appeals for whatever action he may
undertake in light of our pronouncement in the Tomawis v. Hon. Balindong case quoted earlier on the creation of a
Special Division to handle appeals or petitions from trial orders or decisions of the Shari' a District Court.

WHEREFORE, the petition is GRANTED. The Orders dated November 9, 2009, January 5, 2010 and February 10, 2010,
of the Shari'a District Court, Fourth Shari'a Judicial District, Marawi City are hereby CANCELLED and SET ASIDE.
The Shari'a District Court is hereby ORDERED to ISSUE a writ of demolition to enforce its Decision dated January 31,
2005 in Civil Case No. 055-91.

SO ORDERED.