People vs Moner, G.R. No.

202206, March 5, 2018

G.R. No. 202206

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee

vs.
TENG MONER y ADAM, Accused-Appellant

DECISION

LEONARDO-DE CASTRO, J.:

This is an appeal of the Decision1 dated July 27, 2011 of the Court of Appeals in CA-
G.R. CR-H.C. No. 04399 entitled, People of the Philippines v. Teng Manery
Adam, which affirmed the Joint Decision2 dated August 4, 2009 of the Regional Trial
Court (RTC) of Quezon City, Branch 95 in Criminal Case Nos. Q-05-133982 and Q-05-
133983. Anent Criminal Case No. Q-05-133982, the trial court found appellant Teng
Moner y Adam (Moner) guilty beyond reasonable doubt of violating Section 5, Article II
(sale of dangerous drugs) of Republic Act No. 9165 otherwise known as the
Comprehensive Dangerous Drugs Act of 2002. In the same judgment, Moner and his
co-accused were acquitted of the charge of violating Section 11, Article II (possession of
dangerous drugs) of the same statute which was the subject of Criminal Case No. Q-05-
133983.

The crime of which Moner was convicted is described in the Information dated April 25,
2005, as follows:

That on or about the 23rd day of April, 2005, in Quezon City, Philippines, the said
accused, not being authorized by law to sell, dispense, deliver, transport or distribute
any dangerous drug, did then and there, willfully and unlawfully sell, dispense, deliver,
transport, distribute or act as broker in the said transaction, three point ninety-one (3.91)
grams of methylamphetamine hydrochloride, a dangerous drug.3

Subsequently, on May 16, 2005, Moner pleaded "NOT GUILTY" to the aforementioned
charge of illegal sale of dangerous drugs upon his arraignment. 4

In its assailed Decision, the Court of Appeals presented the factual milieu of this case in
this manner:

To establish the guilt of accused-appellant, the prosecution presented three (3)

witnesses namely: P02 Joachim Panopio, P03 Junnifer Tuldanes and PO3 Edwin Lirio.

The prosecution's evidence tends to establish the following facts:

On April 23, 2005, the police operatives of Las Piñas Police Station Anti-Illegal Drugs
Special Operation Task Force (SAIDSOTF) had arrested a certain Joel Taudil for
possession of illegal drugs. Upon investigation, they gathered from Taudil that the
source of the illegal drugs was Teng Moner (herein accused-appellant) who hails from
Tandang Sora, Quezon City.

As per this information, Police Chief Inspector Jonathan Cabal formed a team that
would conduct a buy-bust operation for the apprehension of accused-appellant. The
team was composed of himself, SP04 Arnold Alabastro, SPO1 Warlie Hermo, PO3
Junnifer Tuldanes, PO3 Edwin Lirio, PO2 Rodel Ordinaryo, PO1 Erwin Sabbun and
PO2 Joachim Panopio. The marked and boodle money were given to PO2 Panopio who
acted as the poseur-buyer.

Before proceeding with the buy-bust operation, the team prepared the pre-operation
report addressed to the Philippine Drug Enforcement Agency (PDEA), the authority to
operate outside their jurisdiction and the coordination paper. Thereafter, they proceeded
to the Central Police District Office (CPDO), Camp Karingal, Quezon City for proper
coordination. Thereafter, the team together with Taudil and a CPD-DIID personnel
proceeded [to] No. 26 Varsity Lane, Barangay Culiat, Tandang Sora, Quezon City.
Upon reaching the place they made a surveillance and assumed their respective
positions.

At the target area, P02 Panopio and Taudil went to accusedappellant's house. While
outside the gate, Taudil summoned accusedappellant and the latter came out after a
few minutes. The two men talked with each other in the Muslim dialect. Taudil
introduced PO2 Panopio as his friend to accused-appellant and told him that PO2
Panopio was interested to buy shabu. PO2 Panopio asked for the price of five (5) grams
of shabu. Accused-appellant replied that the same would cost him ₱8,000.00 and asked
him if he has the money. When PO2 Panopio confirmed that he has the money with
him, accused-appellant asked them to wait and he went inside the house. When he
returned after a few minutes, he handed a plastic sachet containing a substance
suspected as shabu to PO2 Panopio who in turn gave him the marked and boodle
money. Accused-appellant was about to count the money when PO2 Panopio gave the
pre-arranged signal to his team and introduced himself as [a] police officer.

Accused-appellant resisted arrest and ran inside the house but PO2 Panopio was able
to catch up with him. The other members of the team proceeded inside the house and
they saw the other accused gather[ed] around a table re-packing shabu. PO3 Lirio
confiscated the items from them and placed the same inside a plastic bag.

After accused-appellant and his co-accused were arrested, the team proceeded to the
Las Piñas City Police Station. The items confiscated from them were turned over by
PO2 Panopio to PO3 Dalagdagan who marked them in the presence of the police
operatives, accused-appellant and his co-accused. PO3 Dalagdagan prepared the
corresponding inventory of the confiscated items. The specimens were then brought to
the police crime laboratory for testing. The specimens yielded positive to the test for
methylamphetamine hydrochloride or shabu.

Consequently, a case for Violation of Section 5, Article II of R.A. 9165 was filed against
accused-appellant and another for Violation of Section 11, Article II of R.A. 9165 against
him and his co-accused.

In refutation of the prosecution's version, the defense presented four (4) witnesses, to
wit: Judie Durado, Fatima Macabangen, accused-appellant and Richard Pascual.

It is the contention of the defense that on April 23, 2005, accused-appellant and his co-
accused in Criminal Case No. Q-05-133983 were at the house located along No. 26
Varsity Lane, Philam, Tan.dang Sora, Quezon City to prepare for the wedding of Fatima
Macabangen and Abubakar Usman to be held the following day. While they were inside
the house, several armed persons wearing civilian clothes entered and announced that
they were police officers. They searched the whole house and gathered all of them in
the living room.

The police officer who was positioned behind accused-appellant and Abubakar dropped
a plastic sachet. The former asked accused-appellant and Abubakar who owns the
plastic sachet. When accused-appellant .denied its ownership, the police officer slapped
him and accused him of being a liar. Thereafter, they were all frisked and handcuffed
and were brought outside the house. Their personal effects and belongings were
confiscated by the police officers. Then they boarded a jeepney and were brought to
[the] Las Piñas Police Station.

Upon their arrival, they were investigated. A police officer asked them to call up
anybody who can help them because they only needed money for their release. Judie
Dorado called up [his] mother. They saw the other items allegedly confiscated from
them only at the police station. At around 10:00 o'clock in the evening, they were
brought to Camp Crame, Quezon City. From there, they went to Makati for drug testing
and were returned to Las Piñas Police Station.

Subsequently, cases for Violation of R.A. No. 9165 were filed against them.5

After receiving the evidence for both sides, the trial court convicted Moner on the charge
of selling shabu while, at the same time, acquitting him and his co-accused of the
charge of possession of illegal drugs. The dispositive portion of the August 4, 2009 Joint
Decision of the trial court reads:

WHEREFORE, the Court renders its Joint Decision as follows:

1. In Criminal Case No. Q-05-133982:

The Court finds accused TENG MONER Y ADAM "GUILTY" beyond reasonable doubt
for violation of Section 5, Article II of R.A. 9165 or illegal selling of three point ninety-one
(3.91) grams of methylamphetamine hydrochloride, a dangerous drug and he is hereby
sentenced to suffer the penalty of LIFE IMPRISONMENT and to pay a FINE of FIVE
HUNDRED THOUSAND PESOS (Php500,000.00).

2. In Criminal Case No. Q-05-133983:

The Court finds accused TENG MONER Y ADAM, JUDIE DURADO Y MACABANGEN,
FATIMA MACABANGEN Y NUÑEZ, ABUBAKAR USMAN Y MASTORA, GUIAMIL ABU
Y JUANITEZ, NORODIN USMAN Y MASTORA, RICHARD PASCUAL Y TANGALIN
and AMINA USMAN-MONER "NOT GUILTY" for violation of Section 11, Art. II of R.A.
9165 considering that the prosecution failed to prove their guilt beyond reasonable
doubt.

The pieces of evidence subject matter of Crim. Case No. Q-05- 133983 are hereby
ordered to be safely delivered to the Philippine Drug Enforcement Agency for proper
disposition.6

As can be expected, Moner elevated his case to the Court of Appeals which,
unfortunately for him, ruled to affirm the findings of the trial court and dispositively held:

WHEREFORE, the appealed Decision dated August 4, 2009 of the Regional Trial Court,
Branch 95, Quezon City in Criminal Case No. Q-05- 133982 finding accused-appellant
guilty beyond reasonable doubt is hereby AFFIRMED. 7

Hence, Moner interposes this appeal wherein he reiterates the same errors on the part
of the trial court contained in his Brief filed with the Court of Appeals, to wit:

A. THE COURT A QUO SERIOUSLY ERRED WHEN IT ISSUED ITS DECISION

DATED AUGUST 4, 2009 FINDING THE ACCUSEDAPPELLANT MONER
GUILTY BEYOND REASONABLE DOUBT OF VIOLATING SECTION 5,
ARTICLE II OF R.A. 9165, WHEN THE TESTIMONIES OF THE THREE (3)
PROSECUTION WITNESSES (P02 JOACHIM P ANOPIO, P03 JUNNIFER
TULDANES, AND P03 EDWIN LIRIO) ARE HIGHLY INCREDIBLE AND
UNBELIEVABLE TO PROVE THE ALLEGED BUY-BUST.

B. THE COURT A QUO SERIOUSLY ERRED IN ITS DECISION WHEN IT

RELIED SOLELY ON THE PERJURED TESTIMONIES OF THE
PROSECUTION WITNESSES POLICE OFFICERS WHICH ARE FULL OF
INCONSISTENCIES.

C. THE COURT A QUO SERIOUSLY ERRED IN ISSUING THE ASSAILED

DECISION WHEN IT FAILED TO GIVE CREDENCE TO THE TESTIMONIES OF
THE DEFENSE WITNESSES WHO CLEARLY TESTIFIED THAT THERE WAS
REALLY NO BUY-BUST AND THAT APPELLANT MONER WAS NOT SELLING
ANY PROHIBITED DRUGS.
 D. THE COURT SERIOUSLY ERRED WHEN IT ISSUED THE ASSAILED
DECISION DESPITE THE FACT THAT THE PROSECUTION WITNESSES
FAILED TO COMPLY WITH THE MANDATORY PROVISION OF SEC. 19 OF
R.A. NO. 9165, ON THE MATTER OF PHYSICAL INVENTORY, AND PICTURE
TAKING OF THE EVIDENCE ALLEGEDLY SEIZED FROM THE ACCUSED, AS
WELL AS THE PROVISION OF SECTION 86 THEREOF.8

In sum, Moner maintains that the prosecution failed to discharge its burden of proof to
sustain his conviction for the charge of sale of dangerous drugs. He highlights the fact
that the prosecution failed to present in court the informant who pointed to him as a
supplier of shabu. He also stresses that the buy-bust operation was conducted without
proper coordination with the Philippine Drug Enforcement Agency (PDEA). Likewise, he
derides the testimonies of the prosecution witnesses as inconsistent, incredible and
unworthy of belief. Most importantly, he underscores the failure of the arresting officers
to comply with the statutorily mandated procedure for the handling and custody of the
dangerous drugs allegedly seized from him.

The appeal is without merit.

For a successful prosecution of an offense of illegal sale of dangerous drugs, the

following essential elements must be proven: (1) that the transaction or ·sale took place;
(2) that the corpus delicti or the illicit drug was presented as evidence; and (3) that the
buyer and seller were identified.9

A perusal of the records of this case would reveal that the aforementioned elements
were established by the prosecution. The illegal drugs and the marked money were
presented and identified in court. More importantly, Police Officer (PO) 2 Joachim
Panopio (PO2 Panopio ), who acted as poseur-buyer, positively identified Moner as the
seller of the shabu to him for a consideration of ₱8,000.00.

With regard to Moner's contention that the prosecution's failure to present the informant
in court diminishes the case against him, we reiterate our pronouncement on this matter
in the recent case of People v. Lafaran10 :

It has oft been held that the presentation of an informant as witness is not regarded as
indispensable to the success of a prosecution of a drug-dealing accused. As a rule, the
informant is not presented in court for security reasons, in view of the need to protect
the informant from the retaliation of the culprit arrested through his efforts. Thereby, the
confidentiality of the informant's identity is protected in deference to his invaluable
services to law enforcement. Only when the testimony of the informant is considered
absolutely essential in obtaining the conviction of the culprit should the need to protect
his security be disregarded. In the present case, as the buy-bust operation was duly
witnessed by SPO2 Aro and PO3 Pera, their testimonies can take the place of that of
the poseur-buyer.
Thus, we concur with the appellate court's finding that there is no need to present the
informant because PO2 Panopio, who acted as the poseur-buyer, had testified in court.
Furthermore, the other members of the buy-bust team, namely PO3 Junnifer Tuldanes
(PO3 Tuldanes) and PO3 Edwin Lirio (PO3 Lirio ), gave clear and credible testimonies
with regard to the criminal transaction that was consummated by appellant and PO2
Panopio.

In addition, we rule that inconsistencies in the testimonies of the prosecution witnesses

that were pointed out by Moner consist merely of minor variances that do not deviate
from the main narrative which is the fact that Moner sold illegal drugs to a poseur-buyer.
It has been held, time and again, that minor inconsistencies and contradictions in the
declarations of witnesses do not destroy the witnesses' credibility but even enhance
their truthfulness as they erase any suspicion of a rehearsed testimony. 11 It bears
stressing, too, that the determination by the trial court of the credibility of witnesses,
when affirmed by the appellate court, is accorded full weight and credit as well as great
respect, if not conclusive effect.12

Lastly, we can give no credence to Moner's contention that the prosecution failed to
prove an unbroken chain of custody in consonance with the requirements of law.

To ensure that the drug specimen presented in court as evidence against the accused
is the same material seized from him or that, at the very least, a dangerous drug was
actually taken from his possession, we have adopted the chain of custody rule. The
Dangerous Drugs Board (DDB) has expressly defined chain of custody involving
dangerous drugs and other substances in the following terms in Section 1 (b) of DDB
Regulation No. 1, Series of 2002:

b. "Chain of Custody" means the duly recorded authorized movements and custody of
seized drugs or controlled chemicals or plant sources of dangerous drugs or laboratory
equipment of each stage, from the time of seizure/confiscation to receipt in the forensic
laboratory to safekeeping to presentation in court for destruction. Such record of
movements and custody of seized item shall include the identity and signature of the
person who held temporary custody of the seized item, the date and time when such
transfer of custody were made in the course of safekeeping and use in court as
evidence, and the final disposition[.]

In relation to this, Section 21 of Republic Act No. 9165 pertinently provides the
following:

SECTION 21. Custody and Disposition of Confiscated, Seized, and/or Surrendered

Dangerous Drugs, Plant Sources of Dangerous Drugs, Controlled Precursors and
Essential Chemicals, Instruments/Paraphernalia and/or Laboratory Equipment. - The
PDEA shall take charge and have custody of all dangerous drugs, plant sources of
dangerous drugs, controlled precursors and essential chemicals, as well as
instruments/paraphernalia and/or laboratory equipment so confiscated, seized and/or
surrendered, for proper disposition in the following manner:
(1) The apprehending team having initial custody and control of the drugs shall,
immediately after seizure and confiscation, physically inventory and photograph the
same in the presence of the accused or the person/s from whom such items were
confiscated and/or seized, or his/her representative or counsel, a representative from
the media and the Department of Justice (DOJ), and any elected public official who
shall be required to sign the copies of the inventory and be given a copy thereof[.]

Furthermore, Section 21(a) of the Implementing Rules and Regulations (IRR) of

Republic Act No. 9165 relevantly states:

SECTION 21. Custody and Disposition of Confiscated, Seized and/or Surrendered

Dangerous Drugs, Plant Sources of Dangerous Drugs, Controlled Precursors and
Essential Chemicals, Instruments/Paraphernalia and/or Laboratory Equipment. - The
PDEA shall take charge and have custody of all dangerous drugs, plant sources of
dangerous drugs, controlled precursors and essential chemicals, as well as
instruments/paraphernalia and/or laboratory equipment so confiscated, seized and/or
surrendered, for proper disposition in the following manner:

(a) The apprehending officer/team having initial custody and control of the drugs shall,
immediately after seizure and confiscation, physically inventory and photograph the
same in the presence of the accused or the person/s from whom such items were
confiscated and/or seized, or his/her representative or counsel, a representative from
the media and the Department of Justice (DOJ), and any elected public official who
shall be required to sign the copies of the inventory and be given a copy thereof;
Provided, that the physical inventory and photograph shall be conducted at the place
where the search warrant is served; or at the nearest police station or at the nearest
office of the apprehending officer/team, whichever is practicable, in case of warrantless
seizures; Provided, further, that noncompliance with these requirements under
justifiable grounds, as long as the integrity and the evidentiary value of the seized
items are properly preserved by the apprehending officer/team, shall not render
void and invalid such seizures of and custody over said items[.] (Emphasis
supplied.)

We have consistently ruled that noncompliance with the requirements of Section 21 of

Republic Act No. 9165 will not necessarily render the illegal drugs seized or confiscated
in a buy-bust operation inadmissible. Strict compliance with the letter of Section 21 is
not required if there is a clear showing that the integrity and evidentiary value of the
seized illegal drugs have been preserved, i.e., the illegal drugs being offered in court as
evidence is, without a specter of doubt, the very same item recovered in the buy-bust
operation.13

With regard to the foregoing, Moner asserts that he should be acquitted of the criminal
charges levelled against him specifically because of the following serious lapses in
procedure committed by the apprehending officers: (a) the physical inventory was not
conducted at the place where the seizure was made; (b) the seized item was not
photographed at the place of seizure; and (c) there was no physical inventory and
photograph of the seized item in the presence of the accused, or his representative or
counsel, with an elected public official and a representative of the National Prosecution
Service or the media who shall be required to sign the copies of the inventory and be
given a copy thereof.

The aforementioned concerns can be squarely addressed by a careful and assiduous

review of the records of this case accompanied by a liberal application and
understanding of relevant jurisprudence in support thereof. Both object and testimonial
evidence demonstrate that the apprehending officers were able to mark the dangerous
drugs seized and to prepare a physical inventory of the same at the Las Piñas Police
Station which was the place where Moner and his co-accused were brought for
processing. The following excerpts lifted from the transcript of the testimony of PO2
Panopio during trial confirm this fact:

Q Now, Mr. Witness, after your team recovered [the] evidence on top of the table inside
the house, arrested those persons whom you identified a while ago and also arrested
Teng Moner recovered from him the buy-bust money, what happened next?

A We brought them to the police headquarters.

Q In what headquarters did you bring the persons arrested?

A We brought them to Special Action ... SAID-SOTF Las Piñas Police Station.

xxxx

Q Now, I would like to inform you that under Section 21 of the Republic Act 9165, the
arresting officer immediately after the arrest of the accused or the person buy-bust for
possession must prepare the inventory of seized evidence.

A Yes, sir.

Q What do you mean by "yes"?

A We did prepare an inventory, sir.

Q So, you are aware of that provision?

A I just forgot the Section 21, sir.

COURT: (to the witness)

Q You do not know that doing an inventory is a requirement under Section 21?

A Yes, your Honor.

PROS.: (to the witness)

Q Now, you said that you are aware of Section 21 an inventory must be made. Do you
know whether your team complied with that provision of the law upon reaching the
station?

A Yes, sir,

Q What do you mean by "yes"?

A We made an Inventory Report, sir.

Q Where is now that Inventory Report?

A It's with the documents I submitted earlier in court, sir.

xxxx

PROS: (to the Court)

This piece of document handed by the witness your Honor, the Inventory of Property
Seized be marked as Exhibit "OOO".

COURT: (to the witness)

Q That is the original, Mr. Witness?

A Yes, your Honor.

xxxx

PROS.: (to the Court)

Q The signature of PO3 Rufino G. Dalagdagan under the heading "Received By:" be
bracketed and be marked as Exhibit "OOO-1"; the list of the articles appearing [in] the
body of Exhibit "OOO" be bracketed and be marked as Exhibit "OOO-2". This Receipt
of Property Turned-Over, your Honor, which states: "I, P03 RUFINO G.
DALAGDAGAN OF SAID-SOTF, LAS PINAS CITY POLICE STATION, SPD hereby
acknowledge received (sic) the items/articles listed hereunder [from] PO2
JOACHIM P. PANOPIO" and may we request, your honor that letters appearing on the
top of the name TENG MONER ADAM, ET AL. (RTS) be marked as Exhibit "OOO-3"

PROS.: (to the witness)

Q Who prepared this Exhibit "OOO"?

A PO3 Rufino Dalagdagan, sir.

Q These items listed [in] the body of marked as Exhibit "OOO", who made these items?

A I, myself, sir.

Q Now, showing to you this Exhibit marked as "OOO-3" particularly on [the] letters RPS
appearing inside the parenthesis, who placed that entry (RPS)?

A Police Officer Dalagdagan, sir.

Q Where were you at the time when this (RPS) marked as Exhibit "OOO-3" was made?

A I was inside the office, sir.

Q Where were those persons whom your team arrested when this evidence
marked as Exhibit "OOO" was made?

A They were also inside the office, sir.

xxxx

Q You said a while ago that in consideration with the buy-bust money, you received
from the accused, Teng Moner, that plastic sachet containing shabu. Upon reaching
the station, what happened to the plastic sachet, subject matter of the buy-bust
operation?

A I turned it over, sir.

Q To whom?

A PO3 Dalagdagan, sir.

Q And before you turned it over to the investigator, PO3 Dalagdagan,

that shabu subject matter of the buy-bust operation, what did you do with it?

A He placed [the] markings on it, sir.

Q Showing to you several pieces of evidence placed inside the brown envelope. Kindly
look at the same and pick from these several items that plastic sachet, subject matter of
the buy-bust operation?

A (Witness picked from the bunch of evidence the plastic sachet which already marked
as Exhibit "P" and he read [the] markings "TMAU1-23APR05".)
Q Now, you also stated a while ago that you were the one who personally recovered the
buy-bust money used in the operation from the possession of the accused, Teng Moner.
If the same would be shown to you, would you be able to identify it?

A Yes, sir.

xxxx

Q Now, you also stated that the Request for Laboratory Examination was made by
the investigator, Now, who delivered the plastic sachet subject matter of the buy-
bust operation for laboratory examination?

A We did, sir.14 (Emphases supplied.)

Judging from the cited testimony, it is apparent that the apprehending officers were able
to substantially comply with the requirements of the law regarding the custody of
confiscated or seized dangerous drugs. When cross-examined by the defense counsel
during trial about the reason behind the buy-bust team's noncompliance with standard
procedure, PO3 Tuldanes, one of the apprehending officers, gave the following
response:

ATTY. PALAD: (to witness)

Q Meaning you had no time to make the inventory right at the scene of the alleged buy-
bust?

A Yes, sir, because we were immediately instructed to pull out from the area.

Q Was there any threat on your lives that you immediately pulled out from the said
area?

A It was not our area - Area of Responsibility - so we just wanted to make sure, for
security and immediately left, sir.

Q So this fear for security, you did not follow this photographing/inventory?

A We did not do that anymore, sir, because our security was at risk. 15

Verily, the circumstances that the buy-bust team proceeded first to the Central Police
District (CPD) Station, Camp Karingal in Quezon City and, from there, they were
accompanied by a police officer from the CPD to the target location, aside from proving
that it was a legitimate police operation, supported the existence of a security risk to the
buy-bust team. These additional precautions taken by the buy-bust team underscored
their unfamiliarity with the location of the operation and, in fact, corroborated the above-
quoted testimony that the buy-bust team believed there was a threat to their security.
With regard to the accused’s allegation that the buy-bust team failed to coordinate with
the PDEA before proceeding with the operation that nabbed Moner, both the trial court
and the Court of Appeals declare in unison that the requisite prior coordination with
PDEA did happen. Likewise, our own review did not provide any reason for us to
disbelieve said established fact.

To reiterate, noncompliance with the chain of custody rule is excusable as long as there
exist justifiable grounds which prevented those tasked to follow the same from strictly
conforming to the said directive. The preceding discussion clearly show that the
apprehending officers in this case did not totally disregard prescribed procedure but,
instead, demonstrated substantial compliance with what was required. It was likewise
explained that the divergence in procedure was not arbitrary or whimsical but because
the buy-bust team decided that they could not linger at the crime scene as it would
unduly expose them to security risks since they were outside their area of responsibility.

Notably, in the recent case of Palo v. People, 16 we affirmed a conviction for illegal

possession of dangerous drugs despite the fact that the seized illegal substance was
only marked at the police station and that there was no physical inventory or photograph
of the same:

The fact that the apprehending officer marked the plastic sachet at the police station,
and not at the place of seizure, did not compromise the integrity of the seized item.
Jurisprudence has declared that "marking upon immediate confiscation" contemplates
even marking done at the nearest police station or office of the apprehending team.
Neither does the absence of a physical inventory nor the lack of photograph of the
confiscated item renders the same inadmissible. What is of utmost importance is the
preservation of the integrity and evidentiary value of the seized items as these would be
used in determining the guilt or innocence of the accused.17

With regard to the third breach of procedure highlighted by Moner, this Court
cites People v. Usman18 wherein we declared that the chain of custody is not
established solely by compliance with the prescribed physical inventory and
photographing of the seized drugs in the presence of the enumerated persons by law. In
that case, the police officers who arrested and processed the accused did not perform
the prescribed taking of photographs under the law but, nevertheless, the assailed
conviction was upheld. The Court reasoned thus:

[T]his Court has, in many cases, held that while the chain of custody should ideally be
perfect, in reality it is not, "as it is almost always impossible to obtain an unbroken
chain." The most important factor is the preservation of the integrity and the evidentiary
value of the seized items as they will be used to determine the guilt or innocence of the
accused. x x x.19

In the case at bar, the records indicate that the integrity and the evidentiary value of the
seized items had been preserved despite the procedural infirmities that accompanied
the process. On this score, we quote with approval the disquisition of the Court of
Appeals:

The record shows that upon the arrest of accused-appellant, the shabu and marked
money were confiscated from him by P02 Panopio. Accused-appellant was immediately
brought to the Las Piñas Police Station where the items confiscated from him were
turned-over by P02 Panopio to P03 Dalagdagan, the investigator-on-case. The latter
received the confiscated items and marked them in the presence of P02 Panopio
and accused-appellant. An inventory of the confiscated items was also made.

Thereafter, the request for laboratory examination was prepared by P03 Dalagdagan
and signed by P/C Insp. Jonathan A. Cabal. The specimen together with the request
was brought to the PNP Crime Laboratory, Camp Crame, Quezon City by P02 Panopio
and the other police officers. There, it was received by PSI Michael S: Holada, who
delivered the specimen and request for laboratory test to the forensic chemist PIS
Maridel C. Rodis. After examination, the specimen submitted for testing proved positive
for Methylamphetamine Hydrochloride, a dangerous drug. The result of the test was
reduced to writing and signed by the forensic chemist. It was duly noted by P/Sr. Supt.
Ricardo Cacholaver. It is worth stressing that the prosecution and defense had agreed
to dispense with the testimony of the forensic chemist and stipulated among others that
she could identify the documents and the specimens she examined. 20 (Emphases
supplied and citations omitted.)

Anent Moner' s allegation that the buy-bust team asked money from him and his former
co-accused in exchange for their liberty, it must be emphasized that the said allegation
only came to light when defense counsel asked appellant what happened when he and
his former co-accused were brought to the Las Piñas Police Station. 21 Curiously,
however, defense counsel did not confront any of the prosecution witnesses regarding
the said accusation. More importantly, based on the record, no criminal or
administrative· case relating thereto was ever filed by Moner or any of his former co-
accused against their alleged extortionists. Nevertheless, on this particular issue, we
would like to reiterate our ruling that the defense of denial or frame-up, like alibi, has
been invariably viewed by the courts with disfavor for it can just easily be concocted and
is a common and standard defense ploy in most prosecution for violation of the
Dangerous Drugs Act.22

At this juncture, it bears repeating that in cases involving violations of the Dangerous
Drugs Act, credence is given to prosecution witnesses who are police officers, for they
are presumed to have performed their duties in a regular manner, unless there is
evidence to the contrary.23 Admittedly, the buy-bust team did not follow certain aspects
of procedure to the letter but this was excusable under the saving clause of the chain of
custody rule and prevailing jurisprudence. As a consequence thereof, their arrest of
Moner in the performance of their duty cannot be described as having been done so
irregularly as to convince this Court to invalidate the credibility and belief bestowed by
the trial court on the prosecution evidence. Accordingly, Moner must provide clear and
convincing evidence to overturn the aforesaid presumption that the police officers
regularly performed their duties but the records show that he has failed to do so. Absent
any proof of mishandling, tampering or switching of evidence presented against him by
the arresting officers and other authorities involved in the chain of custody, the
presumption remains.

This is not the first time that this Court has been confronted with the question of whether
or not to uphold the conviction of a person arrested for the illegal sale of dangerous
drugs who had been positively identified by credible witnesses as the perpetrator of said
crime but the manner by which the evidence of illegal drugs was handled did not strictly
comply with the chain of custody rule. To reiterate past pronouncements, while ideally
the procedure on the chain of custody should be perfect and unbroken, in reality, it is
not as it is almost always impossible to obtain an unbroken chain. 24 Unfortunately; rigid
obedience to procedure creates a scenario wherein the safeguards that we set to shield
the innocent are likewise exploited by the guilty to escape rightful punishment. Realizing
the inconvenient truth that no perfect chain of custody can ever be achieved, this Court
has consistently held that the most important factor in the chain of custody rule is the
preservation of the integrity and evidentiary value of the seized items. 25

We find it apropos to highlight this Court's discussion in Zalameda v. People, 26 which

was restated in the recent case of Saraum v. People27

We would like to add that noncompliance with Section 21 of said law, particularly the
making of the inventory and the photographing of the drugs confiscated and/or seized,
will not render the drugs inadmissible in evidence. Under Section 3 of Rule 128 of the
Rules of Court, evidence is admissible when it is relevant to the issue and is not
excluded by the law or these rules. For evidence to be inadmissible, there should be a
law or rule which forbids its reception. If there is no such law or rule, the evidence must
be admitted subject only to the evidentiary weight that will accorded it by the court x x x.

We do not find any provision or statement in said law or in any rule that will bring about
the non-admissibility of the confiscated and/or seized drugs due to noncompliance with
Section 21 of Republic Act No. 9165. The issue therefore, if there is noncompliance with
said section, is not of admissibility, but of weight - evidentiary merit or probative value -
to be given the evidence. The weight to be given by the courts on said evidence
depends on the circumstances obtaining in each case.

Stated differently, if the evidence of illegal drugs was not handled precisely in the
manner prescribed by the chain of custody rule, the consequence relates not to
inadmissibility that would automatically destroy the prosecution's case but rather to the
weight of evidence presented for each particular case. In the case at bar, the trial court
judge convicted Moner on the strength of the credibility of the prosecution's witnesses
despite an imperfect chain of custody concerning the corpus delicti.

It should be noted that Section 21(a) of the IRR of Republic Act No. 9165 provides that:
SEC. 21. Custody and Disposition of Confiscated, Seized, and/or Surrendered
Dangerous Drugs, Plant Sources of Dangerous Drugs, Controlled Precursors and
Essential Chemicals, Instruments/Paraphernalia and/or Laboratory Equipment. - The
PDEA shall take charge and have custody of all dangerous drugs, plant sources of
dangerous drugs, controlled precursors and essential chemicals, as well as
instruments/paraphernalia and/or laboratory equipment so confiscated, seized and/or
surrendered, for proper disposition in the following manner:

(1) The apprehending team having initial custody and control of the dangerous drugs,
controlled precursors and essential chemicals, instruments/paraphernalia and/or
laboratory equipment shall, immediately after seizure and confiscation, conduct a
physical inventory of the seized items and photograph the same in the presence of the
accused or the persons from whom such items were confiscated and/or seized, or
his/her representative or counsel, with an elected public official and a representative of
the National Prosecution Service or the media who shall be required to sign the copies
of the inventory and be given a copy thereof: Provided, That the physical inventory and
photograph shall be conducted at the place where the search warrant is served; or at
the nearest police station or at the nearest office of the apprehending officer/team,
whichever is practicable, in case of warrantless seizures: Provided, finally, That
noncompliance of these requirements under justifiable grounds, as long as the
integrity and the evidentiary value of the seized items are properly preserved by
the apprehending officer/team, shall not render void and invalid such seizures
and custody over said items. (Emphases supplied.)

The above-quoted provision recognizes that the credibility of the prosecution's

witnesses and the admissibility of other evidence are well within the power of trial court
judges to decide. Paragraph (5), Section 5, Article VIII of the 1987 Constitution vests
upon the Supreme Court the following power, among others:

(5) Promulgate rules concerning the protection and enforcement of constitutional

rights, pleading, practice, and procedure in all courts, the admission to the practice
of law, the Integrated Bar, and legal assistance to the underprivileged. Such rules shall
provide a simplified and inexpensive procedure for the speedy disposition of cases,
shall be uniform for all courts of the same grade, and shall not diminish, increase, or
modify substantive rights. Rules of procedure of special courts and quasi-judicial bodies
shall remain effective unless disapproved by the Supreme Court.

Jurisprudence explains the above-quoted constitutional provision m the following

manner:

Until the 1987 Constitution took effect, our two previous constitutions textualized a
power sharing scheme between the legislature and this Court in the enactment of
judicial rules. Thus, both the 1935 and the 1973 Constitutions vested on the Supreme
Court the "power to promulgate rules concerning pleading, practice, and procedure in all
courts, and the admission to the practice of law." However, these constitutions also
granted to the legislature the concurrent power to "repeal, alter or supplement" such
rules.

The 1987 Constitution textually altered the power-sharing scheme under the
previous charters by deleting in Section 5(5) of Article VIII Congress' subsidiary
and corrective power. This glaring and fundamental omission led the Court to
observe in Echegaray v. Secretary of Justice that this Court's power to
promulgate judicial rules "is no longer shared by this Court with Congress."28

The power to promulgate rules concerning pleading, practice and procedure in all courts
is a traditional power of this Court.29 This includes the power to promulgate the rules of
evidence.

On the other hand, the Rules of Evidence are provided in the Rules of Court issued by
the Supreme Court. However, the chain of custody rule is not found in the Rules of
Court. Section 21 of Republic Act No. 9165 was passed by the legislative department
and its implementing rules were promulgated by PDEA, in consultation with the
Department of Justice (DOJ) and other agencies under and within the executive
department.

In the United States, the chain of custody rule is followed by the federal courts using the
provisions of the Federal Rules of Evidence. The Federal Court of Appeals applied this
rule in United States v. Ricco30 and held as follows:

The "chain of custody" rule is found in Fed. R. Evid. 901, which requires that the
admission of an exhibit must be preceded by "evidence sufficient to support a
finding that the matter in question is what its proponent claims." x x x.

x x x As we have pointed out, the "chain of custody' is not an iron-clad requirement, and
the fact of a ‘missing link' does not prevent the admission of real evidence, so long as
there is sufficient proof that the evidence is what it purports to be and has not been
altered in any material respect." x x x.

According to Cornell University's online legal encyclopedia, "[r]ules of evidence are, as

the name indicates, the rules by which a court determines what evidence is admissible
at trial. In the U.S., federal courts follow the Federal Rules of Evidence, while state
courts generally follow their own rules."31 In the U.S. State of Alaska, for example, the
"chain of custody" rule is found in Alaska Evidence Rule 901(a). 32

Evidence is defined in Section 1 of Rule 12833 as "the means, sanctioned by these

rules, of ascertaining in a judicial proceeding the truth respecting a matter of
fact." Section 2 of the same Rule provides that "[t]he rules of evidence shall be the
same in all courts and in all trials and hearings, except as otherwise provided by law or
these rules."
Furthermore, the said Rule provides for the admissibility of evidence, and states that "[ e
]vidence is admissible when it is relevant to the issue and is not excluded by the law or
these rules." The Rules of Admissibility provide that "[ o ]bjects as evidence are those
addressed to the senses of the court. When an object is relevant to the fact in issue, it
may be exhibited to, examined or viewed by the court. " 34

Under the doctrine of separation of powers, it is important to distinguish if a matter is a

proper subject of the rules of evidence, which as shown above are promulgated by the
Court, or it is a subject of substantive law, and should be passed by an act of Congress.
The Court discussed this distinction in the early case of Bustos v. Lucero35:

Substantive law creates substantive rights and the two terms in this respect may be said
to be synonymous. Substantive rights is a term which includes those rights which one
enjoys under the legal system prior to the disturbance of normal relations. (60 C. J.,
980.) Substantive law is that part of the law which creates, defines and regulates rights,
or which regulates ·the rights and duties which give rise to a cause of action; that part of
the law which courts are established to administer; as opposed to adjective or remedial
law, which prescribes the method of enforcing rights or obtains redress for their
invasion. (36 C. J., 27; 52 C. J. S., 1026.)

As applied to criminal law, substantive law is that which declares what acts are
crimes and prescribes the punishment for committing them, as distinguished
from the procedural law which provides or regulates the steps by which one who
commits a crime is to be punished. (22 C. J. S., 49.) Preliminary investigation is
eminently and essentially remedial; it is the first step taken in a criminal prosecution.

As a rule of evidence, section 11 of Rule 108 is also procedural. Evidence - which is

"the mode and manner of proving the competent facts and circumstances on which a
party relies to establish the fact in dispute in judicial proceedings" - is identified with and
forms part of the method by which, in private law, rights are enforced and redress
obtained, and, in criminal law, a law transgressor is punished. Criminal procedure refers
to pleading, evidence and practice. (State vs. Capaci, 154 So., 419; 179 La., 462.) The
entire rules of evidence have been incorporated into the Rules of Court. We can not tear
down section 11 of Rule 108 on constitutional grounds without throwing out the whole
code of evidence embodied in these Rules.

In Beazell vs. Ohio, 269 U. S., 167, 70 Law. ed., 216, the United States Supreme Court
said:

"Expressions are to be found in earlier judicial opinions to the effect that the
constitutional limitation may be transgressed by alterations in the rules of evidence or
procedure. See Calder vs. Bull, 3 Dall. 386, 390, 1 L. ed., 648, 650;
Cummings vs. Missouri, 4 Wall. 277, 326, 18 L. ed., 356, 364; Kring vs. Missouri, 107 U.
S. 221, 228, 232, 27 L. ed., 507, 508, 510, 2 Sup. Ct. Rep., 443. And there may be
procedural changes which operate to deny to the accused a defense available under
the laws in force at the time of the commission of his offense, or which otherwise affect
him in such a harsh and arbitrary manner as to fall within the constitutional prohibition.
Kring vs. Missouri, 107 U. S., 221, 27 L. ed., 507, 2 Sup. Ct. Rep., 443;
Thompson vs. Utah, 170 U. S., 343, 42 L. ed., 1061, 18 Sup. Ct. Rep., 620. But it is now
well settled that statutory changes in the mode of trial or the rules of evidence, which do
not deprive the accused of a defense and which operate only in a limited and
unsubstantial manner to his disadvantage, are not prohibited. A statute which, after
indictment, enlarges the class of persons who may be witnesses at the trial, by
removing the disqualification of persons convicted of felony, is not an ex post facto law.
Hopt vs. Utah, 110 U. S., 575, 28 L. ed., 263, 4 Sup. Ct. Rep., 202, 4 Am. Crim. Rep.
417. Nor is a statute which changes the rules of evidence after the indictment so as to
render admissible against the accused evidence previously held inadmissible,
Thompson vs. Missouri, 171 U. S., 380, 43 L. ed., 204, 18 Sup. Ct. Rep., 922; or which
changes the place of trial, Gut vs. Minnesota, 9 Wall. 35, 19 L. ed., 573; or which
abolishes a court for hearing criminal appeals, creating a new one in its stead. See
Duncan vs. Missouri, 152 U. S., 377, 382, 38 L. ed., 485, 487, 14 Sup. Ct. Rep., 570."

xxxx

The distinction between "remedy" and "substantive right" is incapable of exact definition.
The difference is somewhat a question of degree. (Dexter vs. Edmands, 89 F., 467;
Beazell vs. Ohio, supra.) It is difficult to draw a line in any particular case beyond which
legislative power over remedy and procedure can pass without touching upon the
substantive rights of parties affected, as it is impossible to fix that boundary by general
condition. (State vs. Pavelick, 279 P., 1102.) This being so, it is inevitable that the
Supreme Court in making rules should step on substantive rights, and the Constitution
must be presumed to tolerate if not to expect such incursion as does not affect the
accused in a harsh and arbitrary manner or deprive him of a defense, but operates only
in a limited and unsubstantial manner to his disadvantage. For the Court's power is not
merely to compile, revise or codify the rules of procedure existing at the time of the
Constitution's approval. This power is "to promulgate rules concerning pleading,
practice, and procedure in all courts," which is a power to adopt a general, complete
and comprehensive system of procedure, adding new and different rules without regard
to their source and discarding old ones.

To emphasize, the distinction in criminal law is this: substantive law is that which
declares what acts are crimes and prescribes the punishment for committing them, as
distinguished from the procedural law which provides or regulates the steps by which
one who commits a crime is to be punished.36

Based on the above, it may be gleaned that the chain of custody rule is a matter of
evidence and a rule of procedure.1âwphi1 It is therefore the Court who has the last say
regarding the appreciation of evidence. Relevant portions of decisions elucidating on
the chain of custody rule are quoted below:

Saraum v. People37:
The chain of custody rule requires the identification of the persons who handled
the confiscated items for the purpose of duly monitoring the authorized
movements of the illegal drugs and/or drug paraphernalia from the time they were
seized from the accused until the time they are presented in court.x x x. (Citation
omitted.)

Mallillin v. People38 :

Prosecutions for illegal possession of prohibited drugs necessitates that the elemental
act of possession of a prohibited substance be established with moral certainty,
together with the fact that the same is not authorized by law. The dangerous drug itself
constitutes the very corpus delicti of the offense and the fact of its existence is vital to a
judgment of conviction. Essential therefore in these cases is that the identity of the
prohibited drug be established beyond doubt. Be that as it may, the mere fact of
unauthorized possession will not suffice to create in a reasonable mind the moral
certainty required to sustain a finding of guilt. More than just the fact of possession, the
fact that the substance illegally possessed in the first place is the same substance
offered in court as exhibit must also be established with the same unwavering
exactitude as that requisite to make a finding of guilt. The chain of custody requirement
performs this function in that it ensures that unnecessary doubts concerning the identity
of the evidence are removed.

As a method of authenticating evidence, the chain of custody rule requires that

the admission of an exhibit be preceded by evidence sufficient to support a
finding that the matter in question is what the proponent claims it to be. It would
include testimony about every link in the chain, from the moment the item was picked up
to the time it is offered into evidence, in such a way that every person who touched the
exhibit would describe how and from whom it was received, where it was and what
happened to it while in the witness' possession, the condition in which it was received
and the condition in which it was delivered to the next link in the chain. These witnesses
would then describe the precautions taken to ensure that there had been no change in
the condition of the item and no opportunity for someone not in the chain to have
possession of the same. (Citations omitted.)

These are matters well within the powers of courts to appreciate and rule upon, and so,
when the courts find appropriate, substantial compliance with the chain of custody rule
as long as the integrity and evidentiary value of the seized items have been preserved
may warrant the conviction of the accused. This is the rationale, grounded on the
constitutional power of the Court, to pass upon the credibility and admissibility of
evidence that underlies the proviso in Section 21(a) of the IRR of Republic Act No.
9165.

To conclude, this Court has consistently espoused the time-honored doctrine that where
the issue is one of credibility of witnesses, the findings of the trial court are not to be
disturbed unless the consideration of certain facts of substance and value, which have
been plainly overlooked, might affect the result of the case. 39 We do not believe that the
explainable deviations to the chain of custody rule demonstrated by the police officers
involved in this case are reason enough to overturn the findings of the trial court judge,
who personally observed and weighed the testimony of the witnesses during trial and
examined the evidence submitted by both parties.

In light of the foregoing, we are compelled to dismiss the present appeal and affirm the
conviction of Moner for the crime of illegal sale of dangerous drugs.

WHEREFORE, premises considered, the present appeal is DISMISSED for lack of

merit. The assailed Decision dated July 27, 2011 of the Court of Appeals in CA-G.R.
CR-H.C. No. 04399 is AFFIRMED.

SO ORDERED.
Primicias vs. Ocampo, 93 Phil. 446
[G.R. No. L-6120. June 30, 1953.]

CIPRIANO P. PRIMICIAS, Petitioner, v. FELICISIMO OCAMPO, as Judge-at-large

presiding over Branch C of the Court of First Instance of Manila and EUGENIO
ANGELES, as City Fiscal of Manila, representing the PEOPLE OF THE
PHILIPPINES, Respondents.

Claro M. Recto for Petitioner.

City Fiscal Eugenio Angeles for Respondents.

SYLLABUS

1. CRIMINAL PROCEDURE; ASSESSORS; TRIAL WITH AID OF ASSESSORS, A

SUBSTANTIVE RIGHT. — The right to a trial by assessors is substantive in the sense
that it must be created and defined by express enactment as opposed to a mere
remedy devised to enforce such right or obtain redress therefor. The trial with the aid of
assessors as granted by section 154 of the Code of Civil Procedure and section 2477 of
the old Charter of Manila are parts of substantive law and as such are not embraced by
the rule-making power of the Supreme Court. This is so because in said section 154 this
matter is referred to as a right given by law to a party litigant. Section 1477 of the
Administrative Code of 1917 is couched in such a manner that a similar right is implied
when invoked by a party litigant. It says that the aid may be invoked in the manner
provided in the Code of Civil Procedure. And this right has been declared absolute and
substantial by the Supreme Court in several cases where the aid of assessors had been
invoked (Berbari v. Concepcion Et. Al., 40 Phil., 320; Colegio de San Jose v. Sison, 56
Phil., 344).

2. ID.; ID.; ID.; SUBSTANTIVE MATTER, DISTINGUISHED FROM PROCEDURAL. —

A substantive law creates, defines or regulates rights concerning life, liberty or property,
or the powers of agencies or instrumentalities for the administration of public affairs,
whereas rules of procedure are provisions prescribing the method by which substantive
rights may be enforced in courts of justice. (1 Moran, Comments on the Rules of Court,
1952 ed., p. 4; Bustos v. Lucero, 46 Off. Gaz., Jan. supp., pp. 445, 448.)

3. PLEADING AND PRACTICE; ASSESSORS; TRIAL; RIGHT TO ASSESSORS STILL

EXISTS IN MANILA AND IN PROVINCES. — The promulgation of the Rules of Court
did not have the effect of repealing the provisions on assessors embodied in the Code
of Civil Procedure. These provisions have not been incorporated by the Supreme Court
in the present Rules of Court because they are substantive in nature. This remedy may
be invoked not only in Manila but in all other places where it existed prior to the
promulgation of the Rules of Court. The provisions on assessors embodied in the Code
of Civil Procedure are still in force and the same may still be invoked in the light of the
provisions of section 49 of Republic Act No. 409.

DECISION

BAUTISTA ANGELO, J.:

This is a petition which seeks to prohibit respondent Judge from proceeding with the
trial of two criminal cases which were then pending against petitioner without the
assistance of assessors in accordance with the provisions of section 49 of Republic Act
No. 409 in relation to section 154 of Act No. 190, and as an auxiliary remedy, to have a
writ of preliminary injunction issued so that the trial may be held pending until further
orders of this court.

This petition was originally filed with the Court of Appeals, but was later certified to this
court on the ground that the main basis of the petition is section 49 of Republic Act No.
409, otherwise known as Revised Charter of the City of Manila, approved on June 18,
1949, and respondents assail the constitutionality of said section in that it contravenes
the constitutional provision that the rules of court "shall be uniform for all courts of the
same grade . . ." (Section 13, Article VIII of the Constitution.)

Petitioner was charged before the Court of First Instance of Manila with two statutory
offenses, namely, (1) with a violation of Commonwealth Act No. 606, which was
docketed as criminal case No. 18374, in that he knowingly chartered a vessel of
Philippine registry to an alien without the approval of the President of the Philippines
and (2) with a violation of section 129 in relation to section 2713 of the Revised
Administrative Code, which was docketed as Criminal Case No. 18375, in that he failed
to submit to the Collector of Customs the manifests and certain authenticated
documents for the vessel "Antarctic" and failed to obtain the necessary clearance from
the Bureau of Customs prior to the departure of said vessel for a foreign port.

On April 23, 1952, before the trial of said criminal cases, petitioner filed a motion
praying that assessors be appointed to assist the court in considering the questions of
fact involved in said cases as authorized by section 49 of Republic Act No. 409,
otherwise known as Revised Charter of the City of Manila, which provides that "the aid
of assessors in the trial of any civil or criminal action in the Municipal Court, or the Court
of First Instance, within the City, may be invoked in the manner provided in the Code of
Civil Procedure." This motion was opposed by the City Fiscal who appeared for the
People of the Philippines.

On April 28, 1952, the court issued an order denying the motion holding in effect that
with the promulgation of the Rules of Court by the Supreme Court, which became
effective on July 1, 1940, all rules concerning pleading, practice and procedure in all
courts of the Philippines previously existing were not only superseded but expressly
repealed, that the Supreme Court, having been vested with the rule- making power,
expressly omitted the portions of the Code of Civil Procedure regarding assessors in
said Rules of Court, and that the reference to said statute by section 49 of Republic Act
No. 409 on the provisions regarding assessors should be deemed as a mere
surplusage. Believing that this order is erroneous, petitioner now comes to this court
imputing abuse of discretion to the respondent Judge.

The issues now posed by petitioner are:jgc:chanrobles.com.ph

"I. The right of the petitioner to a trial with the aid of assessors is an absolute
substantive right, and the duty of the court to provide assessors is mandatory.

"II. The right to trial with the aid of assessors, being substantive right, cannot be
impaired by this court in the exercise of its rule-making power.

"III. Section 154 of the Code of Civil Procedure and Section 2477 of the Old Charter of
Manila, creating the right to trial with the aid of assessors, are substantive law and were
not repealed by Rules of Court.

"IV. Granting without admitting that the provisions on assessors of the Code of Civil
Procedure and the old Charter of Manila were impliedly repealed, nevertheless, the
same provisions were later reenacted by reference in section 49 of the Revised Charter
of Manila, which is now the source of the right to trial with the aid of assessors and
which refers to the Code of Civil Procedure merely to indicate the procedure for
appointing assessors.

"V. Section 49 of the Revised Charter of Manila is not invalid class legislation and does
not violate the constitutional provision that the rules of pleading, practice and procedure
’shall be uniform for all courts of the same grade.’"

A brief summary of the historical background of the legislation regarding trial with the
aid of assessors in the Philippines may be of help in the determination of the issues
posed by petitioner. The first provision which allowed trial with the aid of assessors in
civil cases in inferior courts and Courts of First Instance is contained in Act No. 190 of
the Philippine Commission, otherwise known as the Code of Civil Procedure, which took
effect on October 1, 1901 (Sections 58-62; 154-161). Almost simultaneously, or on
October 17, 1901, the trial with the aid of assessors both in civil and criminal cases was
allowed in the Manila courts upon the enactment of Act No. 267, amending Act No. 183,
the original Charter of Manila. In 1914, the trial by assessors was allowed in criminal
cases in the courts of first instance in the provinces with the enactment of Act No. 2369.
And in 1915, Act No. 2520 was passed extending the same trial by assessors to the
courts of first instance and justice of the peace courts in the Department of Mindanao
and Sulu.

In connection with the use of assessors in Manila, section 44 of Act No. 183, the original
Charter of Manila, as amended by section 13 of Act No. 267, was reenacted as section
2449 of the Administrative Code 1916, Act No. 2657. Section 2449 of the Administrative
Code of 1916 became section 2477 of Act No. 2711, otherwise known as the Revised
Administrative Code of 1917. And section 2477 in turn became section 49 of the
Republic Act No. 409, which is the present Charter of the City of Manila. This section 49
is the law now invoked by petitioner in support of his claim to a trial With the aid of
assessors in the two criminal cases now pending against him. Its pertinent provisions
are quoted hereunder for ready reference:jgc:chanrobles.com.ph

"SEC. 49. Assessors in the courts in the city. — The aid of assessors in the trial of any
civil or criminal action in the municipal court, or the Court of First Instance, within the
city, may be invoked in the manner provided in the Code of Civil Procedure. It shall be
the duty of the Municipal Board to prepare one list of the names of twenty-five residents
of the City best fitted by education, natural ability and reputation for probity to sit as
assessors in the trial of actions in the municipal court and a like list of persons to sit as
assessors in the trial of the action in the Court of First Instance. The Board may at any
time strike any name from the list so prepared, by reason of the death, permanent
disability, or unfitness of the person named; and in case names are so stricken out,
other names shall be added in their place, to be selected as in this section provided.
Parties desiring to avail themselves of the use of assessors in the municipal or Court of
First Instance shall proceed as provided for by law or rules of court; and the method of
summoning assessors, enforcing their attendance, excusing them from attendance,
their compensation, oath duties and effect of dissent from the opinion of the judges shall
be as provided in those laws or rules."cralaw virtua1aw library

A careful analysis of the above provisions is interesting. Their most salient features are:
The aid of assessors in the trial of any civil or criminal action in the Municipal Court for
the Court of First Instance may be invoked in the manner provided in the Code of Civil
Procedure. The parties desiring to avail themselves of the use of assessors "shall
proceed as provided for by law or rules of court", and "the method of summoning
assessors, enforcing their attendance, excusing them from attendance, their
compensation, oath, duties, and effect of the dissent from the opinion of the judge shall
be as provided in those laws or rules." If we are to be guided merely by these
provisions, the right to trial with the aid of assessor would seem to be beyond dispute.
These provisions are simple and clear and appear to be mandatory. But where the
difficulty arises is in their relation or bearing on the directive of the Constitution which
provides that "the existing laws on pleading, practice, and procedure are hereby
repealed as statutes, and are declared rules of courts subject to the power of the
Supreme Court to alter and modify the same." Pursuant to this rule-making power, the
Supreme Court promulgated the present Rules of Court, which became effective on July
1, 1940, but because it failed to incorporate therein the provisions of the Code of Civil
Procedure on assessors, respondents now contend that the right to trial with the aid of
assessors, with all its concomitant provisions, cannot now be invoked because, being
procedural in nature, the same must be deemed to have been impliedly eliminated.

This claim would be correct if we were to hold that the right to trial with the aid of
assessors is not substantive but procedural or adjective in nature. If it were merely
procedural, not having been incorporated in the Rules of Court, the logical conclusion is
that the rule-making power has deemed wise to eliminate it. But no such presumption,
nor conclusion, can be drawn for the reason that the right to a trial by assessors is
substantive in the sense that it must be created and defined by express enactment as
opposed to a mere remedy devised to enforce such right or obtain redress therefor.
"Rules of procedure should be distinguished from substantive law. A substantive law
creates, defines or regulates rights concerning life, liberty or property, or the powers of
agencies or instrumentalities for the administration of public affairs, whereas rules of
procedure are provisions prescribing the method by which substantive rights may be
enforced in courts of justice." (Moran, Comments on the Rules of Court, Vol. I, 1952 ed.,
p. 4.)

In Bustos v. Lucero, * (46 Off. Gaz., January Supp., pp. 445, 448), this Court cited with
approval the following definitions of substantive law:jgc:chanrobles.com.ph

"Substantive law creates substantive rights and the two terms in this respect may be
said to be synonymous. Substantive rights in a term which includes those rights which
one enjoys under the legal system prior to the disturbance of normal relations. (60 C. J.
980.)

"Substantive law is that part of the law which creates, defines and regulates rights, or
which regulates the right and duties which give rise to a cause of action; that part of the
law which courts are established to administer; as opposed to adjective or remedial law,
which prescribes the method of enforcing rights or obtain redress for their invasions (36
C. J. 27; 52 C. J. S. 1026)."cralaw virtua1aw library

The trial with the aid of assessors as granted by section 154 of the Code of Civil
Procedure and section 2477 of the old Charter of Manila are parts of substantive law
and as such are not embraced by the rule making power of the Supreme Court. This is
so because in said section 154 this matter is referred to as a right given by law to a
party litigant. Section 2477 of the Administrative Code of 1917 is couched in such a
manner that a similar right is implied when invoked by a party litigant. It says that the aid
may be invoked in the manner provided in the Code of Civil Procedure. And this right
has been declared absolute and substantial by this Court in several cases where the aid
of assessors had been invoked (Berbari v. Concepcion, Et Al., 40 Phil., 320; Colegio de
San Jose v. Sison, 54 Phil., 344). Thus, it was there said that these provisions
"necessarily lead to the conclusion that the intervention of the assessors is not an empty
formality which may be disregarded without violating either the letter or the spirit of the
law. It is another security given by the law to the litigants, and as such, it is a substantial
right of which they cannot be deprived without vitiating all the proceedings. Were we to
agree that for one reason or another the trial by assessors may be done away with, the
same line of reasoning would force us to admit that the parties litigant may be deprived
of their right to be represented by counsel, to appear and be present at the hearings,
and so on, to the extent of omitting the trial in a civil case, and thus set at naught the
essential rights granted by the law to the parties, with consequent nullity of the
proceedings." (Colegio de San Jose v. Sison, 54 Phil., 344, 349.)

Being substantive in nature, it is not difficult to see why the provisions concerning trial
by assessors embodied in the Code of Civil Procedure have not been incorporated by
the Supreme Court in the present Rules of Court. To have done so, it would have been
a travesty of its rule-making power which, by direct mandate of the Constitution, is
limited to matters referring to pleading, practice and procedure. The application that the
respondents draw from the failure to incorporate these provisions in the present Rules
of Court to the effect that the intention was to eliminate them or repeal them all together
cannot, therefore, stand in the light of the observations and authorities we have above
adverted to.

There is a point in the claim that the provisions concerning trial by assessors embodied
in the Code of Civil Procedure are not wholly substantive but portions thereof are
remedial such as those which refer to the method of summoning assessors, enforcing
their attendance, excusing them from attendance, their compensation, oath, duties and
effect of dissent from the opinion of the judge, as to which no cogent reason is seen for
their non-incorporation if the intent is not to eliminate them from the Rules of Court. This
is true; but it is likewise true that because said remedial provisions are inextricably
interwoven with the substantive part, it must have been deemed wise and proper to
leave them as they were for reasons of coordination and expediency, it being a truism
that the one cannot be detached from the other. Ubi jus ibi remedium. Remedial
measures are but implementary in character and they must be appended to the portion
of the law to which they belong. Mention should be made here that not all of the
provisions appearing in the Code of Civil Procedure are remedial in nature, such as
those pertaining to prescription, the requisites for making a will, and the succession of
the estate of an adopted child, which are admittedly substantive in character and for that
reason were not incorporated in the Rules of Court. To this group belong the provisions
under consideration.

Granting arguendo that the provisions on assessors of the Code of Civil Procedure and
even in the old Charter of Manila are purely remedial in nature and because of the
failure to incorporate them in the Rules of Court they are deemed to have been
impliedly repealed as claimed by respondents, we are of the opinion that they can still
he invoked by a litigant upon the theory that they had been reaffirmed and reenacted by
Republic Act No. 409, which was approved in 1949, or nine years after the Rules of
Court became effective. As already stated, section 49 of said Act states that the aid of
assessors may be invoked in the manner provided in the Code of Civil Procedure. It
likewise states that the parties desiring to avail themselves of the use of assessors shall
proceed as provided for by law. The mention made of the Code of Civil Procedure in
said section indicates in itself a re-enactment or incorporation by reference of the
provisions concerning assessors contained in said law. Congress, whose members
were mostly lawyers, must be presumed to know that at the time said Act was approved
the Rules of Court had already been promulgated without incorporating therein the
provisions concerning the aid to assessors, and fully cognizant of this situation, and not
desiring to omit this right granted to a litigant, they must have deemed it wise and
proper to re-enact them by reference in said section 49. This Congress can do, for,
while our Constitution has given the power to adopt rules of procedure to the Supreme
Court, such grant did not preclude Congress from enacting any procedural law or
altering, amending, or supplementing any of the rules that may be promulgated by the
Supreme Court (Section 13, Article VIII, Philippine Constitution).

The practice of making such reference has long been sanctioned. Our Congress did this
not only in connection with courts in the City of Manila. It also did it in connection with
courts in Quezon City (Republic Act No. 537). Statutes which refer to other statutes and
make them applicable to the subject for legislation are called "reference statutes."
These statutes are frequently used "to avoid encumbering the statute books by
unnecessary repetition, and they have frequently been recognized as an approved
method of legislation, in the absence of constitutional restrictions." [50 Am. Jur. 57;
Gruen v. Tax Commission, 211 P. (2d) (1949) 651, 666.]

Again, it has been held that "The adoption of an earlier statute by reference makes it as
much as a part of the latter act as though it had been incorporated at full length. This is
true of a legislative act which refers to another act for the procedure to be taken." (50
Am. Jur. 58.) The reference in Republic Act No. 409 to the provisions on assessors
must be deemed, therefore, to have incorporated therein the pertinent provisions on the
matter contained in the Code of Civil Procedure in much the same manner as if the
whole provisions had been reproduced. Consistent with this theory, we cannot but hold
that the observations made by respondents to the effect that the reference made to said
provisions in section 49 is a mere surplusage, or was due to a mere oversight, has no
legal basis, as such innuendo would be tantamount to imputing lack of foresight, if not
brazen negligence, to our legislative body.

It is finally contended that section 49 of Republic Act No. 409 is unconstitutional

because it violates the constitutional provisions that procedural rules "shall be uniform
for all courts of the same grade" and, therefore, it is a class legislation. This contention
cannot be entertained: firstly, because it is raised for the first time in this instance, a
procedural defect which would bar any further discussion on the matter following well-
known precedents 1 and, secondly, because it is not correct that at present only in
Manila trial with the aid of assessors may be invoked if we will sustain the theory that
the promulgation of the Rules of Court did not have the effect of repealing the provisions
on assessors embodied in the Code of Civil Procedure.

The contention of respondents — we reckon — is predicated on the assumption that the

provisions on assessors of the Code of Civil Procedure had been impliedly repealed.
Such is not the case. We have already pointed out that the basic provisions on the
matter partake of the nature of substantive law and as such they were left intact by the
Supreme Court. The corollary to this conclusion is that this remedy may be invoked out
only in Manila but in all other places where it existed prior to the promulgation of the
Rules of Court. This is true in civil cases. With regard to criminal cases, we have seen
that they are allowed by Act No. 2369; and we have already said that the same remedy
may be invoked in the cities of Cebu, Iloilo and Quezon, with the particularity that their
charters make express reference, either directly or indirectly, to the provisions of the
code of Civil Procedure. With this historical background, the claim that under the theory
we have entertained the trial with the aid of assessors can only be invoked in the City of
Manila is certainly without merit.

In view of the foregoing, we hold that the provisions on assessors embodied in the Code
of Civil Procedure are still in force and that the same may still be invoked in the light of
the provisions of section 49 of Republic Act No. 409. It is therefore our opinion that the
respondent Judge acted with abuse of discretion in denying petitioner his right to the aid
of assessors in the trial of the two criminal cases now pending in the Court of First
Instance of Manila.

Wherefore, petition is hereby granted, without pronouncement as to costs.

Bustos v. Lucero, G.R. No. L-2086, March 8, 1949

G.R. No. L-2068             October 20, 1948

DOMINADOR B. BUSTOS, Petitioner, vs. ANTONIO G. LUCERO, Judge of First

Instance of Pampanga, Respondent.

E. M. Banzali for petitioner.

Acting Provincial Fiscal Albino L. Figueroa and Assistant Provincial Fiscal Marcelo L.
Mallari for respondent

TUASON, J.: chanrobles virtual law library

The petitioner herein, an accused in a criminal case, filed a motion with the Court of
First Instance of Pampanga after he had been bound over to that court for trial, praying
that the record of the case be remanded to the justice of the peace court of Masantol,
the court of origin, in order that the petitioner might cross-examine the complainant and
her witnesses in connection with their testimony, on the strength of which warrant was
issued for the arrest of the accused. The motion was denied and that denial is the
subject matter of this proceeding.chanroblesvirtualawlibrary chanrobles virtual law
library

According to the memorandum submitted by the petitioner's attorney to the Court of

First Instance in support of his motion, the accused, assisted by counsel, appeared at
the preliminary investigation. In that investigation, the justice of the peace informed him
of the charges and asked him if he pleaded guilty or not guilty, upon which he entered
the plea of not guilty. "Then his counsel moved that the complainant present her
evidence so that she and her witnesses could be examined and cross-examined in the
manner and form provided by law." The fiscal and the private prosecutor objected,
invoking section 11 of rule 108, and the objection was sustained. "In view thereof, the
accused's counsel announced his intention to renounce his right to present evidence,"
and the justice of the peace forwarded the case to the court of first
instance.chanroblesvirtualawlibrary chanrobles virtual law library

Leaving aside the question whether the accused, after renouncing his right to present
evidence, and by reason of that waiver he was committed to the corresponding court for
trial, is estopped, we are of the opinion that the respondent judge did not act in excess
of his jurisdiction or in abuse of discretion in refusing to grant the accused's motion to
return the record for the purpose set out therein. In Dequito and Saling Buhay
vs. Arellano, G.R. No. L-1336, recently promulgated, in which case the respondent
justice of the peace had allowed the accused, over the complaint's objection, to recall
the complainant and her witnesses at the preliminary investigation so that they might be
cross-examined, we sustained the justice of the peace's order. We said that section 11
of Rule 108 does not curtail the sound discretion of the justice of the peace on the
matter. We said that "while section 11 of Rule 108 defines the bounds of the
defendant's right in the preliminary investigation, there is nothing in it or any other law
restricting the authority, inherent in a court of justice, to pursue a course of action
reasonably calculated to bring out the truth."chanrobles virtual law library

But we made it clear that the "defendant can not, as a matter of right, compel the
complaint and his witnesses to repeat in his presence what they had said at the
preliminary examination before the issuance of the order of arrest." We called attention
to the fact that "the constitutional right of an accused to be confronted by the witnesses
against him does not apply to preliminary hearings' nor will the absence of a preliminary
examination be an infringement of his right to confront witnesses." As a matter of fact,
preliminary investigation may be done away with entirely without infringing the
constitutional right of an accused under the due process clause to a fair
trial.chanroblesvirtualawlibrary chanrobles virtual law library

The foregoing decision was rendered by a divided court. The minority went farther than
the majority and denied even any discretion on the part of the justice of the peace or
judge holding the preliminary investigation to compel the complainant and his witnesses
to testify anew.chanroblesvirtualawlibrary chanrobles virtual law library

Upon the foregoing considerations, the present petition is dismissed with costs against
the petitioner.
Panay Railways Inc. v. Heva Management and Development Corporation, et al., G.R.
No. 154061, January 25, 2012
[G. R. No. 154061 : January 25, 2012]

PANAY RAILWAYS INC., PETITIONER, VS. HEVA MANAGEMENT AND

DEVELOPMENT CORPORATION, PAMPLONA AGRO-INDUSTRIAL
CORPORATION, AND SPOUSES CANDELARIA DAYOT AND EDMUNDO DAYOT,
RESPONDENTS.

DECISION

SERENO, J.:

The present Petition stems from the dismissal by the Regional Trial Court (RTC) of Iloilo
City of a Notice of Appeal for petitioner's failure to pay the corresponding docket
fees.cralaw

The facts are as follows:

On 20 April 1982, petitioner Panay Railways Inc., a government-owned and controlled

corporation, executed a Real Estate Mortgage Contract covering several parcels of
lands, including Lot No. 6153, in favor of Traders Royal Bank (TRB) to secure P20
million worth of loan and credit accommodations. Petitioner excluded certain portions of
Lot No. 6153: that already sold to Shell Co., Inc. referred to as 6153-B, a road referred
to as 6153-C, and a squatter area known as 6153-D. [1]

Petitioner failed to pay its obligations to TRB, prompting the bank to extra-judicially
foreclose the mortgaged properties including Lot No. 6153. On 20 January 1986, a
Certificate of Sale was issued in favor of the bank as the highest bidder and purchaser.
Consequently, the sale of Lot No. 6153 was registered with the Register of Deeds on 28
January 1986 and annotated at the back of the transfer certificates of title (TCT)
covering the mortgaged properties.

Thereafter, TRB caused the consolidation of the title in its name on the basis of a Deed
of Sale and an Affidavit of Consolidation after petitioner failed to exercise the right to
redeem the properties. The corresponding TCTs were subsequently issued in the name
of the bank.

On 12 February 1990, TRB filed a Petition for Writ of Possession against petitioner.
During the proceedings, petitioner, through its duly authorized manager and officer-in-
charge and with the assistance of counsel, filed a Manifestation and Motion to Withdraw
Motion for Suspension of the Petition for the issuance of a writ of possession.[2] The
pertinent portions of the Manifestation and Motion state:

3. That after going over the records of this case and the case of Traders Royal Bank vs.
Panay Railway, Inc., Civil Case No. 18280, PRI is irrevocably withdrawing its Motion for
Suspension referred to in paragraph 1 above, and its Motion for Reconsideration
referred in paragraph 2 above and will accept and abide by the September 21, 1990
Order denying the Motion For Suspension;

4. That PRI recognizes and acknowledges petitioner (TRB) to be the registered

owner of Lot 1-A; Lot 3834; Lot 6153; Lot 6158; Lot 6159, and Lot 5 covered by
TCT No. T-84233; T-84234; T-84235; T-84236; T-84237, T-84238 and T-45724
respectively, free of liens and encumbrances, except that portion sold to Shell
Co. found in Lot 5. That Petitioner (TRB) as registered owner is entitled to
peaceful ownership and immediate physical possession of said real properties.

5. That PRI further acknowledges that the Provincial Sheriff validly foreclosed the
Real Estate Mortgage erected by PRI due to failure to pay the loan of ?
20,000,000.00. That TRB was the purchaser of these lots mentioned in paragraph 4
above at Sheriff's Auction Sale as evidenced by the Certificate of Sale dated January
20, 1986 and the Certificates of Titles issued to Petitioner;

6. That PRI further manifests that it has no past, present or future opposition to
the grant of the Writ of Possession to TRB over the parcels of land mentioned in
paragraph 4 above and subject of this Petition and even assuming "arguendo"
that it has, PRI irrevocably waives the same. That PRI will even assist TRB in
securing possession of said properties as witness against squatters, illegal
occupants, and all other possible claimants;

7. That upon execution hereof, PRI voluntarily surrenders physical possession and

control of the premises of these lots to TRB, its successors or its assigns,
together with all the buildings, warehouses, offices, and all other permanent
improvements constructed thereon and will attest to the title and possession of
petitioner over said real properties. (Emphasis supplied)

TCT No. T-84235 mentioned in the quoted portion above is Lot No. 6153, which is
under dispute.

It was only in 1994 that petitioner realized that the extrajudicial foreclosure included
some excluded properties in the mortgage contract. Thus, on 19 August 1994, it filed a
Complaint for Partial Annulment of Contract to Sell and Deed of Absolute Sale with
Addendum; Cancellation of Title No. T-89624; and Declaration of Ownership of Real
Property with Reconveyance plus Damages.[3]

It then filed an Amended Complaint[4] on 1 January 1995 and again filed a Second
Amended Complaint[5] on 8 December 1995.

Meanwhile, respondents filed their respective Motions to Dismiss on these grounds: (1)
petitioner had no legal capacity to sue; (2) there was a waiver, an abandonment and an
extinguishment of petitioner's claim or demand; (3) petitioner failed to state a cause of
action; and (4) an indispensable party, namely TRB, was not impleaded.
On 18 July 1997, the RTC issued an Order[6] granting the Motion to Dismiss of
respondents. It held that the Manifestation and Motion filed by petitioner was a judicial
admission of TRB's ownership of the disputed properties. The trial court pointed out that
the Manifestation was executed by petitioner's duly authorized representative with the
assistance of counsel. This admission thus operated as a waiver barring petitioner from
claiming otherwise.

On 11 August 1997, petitioner filed a Notice of Appeal without paying the necessary
docket fees. Immediately thereafter, respondents filed a Motion to Dismiss Appeal on
the ground of nonpayment of docket fees.

In its Opposition,[7] petitioner alleged that its counsel was not yet familiar with the
revisions of the Rules of Court that became effective only on 1 July 1997. Its
representative was likewise not informed by the court personnel that docket fees
needed to be paid upon the filing of the Notice of Appeal. Furthermore, it contended that
the requirement for the payment of docket fees was not mandatory. It therefore asked
the RTC for a liberal interpretation of the procedural rules on appeals.

On 29 September 1997, the RTC issued an Order[8] dismissing the appeal citing Sec. 4
of Rule 41[9] of the Revised Rules of Court.

Petitioner thereafter moved for a reconsideration of the Order[10] alleging that the trial
court lost jurisdiction over the case after the former had filed the Notice of Appeal.
Petitioner also alleged that the court erred in failing to relax procedural rules for the
sake of substantial justice.

On 25 November 1997, the RTC denied the Motion.[11]

On 28 January 1998, petitioner filed with the Court of Appeals (CA) a Petition for
Certiorari and Mandamus under Rule 65 alleging that the RTC had no jurisdiction to
dismiss the Notice of Appeal, and that the trial court had acted with grave abuse of
discretion when it strictly applied procedural rules.

On 29 November 2000, the CA rendered its Decision[12] on the Petition. It held that while
the failure of petitioner to pay the docket and other lawful fees within the reglementary
period was a ground for the dismissal of the appeal pursuant to Sec. 1 of Rule 50 of the
Revised Rules of Court, the jurisdiction to do so belonged to the CA and not the trial
court. Thus, appellate court ruled that the RTC committed grave abuse of discretion in
dismissing the appeal and set aside the latter's assailed Order dated 29 September
1997.

Thereafter, respondents filed their respective Motions for Reconsideration.

It appears that prior to the promulgation of the CA's Decision, this Court issued
Administrative Matter (A.M.) No. 00-2-10-SC which took effect on 1 May 2000,
amending Rule 4, Sec. 7 and Sec. 13 of Rule 41 of the 1997 Revised Rules of Court.
The circular expressly provided that trial courts may, motu proprio or upon motion,
dismiss an appeal for being filed out of time or for nonpayment of docket and other
lawful fees within the reglementary period. Subsequently, Circular No. 48-2000[13] was
issued on 29 August 2000 and was addressed to all lower courts.

By virtue of the amendment to Sec. 41, the CA upheld the questioned Orders of the trial
court by issuing the assailed Amended Decision [14] in the present Petition granting
respondents' Motion for Reconsideration.

The CA's action prompted petitioner to file a Motion for Reconsideration alleging that SC
Circular No. 48-2000 should not be given retroactive effect. It also alleged that the CA
should consider the case as exceptionally meritorious. Petitioner's counsel, Atty. Rexes
V. Alejano, explained that he was yet to familiarize himself with the Revised Rules of
Court, which became effective a little over a month before he filed the Notice of Appeal.
He was thus not aware that the nonpayment of docket fees might lead to the dismissal
of the case.

On 30 May 2002, the CA issued the assailed Resolution[15] denying petitioner's Motion

for Reconsideration.

Hence, this Petition.

Petitioner alleges that the CA erred in sustaining the RTC's dismissal of the Notice of
Appeal. Petitioner contends that the CA had exclusive jurisdiction to dismiss the Notice
of Appeal at the time of filing. Alternatively, petitioner argues that while the appeal was
dismissible for failure to pay docket fees, substantial justice demands that procedural
rules be relaxed in this case.

The Petition has no merit.

Statutes and rules regulating the procedure of courts are considered applicable to
actions pending and unresolved at the time of their passage. Procedural laws and rules
are retroactive in that sense and to that extent. The effect of procedural statutes and
rules on the rights of a litigant may not preclude their retroactive application to pending
actions. This retroactive application does not violate any right of a person adversely
affected. Neither is it constitutionally objectionable. The reason is that, as a general rule,
no vested right may attach to or arise from procedural laws and rules. It has been held
that "a person has no vested right in any particular remedy, and a litigant cannot insist
on the application to the trial of his case, whether civil or criminal, of any other than the
existing rules of procedure."[16] More so when, as in this case, petitioner admits that it
was not able to pay the docket fees on time. Clearly, there were no substantive rights to
speak of when the RTC dismissed the Notice of Appeal.

The argument that the CA had the exclusive jurisdiction to dismiss the appeal has no
merit. When this Court accordingly amended Sec. 13 of Rule 41 through A.M. No. 00-2-
10-SC, the RTC's dismissal of the action may be considered to have had the imprimatur
of the Court. Thus, the CA committed no reversible error when it sustained the dismissal
of the appeal, taking note of its directive on the matter prior to the promulgation of its
Decision.

As early as 1932, in Lazaro v. Endencia,[17] we have held that the payment of the full
amount of the docket fees is an indispensable step for the perfection of an appeal. The
Court acquires jurisdiction over any case only upon the payment of the prescribed
docket fees.[18]

Moreover, the right to appeal is not a natural right and is not part of due process. It is
merely a statutory privilege, which may be exercised only in accordance with the law.[19]

We have repeatedly stated that the term "substantial justice" is not a magic wand that
would automatically compel this Court to suspend procedural rules. Procedural rules are
not to be belittled or dismissed simply because their non-observance may result in
prejudice to a party's substantive rights. Like all other rules, they are required to be
followed, except only for the most persuasive of reasons when they may be relaxed to
relieve litigants of an injustice not commensurate with the degree of their
thoughtlessness in not complying with the procedure prescribed. [20]

We cannot consider counsel's failure to familiarize himself with the Revised Rules of
Court as a persuasive reason to relax the application of the Rules. It is well-settled that
the negligence of counsel binds the client. This principle is based on the rule that any
act performed by lawyers within the scope of their general or implied authority is
regarded as an act of the client. Consequently, the mistake or negligence of the counsel
of petitioner may result in the rendition of an unfavorable judgment against it. [21]cralaw

WHEREFORE, in view of the foregoing, the Petition is DENIED for lack of merit.

SO ORDERED.
Felix Martos, et al. v. New San Jose Builders, Inc., G.R. No. 192650, October 24, 2012

G.R. No. 192650               October 24, 2012

FELIX MARTOS, JIMMY ECLANA, RODEL PILONES, RONALDO NOVAL,

JONATHAN PAILAGO, ERNESTO MONTANO, DOYONG JOSE, DEO MAMALATEO,
ROSELO MAGNO, BONNIE SANTILLAN, ARSENIO GONZALES, ALEX EDRADAN,
MICHAEL ERASCA, MARLON MONTANO, VICENTE OLIVEROS, REYNALDO
LAMBOSON, DOMINGO ROTA, EDDIE ROTA, ZALDY OLIVEROS, ANTONIO
NATIL, HERMIE BUISON, ROGER BUISON, MARIANO LAZATE, JUAN VILLABER,
LIMUEL LLANETA, LITO BANTILO, TERSO GARAY, ROWEL BESTOLO, JERRY
YORTAS, PASTOR PANTIG, GAVINO NICOLAS, RAFAEL VILLA, FELIX YORTAS,
MELVIN GARAY, NEIL DOMINGUEZ REYNALDO EVANGELISTA, JR., JOSE
RAMOS, ELVIN ROSALES, JUN GRANEHO, DANNY ASPARES, SALVEDOR
TONLOC, ROLANDO EVANGELISTA, RICKY M. FRANCISCO, EDUARDO
ALEGRIA, SALVADOR SANTOS, GREG BISONIA, RUFO CARBILLO, MARVIN
MONTERO, DANILO BESSIRE, ALLAN CABALLERO, ORLANDO LIMOS,
EDGARDO BICLAR, MANDY MAMALATEO, ALFRED GAJO, ERIC CASTRENCE,
ANTHONY MOLINA, JAIME SALIM, ROY SILVA, DANILO BEGORIE, PEPING
CALISANA, ERIC RONDA, RUFO CARBANILLO, ROWEL BATA, RICARDO
TOLENTINO, ARNEL ARDINEZ, FERDINAND R. ARANDIA, ROMEO R. GARBO,
ANTONIO ROTA, REYNIELANDRE QUINTANILLA, JOSELITO HILARIO, JIMMY
CAMPANA, DANILO LIDO-AN, EMERSON PENAFLOR, CESAR PABALINAS,
JONATHAN MELCHOR, ALEX DAVID, EUTIQUIO ALCALA, MICHAEL
CARANDANG, EDUARDO MANUEL, RAMON EVANGELISTA, RUBEN MENDOZA,
ERNESTO MENDOZA, RICKY RAMOS, ROBERTO NOVELLA, RUBEN CONDE,
DANILO POLISTICO, DOMINGO MENDOZA, FERNANDO SAN GABRIEL, AND
DOMINGO ROTO, Petitioners,
vs.
NEW SAN JOSE BUILDERS, INC., Respondent.

DECISION

MENDOZA, J.:

Questioned in this Petition for Review is the July 31, 2009 Decision 1 of the Court of
Appeals (CA) and its June 17, 2010 Resolution, 2 which reversed and set aside the July
30, 2008 Decision3 and October 28, 2008, Resolution4 of the National Labor Relations
Commission (NLRC); and reinstated the May 23, 2003 Decision 5 of the Labor Arbiter
(LA). The dispositive portion of the CA Decision reads:

WHEREFORE, decision is hereby rendered, as follows:

1. Declaring the complainant Felix Martos was illegally dismissed and ordering
respondent New San Jose Builders, Inc. to pay him his separation pay, backwages,
salary differentials, 13th month pay, service incentive leave pay, and attorney’s fees in
the total amount of TWO HUNDRED SIXTY THOUSAND SIX HUNDRED SIXTY ONE
PESOS and 50/1000 (P260, 661.50).

The awards for separation pay, backwages and the corresponding attorney’s fees are
subject to further computation until the decision in this case becomes final and
executory; and

2. Dismissing the complaints/claim of the other complainants without prejudice.

SO ORDERED.6

The Facts

The factual and procedural antecedents were succinctly summarized by the CA as

follows:

New San Jose Builders, Inc. (hereafter petitioner) is a domestic corporation duly
organized and existing under the laws of the Philippines and is engaged in the
construction of road, bridges, buildings, and low cost houses primarily for the
government. One of the projects of petitioner is the San Jose Plains Project (hereafter
SJPP), located in Montalban, Rizal. SJPP, which is also known as the "Erap City" calls
for the construction of low cost housing, which are being turned over to the National
Housing Authority to be awarded to deserving poor families.

Private respondents alleged that, on various dates, petitioner hired them on different
positions, hereunder specified:

1âwphi1
Names Date Employed Date Dismissed
1. Felix Martos October 5, 1998 February 25, 2002
2. Jimmy Eclana 1999 July 2001
3. Rodel Pilones February 1999 July 2001
4. Ronaldo Noval
5. Jonathan Pailago
6. Ernesto Montaño 1998 2000
7. Doyong Jose 1996 July 2001
8. Deo Mamalateo 1999 July 2001
9. Roselo Magno 1994 November 2000
10. Bonnie Santillan 1998 July 2001
11. Arsenio Gonzales 1998 July 2001
12. Alex Edradan 1998 November 2001
13. Michael Erasca 1999 July 2001
14. Marlon Montaño 1998 July 2001
15. Vicente Oliveros April 5, 1998 July 2001
16. Reynaldo Lamboson 1999 July 2001
17. Domingo Rota 1998
18. Eddie Rota 1998
19. Zaldy Oliveros 1999 July 2001
20. Antonio Natel 1998 July 2001
21. Hermie Buison 1998 July 2001
22. Roger Buison 1998 2000
23. Mariano Lazate February 19, 1995
24. Juan Villaber January 10, 1997
25. Limuel Llaneta March 5, 1994
26. Lito Bantilo May 1987
27. Terso Garay October 3, 1986
28. Rowel Bestolo February 6, 1999
29. Jerry Yortas May 1994
30. Pastor Pantig April 11,1998
31. Gavino Nicolas June 20, 1997
32. Rafael Villa March 9, 1998
33. Felix Yortas 1992
34. Melvin Garay February 2, 1994
35. Neil Dominguez February 16, 1998
36. Reynaldo Evangelista, Jr. October 10, 1998
37. Jose Ramos October 10, 1998
38. Elvis Rosales June 14, 1998
39. Jun Graneho January 15, 1998
40. Danny Espares April 1999
41. Salvador Tonloc January 8, 1998
42. Rolando Evangelista March 15, 1998
43. Ricky M. Francisco September 28, 1991
44. Eduardo Alegria May 2001
45. Salvador Santos September 22, 2000
46. Greg Bisonia March 28, 1993
47. Rufo Carbillo March 28, 1993
48. Marvin Montero 1997 January 2001
49. Danilo Bessiri 1997 2002
50. Allan Caballero 1997 2002
51. Orlando Limos 1997 July 2001
52. Edgardo Biclar 1997 July 2001
53. Mandy Mamalatco 1989 2002
54. Alfred Gajo 1998 July 2001
55. Eric Castrence 1988 2002
56. Anthony Molina 1997 2002
57. Jaime Salin
58. Roy Silva 1997 2002
59. Danilo V. Begorie 1994 January 2001
60. Peping Celisana 1999 July 2001
61. Eric Ronda 1998 July 2001
62. Rufo Carbanillo 1998 July 2001
63. Rowel Batta 1999 July 2001
64. Ricardo Tolentino 1997 July 2001
65. Arnel Ardinez 1998 July 2001
66. Ferdinand P. Arandia 1998 1999
67. Romeo R. Garbo 1998 2000
68. Antonio Rota 1998 July 2001
69. Reynielande Quintanilla February 28, 1998 2002
70. Joselito Hilario 1998 2002
 71. Jimmy Campana August 15, 1998 August 2001
72. Danilo Lido-An September 8, 1998
73. Emerson Peñaflor August 8,1998
74. Cesar Pabalinas
75. Jonathan Melchor November 1998
76. Alex David 1998
77. Eutiquio Alcala December 1999
78. Michael Carandang June 2000
79. Eduardo Nanuel October 1999
80. Ramon Evangelista February 15, 1998
81. Ruben Mendoza 1999 July 2001
82. Ernesto A. Mendoza 1998 July 2001
83. Ricky Ramos 1999 July 2001
84. Roberto Novella 1998 July 2001
85. Ruben Conde 1998 July 2001
86. Ramon Evangelista 1997 July 2001
87. Danilo Polistico 1999 July 2001
88. Domingo Mendoza 1999 July 2001
89. Fernando San Gabriel 1999 July 2001
90. Domingo Roto 1994 July 2001

Sometime in 2000, petitioner was constrained to slow down and suspend most of the
works on the SJPP project due to lack of funds of the National Housing Authority. Thus,
the workers were informed that many of them [would] be laid off and the rest would be
reassigned to other projects. Juan Villaber, Terso Garay, Rowell Batta, Pastor Pantig,
Rafael Villa, and Melvin Garay were laid off. While on the other hand, Felix Martos, Ariel
Dominguez, Greg Bisonia, Allan Caballera, Orlando Limos, Mandy Mamalateo, Eric
Castrence, Anthony Molina, and Roy Silva were among those who were retained and
were issued new appointment papers to their respective assignments, indicating therein
that they are project employees. However, they refused to sign the appointment papers
as project employees and subsequently refused to continue to work.

On different dates, three (3) Complaints for Illegal Dismissal and for money claims were
filed before the NLRC against petitioner and Jose Acuzar, by private respondents who
claimed to be the former employees of petitioner, to wit:
 1. Complaint dated March 11, 2002, entitled "Felix Martos, et al. vs. NSJBI",
docketed as NLRC-NCR Case No. 03-01639-2002;

2. Complaint dated July 9, 2002, entitled "Jimmy Campana, et al. vs. NSJBI,"
docketed as NLRC-NCR Case No. 07-04969-2002;

3. Complaint dated July 4, 2002, entitled "Greg Bisonia, et al. vs. NSJBI",
docketed as NLRC-NCR Case No. 07-02888-2002.

Petitioner denies that private respondents were illegally dismissed, and alleged that
they were project employees, whose employments were automatically terminated upon
completion of the project for which they were hired. On the other hand, private
respondents claim that petitioner hired them as regular employees, continuously and
without interruption, until their dismissal on February 28, 2002.

Subsequently, the three Complaints were consolidated and assigned to Labor Arbiter
Facundo Leda.7

Ruling of the Labor Arbiter

As earlier stated, on May 23, 2003, the LA handed down a decision declaring, among
others, that petitioner Felix Martos (Martos) was illegally dismissed and entitled to
separation pay, backwages and other monetary benefits; and dismissing, without
prejudice, the complaints/claims of the other complainants (petitioners).

Ruling of The NLRC

Both parties appealed the LA decision to the NLRC. Petitioners appealed that part
which dismissed all the complaints, without prejudice, except that of Martos. On the
other hand, New San Jose Builders, Inc. (respondent) appealed that part which held
that Martos was its regular employee and that he was illegally dismissed.

On July 30, 2008, the NLRC resolved the appeal by dismissing the one filed by
respondent and partially granting that of the other petitioners. The dispositive portion of
the NLRC decision reads as follows:

WHEREFORE, premises considered, respondent’s appeal is DISMISSED for lack of

merit. The appeal of the complainants is, however, PARTIALLY GRANTED by
modifying the 23 May 2003 Decision of the Labor Arbiter Facundo L. Leda, in that,
respondents are ordered to reinstate all the complainants to their former positions,
without loss of seniority rights and with full backwages, counted from the time their
compensation was withheld from them until actual reinstatement.

Respondents are likewise ordered to pay complainants their salary differentials, service
incentive leave pay, and 13th month pay, using, as basis, the computation made on the
claims of complainant Felix Martos.
In all other aspects, the Decision is AFFIRMED.

SO ORDERED.8

Ruling Of The CA

After the denial of its motion for reconsideration, respondent filed before the CA a
petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure, as amended,
raising the following issues:

I) The public respondent has committed grave abuse of discretion in holding that
the private respondents were regular employees and, thus, have been illegally
dismissed.

II) The public respondent has committed grave abuse of discretion in reviving the
complaints of the other private respondents despite their failure to verify the
same.

III) The public respondent has committed grave abuse of discretion when it
upheld the findings of the Labor Arbiter granting relief in favor of those supposed
complainants who did not even render service to the petitioner and, hence, are
not on its payroll.

On July 31, 2009, the CA rendered a decision reversing and setting aside the July 30,
2008 Decision and the October 28, 2008 Resolution of the NLRC and reinstating the
May 23, 2003 Decision of the LA. The dispositive portion of the CA decision reads:

WHEREFORE, premises considered, the present petition is hereby GRANTED.

Accordingly, the assailed Resolution dated October 28, 2008 of public respondent
National Labor Relations Commission is REVERSED and SET ASIDE, and the Decision
dated May 23, 2003 of Labor Arbiter Facundo L. Leda, is hereby ordered reinstated.

SO ORDERED.9

The CA explained that the NLRC committed grave abuse of discretion in reviving the
complaints of petitioners despite their failure to verify the same. Out of the 102
complainants, only Martos verified the position paper and his counsel never offered any
explanation for his failure to secure the verification of the others. The CA also held that
the NLRC gravely abused its discretion when it took cognizance of petitioners’ appeal
because Rule 41, Section 1(h) of the 1997 Rules of Civil Procedure, as amended, which
is suppletory, provides that no appeal may be taken from an order dismissing an action
without prejudice.

Nevertheless, the CA stated that the factual circumstances of Martos’ employment and
his dismissal from work could not equally apply to petitioners because they were not
similarly situated. The NLRC did not even bother to look at the evidence on record and
inappropriately granted monetary awards to petitioners who had either denied having
filed a case or withdrawn the case against respondent. According to the CA, the position
papers should have covered only those claims and causes of action raised in the
complaint excluding those that might have been amicably settled.

With respect to Martos, the CA ruled that he was a regular employee of respondent and
his termination was illegal. It explained that Martos should have been considered a
regular employee because there was no indication that he was merely a project
employee when he was hired. To show otherwise, respondent should have presented
his employment contract for the alleged specific project and the successive employment
contracts for the different projects or phases for which he was hired. In the absence of
such document, he could not be considered such an employee because his work was
necessary and desirable to the respondent’s usual business and that he was not
required to sign any employment contract fixing a definite period or duration of his
engagement. Thus, Martos already attained the status of a regular employee. Moreover,
the CA noted that respondent did not report the termination of Martos’ supposed project
employment to the Department of Labor and Employment (DOLE), as required under
Department Order No. 19.

Being a regular employee, the CA concluded that he was constructively dismissed when
he was asked to sign a new appointment paper indicating therein that he was a project
employee and that his appointment would be co-terminus with the project.

Not in conformity with the CA decision, petitioners filed this petition anchored on the
following

ASSIGNMENT OF ERRORS

WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS AND THE

LABOR ARBITER BELOW GRAVELY ERRED IN DISMISSING THE
COMPLAINTS OF THE NINETY NINE (99) PETITIONERS DUE TO FAILURE
OF THE LATTER TO VERIFY THEIR POSITION PAPER WHEN, OBVIOUSLY,
SUCH TECHNICALITY SHOULD NOT HAVE BEEN RESORTED TO BY THEM
AS IT WILL DEPRIVE THESE PETITIONERS OF THEIR PROPERTY RIGHT
TO WORK.

WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS AND THE

LABOR ARBITER BELOW GRAVELY ERRED IN NOT ORDERING THE
REINSTATEMENT OF PETITIONER MARTOS AND THE OTHER 99
PETITIONERS WHEN, OBVIOUSLY, AND AS FOUND BY THEM, THE
DISMISSAL OF MARTOS IS ILLEGAL WHICH WOULD WARRANT HIS
 REINSTATEMENT AND THE GRANT TO HIM OF FULL BACKWAGES AND
OTHER EMPLOYEES’ BENEFITS.

WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS GRAVELY

ERRED IN NOT ORDERING THE RESPONDENTS TO PAY THE
PETITIONERS ACTUAL, MORAL AND EXEMPLARY DAMAGES.

Position of Petitioners

Petitioners basically argue that the CA was wrong in affirming the dismissal of their
complaints due to their failure to verify their position paper. They insist that the lack of
verification of a position paper is only a formal and not a jurisdictional defect. Hence, it
was not fatal to their cause of action considering that the CA could have required them
to submit the needed verification.

The CA overlooked the fact that all of them verified their complaints by declaring under
oath relevant and material facts such as their names, addresses, employment status,
salary rates, facts, causes of action, and reliefs common to all of them. The information
supplied in their complaints is sufficient to prove their status of employment and
entitlement of their monetary claims. In the adjudication of labor cases, the adherence
to stringent technical rules may be relaxed in the interest of the working man. Moreover,
respondent failed to adduce evidence of payment of their money claims.

Finally, petitioners argue that they and Martos were similarly situated. The award of
separation pay instead of reinstatement to an illegally dismissed employee was
improper because the strained relations between the parties was not clearly
established. Moreover, they are entitled to actual, moral and exemplary damages for
respondent’s illegal act of violating labor standard laws, the minimum wage law and the
13th month pay law.

Position of Respondents

On the other hand, respondent principally counters that the CA and the LA 1) did not err
in dismissing the complaints of the 88 petitioners who failed to verify their position
paper, without prejudice; 2) correctly ruled that Martos and the 88 petitioners concerned
were not entitled to reinstatement; and 3) correctly ruled that petitioners were not
entitled to an award of actual, moral and exemplary damages.

Petitioners have the propensity to disregard the mandatory provisions of the 2005
Revised Rules of Procedure of the NLRC (NLRC Rules) which require the parties to
submit simultaneously their verified position papers with supporting documents and
affidavits. In the proceedings before the LA, the complaints of the 99 workers were
dismissed because they failed to verify or affix their signatures to the position paper filed
with the LA.
While it is true that the NLRC Rules must be liberally construed and that the NLRC is
not bound by the technicalities of law and procedure, it should not be the first to
arbitrarily disregard specific provisions of the rules which are precisely intended to
assist the parties in obtaining just, expeditious and inexpensive settlement of labor
disputes. It was only Felix Martos who verified their position paper and their
memorandum of appeal. It was only he alone who was vigilant in looking after his
interest and enforcing his rights. Petitioners should be considered to have waived their
rights and interests in the case for their consistent neglect and passive attitude.

Moreover, Martos was never authorized by any of his fellow complainants through a
special power of attorney or other document in the proceedings to represent them
before the LA and the NLRC. His acts and verifications were made only in his own
personal capacity and did not bind or benefit petitioners. There is only one logical
reason why a majority of them failed to verify their position paper, their appeal and now
their petition: they were not in any way employees of the respondent. They were total
strangers to the respondent. They even refused to identify themselves during the
proceedings by their failure to appear thereat. Hence, it is too late for the others to
participate in the fruits, if any, of this litigation.

Finally, the reinstatement being sought by Martos and the others was no longer
practicable because of the strained relation between the parties. Petitioners can no
longer question this fact. This issue was never raised or taken up on appeal before the
NLRC. It was only when the petitioners lost in the appeal in the CA that they first raised
the issue of strained relation. Moreover, no proof of actual damages was presented by
the petitioners. There is no clear and convincing evidence on record showing that the
termination of an employee’s services had been carried out in an arbitrary, capricious or
malicious manner.

The Court’s Ruling

The Court is basically asked to resolve two (2) issues: 1 whether or not the CA was
correct in dismissing the complaints filed by those petitioners who failed to verify their
position papers; and 2 whether or not Martos should be reinstated.

Regarding the first issue, the Court agrees with the respondent.

Sections 4 and 5 of Rule 7 of the 1997 Rules of Civil Procedure provide:

SEC. 4. Verification. – Except when otherwise specifically required by law or rule,

pleadings need not be under oath, verified or accompanied by affidavit.

A pleading is verified by an affidavit that the affiant has read the pleadings and that the
allegations therein are true and correct of his personal knowledge or based on authentic
records.
A pleading required to be verified which contains a verification based on "information
and belief" or upon "knowledge, information and belief" or lacks a proper verification,
shall be treated as an unsigned pleading.

SEC. 5. Certification against forum shopping. – The plaintiff or principal party shall
certify under oath in the complaint or other initiatory pleading asserting a claim for relief,
or in a sworn certification annexed thereto and simultaneously filed therewith:

(a) that he has not theretofore commenced any action or filed any claim involving the
same issues in any court, tribunal or quasi-judicial agency and, to the best of his
knowledge, no such other action or claim is pending therein; (b) if there is such other
pending action or claim, a complete statement of the present status thereof; and (c) if he
should thereafter learn that the same or similar action or claim has been filed or is
pending, he shall report that fact within five (5) days therefrom to the court wherein his
aforesaid complaint or initiatory pleading has been filed.

Failure to comply with the foregoing requirements shall not be curable by mere
amendment of the complaint or other initiatory pleading but shall be cause for the
dismissal of the case without prejudice, unless otherwise provided, upon motion and
after hearing. The submission of a false certification or non-compliance with any of the
undertakings therein shall constitute indirect contempt of court, without prejudice to the
corresponding administrative and criminal actions. If the acts of the party or his counsel
clearly constitute willful and deliberate forum shopping, the same shall be ground for
summary dismissal with prejudice and shall constitute direct contempt, as well as a
cause for administrative sanctions. x x x. [Emphases supplied]

The verification requirement is significant, as it is intended to secure an assurance that

the allegations in the pleading are true and correct and not the product of the
imagination or a matter of speculation, and that the pleading is filed in good
faith.10 Verification is deemed substantially complied with when, as in this case, one who
has ample knowledge to swear to the truth of the allegations in the complaint or petition
signs the verification, and when matters alleged in the petition have been made in good
faith or are true and correct.11

The absence of a proper verification is cause to treat the pleading as unsigned and
dismissible.12

The lone signature of Martos would have been sufficient if he was authorized by his co-
petitioners to sign for them. Unfortunately, petitioners failed to adduce proof that he was
so authorized. The complaints of the other parties in the case of Nellie Vda. De
Formoso v. v. PNB13 suffered a similar fate. Thus:

Admittedly, among the seven (7) petitioners mentioned, only Malcaba signed the
verification and certification of non-forum shopping in the subject petition. There was no
proof that Malcaba was authorized by his co-petitioners to sign for them. There was no
special power of attorney shown by the Formosos authorizing Malcaba as their
attorney-in-fact in filing a petition for review on certiorari. Neither could the petitioners
give at least a reasonable explanation as to why only he signed the verification and
certification of non-forum shopping.

The liberal construction of the rules may be invoked in situations where there may be
some excusable formal deficiency or error in a pleading, provided that the same does
not subvert the essence of the proceeding and it at least connotes a reasonable attempt
at compliance with the rules. Besides, fundamental is the precept that rules of
procedure are meant not to thwart but to facilitate the attainment of justice; hence, their
rigid application may, for deserving reasons, be subordinated by the need for an apt
dispensation of substantial justice in the normal course. They ought to be relaxed when
there is subsequent or even substantial compliance, consistent with the policy of
liberality espoused by Rule 1, Section 6.14 Not being inflexible, the rule on verification
allows for such liberality.15

Considering that the dismissal of the other complaints by the LA was without prejudice,
the other complainants should have taken the necessary steps to rectify their procedural
mistake after the decision of the LA was rendered. They should have corrected this
procedural flaw by immediately filing another complaint with the correct verification this
time. Surprisingly, they did not even attempt to correct this technical blunder. Worse,
they committed the same procedural error when they filed their appeal 16 with the NLRC.

Under the circumstances, the Court agrees with the CA that the dismissal of the other
complaints were brought about by the own negligence and passive attitude of the
complainants themselves. In Formoso, the Court further wrote:

The petitioners were given a chance by the CA to comply with the Rules when they filed
their motion for reconsideration, but they refused to do so. Despite the opportunity given
to them to make all of them sign the verification and certification of non-forum shopping,
they still failed to comply. Thus, the CA was constrained to deny their motion and affirm
the earlier resolution.

The Court can only do so much for them.

Most probably, as the list17 submitted is not complete with the information as to when
each started and when each was dismissed there must be some truth in the claim of
respondent that those complainants who failed to affix their signatures in the verification
were either not employees of respondent at all or they simply refused to prosecute their
complaints. In its position paper,18 respondent alleged that, aside from the four (4)
complainants who withdrew their complaints, only 17 out of the more or less 104
complainants appeared on its records as its former project employees or at least known
by it to have worked in one of its construction projects. From the sworn statements
executed by Felix Yortas,19 Marvin Batta,20

Lito Bantillo,21 Gavino Felix Nicolas,22 and Romeo Pangacian Martos,23 they already

withdrew their complaints against respondent. Their status and cause of action not
being clear and proven, it is just not right that these complaints be considered as
similarly situated as Martos and entitled to the same benefits.

As to Martos, the Court agrees that the reinstatement being sought by him was no
longer practicable because of strained relation between the parties. Indeed, he can no
longer question this fact. This issue was never raised or taken up on appeal before the
MLRC. It was only after he lost the appeal in the CA that he raised it.

Thus, the Court deems it fair to award separation pay in lieu of

reinstatement.1âwphi1 In addition to his separation pay. Martos is also entitled to
payment of full backwages, 13th month pay, service incentive leave pay, and attorney’s
fees.

The accepted doctrine is that separation pay may avail in lieu of reinstatement if
reinstatement is no longer practical or in the best interest of the parties. Separation pay
in lieu of reinstatement may likewise be awarded if the employee decides not to be
reinstated.

Under the doctrine of stained relations, the payment of separation pay is considered an
acceptable alternative to reinstatement when the latter opinion is no longer desirable or
viable. On one hand, such payment liberates the employee from what could be highly
oppressive work environment. On the other hand, it release the employer from the
grossly unpalatable obligation of maintaining in its employ a worker it could no longer
trust.24

WHEREFORE, the petition is DENIED.

SO ORDERED.
Maria Consolacion Rivera-Pascual v. Sps. Marilyn Lim, et al., G.R. No.191837,
September 19, 2012

[G.R. NO. 191837 - September 19, 2012]

MARIA CONSOLACION RIVERA-PASCUAL, Petitioner, v. SPOUSES MARILYN LIM

and GEORGE LIM and the REGISTRY OF DEEDS OF VALENZUELA
CITY, Respondents.

RESOLUTION

REYES, J.:

This is a Petition for Review on Certiorari assailing the Resolutions dated October 15,
20091 and March 11, 20102 of the Court of Appeals (CA) in CA-G.R. SP No.
109265.ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

The facts leading to the filing of this petition are undisputed.

chanrobles virtual law library

Subject of the present controversy is a parcel of land with an approximate area of 4.4
hectares and located at Bignay, Valenzuela City. The property is covered by Transfer
Certificate of Title (TCT) No. V-73892, registered in the names of George and Marilyn
Lim (Spouses Lim).

On September 8, 2004, Maria Consolacion Rivera-Pascual (Consolacion) filed before

the Office of the Regional Agrarian Reform Adjudicator (RARAD) for Region IV-A a
petition to be recognized as a tenant of a property located at Bignay, Valenzuela City
against Danilo Deato (Deato). At that time, the property, which has an approximate area
of 4.4 hectares, was covered by TCT No. 24759 under Deato s name. During the
pendency of the petition, Deato sold the property to Spouses Lim. The sale was
registered on December 21, 2004 leading to the issuance of TCT No. V-73892 in favor
of Spouses Lim. Considering this development, Consolacion filed a motion on March 3,
2005 to implead Spouses Lim as respondents.3ςrνll

The petition, which was docketed as DARAB Case No. R-0400-0012-04, was granted
byRegional Adjudicator Conchita C. Miñas (RA Miñas) in a Decision 4 dated
December 2, 2005, the dispositive portion of which states:ςηαñrοblεš  Î½Î¹r†υαl
lαω  lιbrαrÿ

WHEREFORE, premises considered, judgment is hereby rendered:

1) Declaring that petitioner is the tenant of the subject landholding by succession from
her deceased father;
2) Declaring respondents spouses George and Marilyn Lim to have subrogated to the
rights and substituted to the obligation of spouses Danilo and Divina Deato;

3) Ordering the respondents and all persons claiming rights under them to maintain
petitioner in peaceful possession and cultivation of the agricultural land subject hereof;

4) Declaring petitioner to have the right to exercise the right of redemption of the subject
parcel of agricultural land pursuant to Section 12 of RA 3844 as amended;
andcralawlibrary

5) Dismissing the petition against Louie Cruz, Fire Force Agency and Danny Boy Rivera
for having no proximate tenurial relationship with the petitioner hence beyond the
jurisdictional ambit of this Office.ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

SO ORDERED.5ςrνll

chanrobles virtual law library

On July 7, 2006, the foregoing decision became final. 6ςrνll

chanrobles virtual law library

Upon Consolacion s motion for execution filed on January 7, 2008, RA Miñas issued a
writ of execution on January 8, 2008. 7ςrνll

On January 21, 2008, Consolacion filed a petition against Spouses Lim and the
Registrar of Deeds of Valenzuela City praying for the issuance of an order directing
Spouses Lim to accept the amount of P 10,000,000.00 which she undertook to tender
during the initial hearing, declaring the property redeemed, and cancelling TCT No. V-
73892.8 Consolacion consigned with the RARAD the amount of P 10,000,000.00 on
March 3, 2008.9ςrνll

Consolacion s petition, which was docketed as DARAB Case No. R-0400-001-08, was
given due course by RA Miñas in a Decision 10 dated June 2, 2008, the dispositive
portion of which states:ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

WHEREFORE, foregoing premises considered, judgment is hereby

rendered:ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

1. As prayed for, declaring that the landholding subject of the petition as lawfully
redeemed;

2. Ordering respondent spouses to accept and withdraw the amount of the redemption
price consigned with this Office which was deposited for safekeeping indicated in
Manager s Check No. 0000004518 issued by Allied Bank in the name of Spouses
Marilyn and George Lim and/or DAR Adjudication Board Region IV-A in the amount of
ten (10) million pesos;

3. Upon acceptance and the withdrawal of the redemption price as ordered in paragraph
2 hereof, ordering respondent spouses to execute a Deed of Redemption in favor of
petitioner;

4. In case of refusal and/or failure of respondent spouses to execute the Deed of

Redemption as ordered above, the Regional Clerk of the Board is hereby ordered to
execute a Deed of Redemption in the name of the petitioner; andcralawlibrary

5. Directing the Register of Deeds for Valenzuela City to cause the cancellation of TCT
No. V-73892 registered in the name of respondent spouses Marilyn and George Lim
and a new one issued in the name of petitioner upon presentment of the Deed of
Redemption.

SO ORDERED.11ςrνll

chanrobles virtual law library

On appeal, the Department of Agrarian Reform Adjudication Board (DARAB) issued a

Decision12 on February 18, 2009 reversing RA Miñas Decision dated June 2, 2008.
Specifically:ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

WHEREFORE, in view of the foregoing, the appealed Decision dated 02 June 2008 is
hereby REVERSED and SET ASIDE. A new judgment is hereby
rendered:ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

1. DECLARING the landholding to be not lawfully redeemed;

2. DECLARING petitioner-appellee not a bona fide tenant of the subject landholding;

3. DECLARING that petitioner-appellee cannot redeem the subject parcel registered in

the names of the respondents-appellants;

4. ORDERING the respondents-appellants to be maintained in peaceful possession of

the subject landholding; andcralawlibrary

5. DIRECTING the Clerk of the Board of the Regional Agrarian Reform Adjudicator of

Region IV-A to return the Manager s Check No. 0000004518 issued by Allied Bank in
the name of Spouses Marilyn and George Lim and/or DAR Adjudication Board Region
IV-A in the amount of Ten Million pesos to herein petitioner-appellee.

SO ORDERED.13

chanrobles virtual law library

On April 13, 2009, Consolacion moved for reconsideration,14 which the DARAB denied
in a Resolution15 dated June 8, 2009 for being filed out of time.ςηαñrοblεš
νιr†υαl  lαω  lιbrαrÿ

SECTION 12 Rule X of the 2003 DARAB Rules provides that a Motion for
Reconsideration shall be filed within fifteen (15) days from receipt of notice of the order,
resolution, or decision of the Board or Adjudicator. Records show that both the
petitioner-appellee and her counsel received a copy of the Decision dated 18 February
2009 on 27 February 2009 and that Legal Officer Nancy Geocada, the alleged new
counsel of the herein petitioner-appellee, filed the Motion for Reconsideration only on 13
April 2009, clearly the Motion for Reconsideration was filed beyond the fifteen (15) days
(sic) reglementary period thus the herein Decision has already become final and
executory. x x x.16ςrνll

chanrobles virtual law library

On June 25, 2009, Consolacion filed a Petition for Review under Rule 43 of the Rules of
Court with the CA.17ςrνll

On July 1, 2009, the CA resolved to require Consolacion s counsel to submit within five
(5) days from notice his Mandatory Continuing Legal Education (MCLE) Certificate of
Compliance or Exemption and an amended Verification and Certification Against Non-
Forum-Shopping.18 Apparently, Consolacion s counsel failed to indicate in the petition
his MCLE Certificate of Compliance or Exemption Number as required under Bar Matter
No. 1922. Also, the jurat of Consolacion s verification and certification against non-
forum-shopping failed to indicate any competent evidence of Consolacion s identity
apart from her community tax certificate.

Considering the failure of Consolacion and her counsel to comply, the CA issued a
Resolution19 on October 15, 2009 dismissing the petition.ςηαñrοblεš  Î½Î¹r†υαl
lαω  lιbrαrÿ

On July 7, 2009, the counsel for the petitioner received the above-mentioned
Resolution. However, the counsel for the petitioner failed to comply with the said
Resolution which was due on July 19, 2009.

For failure of the counsel for the petitioner to comply with the Resolution dated July 1,
2009, despite receipt of the notice thereof, the petition is
hereby DISMISSED.ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

SO ORDERED.20ςrνll

chanrobles virtual law library

Consolacion moved for reconsideration but this was denied by the CA in a

Resolution21 dated March 11, 2010.
Consolacion is, before this Court, claiming that the CA s summary dismissal of her
petition on technical grounds is unwarranted. Consolacion invoked substantial justice
against the CA s strict application of the rule requiring her counsel to note his MCLE
Compliance or Exemption Certificate Number and the rule rendering the jurat of her
verification and certification on non-forum-shopping defective in the absence of the
details of any one of her current identification document issued by an official agency
bearing her photograph and signature. That there was merit in her petition and that she
complied, albeit belatedly as her counsel s MCLE Compliance Certificate Number was
indicated and a verification and certificate on non-forum-shopping with a proper jurat
was attached to her motion for reconsideration, should have sufficed for the CA to
reverse the dismissal of her petition and decide the same on its merits. Consolacion
alleged that procedural rules or technicalities are designed to facilitate the attainment of
justice and their rigid application should be avoided if this would frustrate rather than
promote substantial justice.

The Court finds no merit in the petition. The Court sees no reversible error committed by
the CA in dismissing Consolacion s petition before it on the ground of petitioner s
unexplained failure to comply with basic procedural requirements attendant to the filing
of a Petition for Review under Rule 43 of the Rules of Court. Notably, Consolacion and
her counsel remained obstinate despite the opportunity afforded to them by the CA to
rectify their lapses. While there was compliance, this took place, however, after the CA
had ordered the dismissal of Consolacion s petition and without reasonable cause
proffered to justify its belatedness. Consolacion and her counsel claimed inadvertence
and negligence but they did not explain the circumstances thereof. Absent valid and
compelling reasons, the requested leniency and liberality in the observance of
procedural rules appears to be an afterthought, hence, cannot be granted. The CA saw
no compelling need meriting the relaxation of the rules. Neither does this Court see any.

The Court is aware of the exceptional cases where technicalities were liberally
construed. However, in these cases, outright dismissal is rendered unjust by the
presence of a satisfactory and persuasive explanation. The parties therein who prayed
for liberal interpretation were able to hurdle that heavy burden of proving that they
deserve an exceptional treatment. It was never the Court s intent "to forge a bastion for
erring litigants to violate the rules with impunity." 22ςrνll

This Court will not condone a cavalier attitude towards procedural rules. It is the duty of
every member of the bar to comply with these rules. They are not at liberty to seek
exceptions should they fail to observe these rules and rationalize their omission by
harking on liberal construction.

While it IS the negligence of Consolacion's counsel that led to this unfortunate result,
she is bound by such.

WHEREFORE, premises considered, the petition is DISMISSED. The Resolutions

dated October 15, 2009 and March 11, 2010 of the Court of Appeals in CA-G.R. SP No.
109265 are AFFIRMED.
Costs against the petitioner.

SO ORDERED.
Neypes vs. Court of Appeals, 469 SCRA 633, 643-644)

G.R. No. 141524 September 14, 2005

DOMINGO NEYPES, LUZ FAUSTINO, ROGELIO FAUSTINO, LOLITO VICTORIANO,

JACOB OBANIA AND DOMINGO CABACUNGAN, Petitioners,
vs.
HON. COURT OF APPEALS, HEIRS OF BERNARDO DEL MUNDO, namely: FE,
CORAZON, JOSEFA, SALVADOR and CARMEN, all surnamed DEL MUNDO, LAND
BANK OF THE PHILIPPINES AND HON. ANTONIO N. ROSALES, Presiding Judge,
Branch 43, Regional Trial Court, Roxas, Oriental Mindoro, Respondent.

DECISION

CORONA, J.:

Petitioners Domingo Neypes, Luz Faustino, Rogelio Faustino, Lolito Victoriano, Jacob
Obania and Domingo Cabacungan filed an action for annulment of judgment and titles
of land and/or reconveyance and/or reversion with preliminary injunction before the
Regional Trial Court, Branch 43, of Roxas, Oriental Mindoro, against the Bureau of
Forest Development, Bureau of Lands, Land Bank of the Philippines and the heirs of
Bernardo del Mundo, namely, Fe, Corazon, Josefa, Salvador and Carmen.

In the course of the proceedings, the parties (both petitioners and respondents) filed
various motions with the trial court. Among these were: (1) the motion filed by
petitioners to declare the respondent heirs, the Bureau of Lands and the Bureau of
Forest Development in default and (2) the motions to dismiss filed by the respondent
heirs and the Land Bank of the Philippines, respectively.

In an order dated May 16, 1997, the trial court, presided by public respondent Judge
Antonio N. Rosales, resolved the foregoing motions as follows: (1) the petitioners’
motion to declare respondents Bureau of Lands and Bureau of Forest Development in
default was granted for their failure to file an answer, but denied as against the
respondent heirs of del Mundo because the substituted service of summons on them
was improper; (2) the Land Bank’s motion to dismiss for lack of cause of action was
denied because there were hypothetical admissions and matters that could be
determined only after trial, and (3) the motion to dismiss filed by respondent heirs of del
Mundo, based on prescription, was also denied because there were factual matters that
could be determined only after trial.1

The respondent heirs filed a motion for reconsideration of the order denying their motion
to dismiss on the ground that the trial court could very well resolve the issue of
prescription from the bare allegations of the complaint itself without waiting for the trial
proper.
In an order2 dated February 12, 1998, the trial court dismissed petitioners’ complaint on
the ground that the action had already prescribed. Petitioners allegedly received a copy
of the order of dismissal on March 3, 1998 and, on the 15th day thereafter or on March
18, 1998, filed a motion for reconsideration. On July 1, 1998, the trial court issued
another order dismissing the motion for reconsideration3 which petitioners received on
July 22, 1998. Five days later, on July 27, 1998, petitioners filed a notice of appeal4 and
paid the appeal fees on August 3, 1998.

On August 4, 1998, the court a quo denied the notice of appeal, holding that it was filed
eight days late.5 This was received by petitioners on July 31, 1998. Petitioners filed a
motion for reconsideration but this too was denied in an order dated September 3,
1998.6

Via a petition for certiorari and mandamus under Rule 65 of the 1997 Rules of Civil
Procedure, petitioners assailed the dismissal of the notice of appeal before the Court of
Appeals.

In the appellate court, petitioners claimed that they had seasonably filed their notice of
appeal. They argued that the 15-day reglementary period to appeal started to run only
on July 22, 1998 since this was the day they received the final order of the trial court
denying their motion for reconsideration. When they filed their notice of appeal on July
27, 1998, only five days had elapsed and they were well within the reglementary period
for appeal.7

On September 16, 1999, the Court of Appeals (CA) dismissed the petition. It ruled that
the 15-day period to appeal should have been reckoned from March 3, 1998 or the day
they received the February 12, 1998 order dismissing their complaint. According to the
appellate court, the order was the "final order" appealable under the Rules. It held
further:

Perforce the petitioners’ tardy appeal was correctly dismissed for the (P)erfection of an
appeal within the reglementary period and in the manner prescribed by law is
jurisdictional and non-compliance with such legal requirement is fatal and effectively
renders the judgment final and executory. 8

Petitioners filed a motion for reconsideration of the aforementioned decision. This was
denied by the Court of Appeals on January 6, 2000.

In this present petition for review under Rule 45 of the Rules, petitioners ascribe the
following errors allegedly committed by the appellate court:

THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE

PETITIONERS’ PETITION FOR CERTIORARI AND MANDAMUS AND IN AFFIRMING
THE ORDER OF THE HON. JUDGE ANTONIO N. ROSALES WHICH DISMISSED
 THE PETITIONERS’ APPEAL IN CIVIL CASE NO. C-36 OF THE REGIONAL TRIAL
COURT, BRANCH 43, ROXAS, ORIENTAL MINDORO, EVEN AFTER THE
PETITIONERS HAD PAID THE APPEAL DOCKET FEES.

II

THE HONORABLE COURT OF APPEALS LIKEWISE ERRED IN RULING AND

AFFIRMING THE DECISION OR ORDER OF THE RESPONDENT HON. ANTONIO M.
ROSALES THAT PETITIONERS’ APPEAL WAS FILED OUT OF TIME WHEN
PETITIONERS RECEIVED THE LAST OR FINAL ORDER OF THE COURT ON JULY
22, 1998 AND FILED THEIR NOTICE OF APPEAL ON JULY 27, 1998 AND PAID THE
APPEAL DOCKET FEE ON AUGUST 3, 1998.

III

THE HONORABLE COURT OF APPEALS FURTHER ERRED IN RULING THAT THE

WORDS "FINAL ORDER" IN SECTION 3, RULE 41, OF THE 1997 RULES OF CIVIL
PROCEDURE WILL REFER TO THE [FIRST] ORDER OF RESPONDENT JUDGE
HON. ANTONIO M. MORALES DATED FEBRUARY 12, 1998 INSTEAD OF THE LAST
AND FINAL ORDER DATED JULY 1, 1998 COPY OF WHICH WAS RECEIVED BY
PETITIONERS THROUGH COUNSEL ON JULY 22, 1998.

IV.

THE HONORABLE COURT OF APPEALS FINALLY ERRED IN FINDING THAT THE

DECISION IN THE CASE OF DENSO, INC. V. IAC, 148 SCRA 280, IS APPLICABLE
IN THE INSTANT CASE THEREBY IGNORING THE PECULIAR FACTS AND
CIRCUMSTANCES OF THIS CASE AND THE FACT THAT THE SAID DECISION WAS
RENDERED PRIOR TO THE ENACTMENT OF THE 1997 RULES OF CIVIL
PROCEDURE.9

The foregoing issues essentially revolve around the period within which petitioners
should have filed their notice of appeal.

First and foremost, the right to appeal is neither a natural right nor a part of due
process. It is merely a statutory privilege and may be exercised only in the manner and
in accordance with the provisions of law. Thus, one who seeks to avail of the right to
appeal must comply with the requirements of the Rules. Failure to do so often leads to
the loss of the right to appeal.10 The period to appeal is fixed by both statute and
procedural rules. BP 129,11 as amended, provides:

Sec. 39. Appeals. – The period for appeal from final orders, resolutions, awards,
judgments, or decisions of any court in all these cases shall be fifteen (15) days counted
from the notice of the final order, resolution, award, judgment, or decision appealed
from. Provided, however, that in habeas corpus cases, the period for appeal shall be
(48) forty-eight hours from the notice of judgment appealed from. x x x
Rule 41, Section 3 of the 1997 Rules of Civil Procedure states:

SEC. 3. Period of ordinary appeal. ― The appeal shall be taken within fifteen (15)
days from the notice of the judgment or final order appealed from. Where a record
on appeal is required, the appellant shall file a notice of appeal and a record on appeal
within thirty (30) days from the notice of judgment or final order.

The period to appeal shall be interrupted by a timely motion for new trial or
reconsideration. No motion for extension of time to file a motion for new trial or
reconsideration shall be allowed. (emphasis supplied)

Based on the foregoing, an appeal should be taken within 15 days from the notice of
judgment or final order appealed from. A final judgment or order is one that finally
disposes of a case, leaving nothing more for the court to do with respect to it. It is an
adjudication on the merits which, considering the evidence presented at the trial,
declares categorically what the rights and obligations of the parties are; or it may be an
order or judgment that dismisses an action.12

As already mentioned, petitioners argue that the order of July 1, 1998 denying their
motion for reconsideration should be construed as the "final order," not the February 12,
1998 order which dismissed their complaint. Since they received their copy of the denial
of their motion for reconsideration only on July 22, 1998, the 15-day reglementary
period to appeal had not yet lapsed when they filed their notice of appeal on July 27,
1998.

What therefore should be deemed as the "final order," receipt of which triggers the start
of the 15-day reglementary period to appeal ¾ the February 12, 1998 order dismissing
the complaint or the July 1, 1998 order dismissing the MR?

In the recent case of Quelnan v. VHF Philippines, Inc.,13 the trial court declared
petitioner Quelnan non-suited and accordingly dismissed his complaint. Upon receipt of
the order of dismissal, he filed an omnibus motion to set it aside. When the omnibus
motion was filed, 12 days of the 15-day period to appeal the order had lapsed. He later
on received another order, this time dismissing his omnibus motion. He then filed his
notice of appeal. But this was likewise dismissed ― for having been filed out of time.

The court a quo ruled that petitioner should have appealed within 15 days after the
dismissal of his complaint since this was the final order that was appealable under the
Rules. We reversed the trial court and declared that it was the denial of the motion for
reconsideration of an order of dismissal of a complaint which constituted the final
order as it was what ended the issues raised there.

This pronouncement was reiterated in the more recent case of Apuyan v. Haldeman et
al.14 where we again considered the order denying petitioner Apuyan’s motion for
reconsideration as the final order which finally disposed of the issues involved in the
case.
Based on the aforementioned cases, we sustain petitioners’ view that the order dated
July 1, 1998 denying their motion for reconsideration was the final order contemplated
in the Rules.

We now come to the next question: if July 1, 1998 was the start of the 15-day
reglementary period to appeal, did petitioners in fact file their notice of appeal on time?

Under Rule 41, Section 3, petitioners had 15 days from notice of judgment or final
order to appeal the decision of the trial court. On the 15th day of the original appeal
period (March 18, 1998), petitioners did not file a notice of appeal but instead opted to
file a motion for reconsideration. According to the trial court, the MR only interrupted the
running of the 15-day appeal period.15 It ruled that petitioners, having filed their MR on
the last day of the 15-day reglementary period to appeal, had only one (1) day left to file
the notice of appeal upon receipt of the notice of denial of their MR. Petitioners,
however, argue that they were entitled under the Rules to a fresh period of 15 days
from receipt of the "final order" or the order dismissing their motion for reconsideration.

In Quelnan and Apuyan, both petitioners filed a motion for reconsideration of the

decision of the trial court. We ruled there that they only had the remaining time of the
15-day appeal period to file the notice of appeal. We consistently applied this rule in
similar cases,16 premised on the long-settled doctrine that the perfection of an appeal in
the manner and within the period permitted by law is not only mandatory but also
jurisdictional.17 The rule is also founded on deep-seated considerations of public policy
and sound practice that, at risk of occasional error, the judgments and awards of courts
must become final at some definite time fixed by law. 18

Prior to the passage of BP 129, Rule 41, Section 3 of the 1964 Revised Rules of Court
read:

Sec. 3. How appeal is taken. — Appeal maybe taken by serving upon the adverse
party and filing with the trial court within thirty (30) days from notice of order or
judgment, a notice of appeal, an appeal bond, and a record on appeal. The time
during which a motion to set aside the judgment or order or for new trial has been
pending shall be deducted, unless such motion fails to satisfy the requirements of Rule
37.

But where such motion has been filed during office hours of the last day of the period
herein provided, the appeal must be perfected within the day following that in which the
party appealing received notice of the denial of said motion. 19 (emphasis supplied)

According to the foregoing provision, the appeal period previously consisted of 30 days.
BP 129, however, reduced this appeal period to 15 days. In the deliberations of the
Committee on Judicial Reorganization20 that drafted BP 129, the raison d’ etre behind
the amendment was to shorten the period of appeal 21 and enhance the efficiency and
dispensation of justice. We have since required strict observance of this reglementary
period of appeal. Seldom have we condoned late filing of notices of appeal, 22 and only
in very exceptional instances to better serve the ends of justice.

In National Waterworks and Sewerage Authority and Authority v. Municipality of

Libmanan,23 however, we declared that appeal is an essential part of our judicial system
and the rules of procedure should not be applied rigidly. This Court has on occasion
advised the lower courts to be cautious about not depriving a party of the right to appeal
and that every party litigant should be afforded the amplest opportunity for the proper
and just disposition of his cause, free from the constraint of technicalities.

In de la Rosa v. Court of Appeals,24 we stated that, as a rule, periods which require
litigants to do certain acts must be followed unless, under exceptional circumstances, a
delay in the filing of an appeal may be excused on grounds of substantial justice. There,
we condoned the delay incurred by the appealing party due to strong considerations of
fairness and justice.

In setting aside technical infirmities and thereby giving due course to tardy appeals, we
have not been oblivious to or unmindful of the extraordinary situations that merit liberal
application of the Rules. In those situations where technicalities were dispensed with,
our decisions were not meant to undermine the force and effectivity of the periods set
by law. But we hasten to add that in those rare cases where procedural rules were not
stringently applied, there always existed a clear need to prevent the commission of a
grave injustice. Our judicial system and the courts have always tried to maintain a
healthy balance between the strict enforcement of procedural laws and the guarantee
that every litigant be given the full opportunity for the just and proper disposition of his
cause.25

The Supreme Court may promulgate procedural rules in all courts. 26 It has the sole
prerogative to amend, repeal or even establish new rules for a more simplified and
inexpensive process, and the speedy disposition of cases. In the rules governing
appeals to it and to the Court of Appeals, particularly Rules 42, 27 4328 and 45,29 the
Court allows extensions of time, based on justifiable and compelling reasons, for parties
to file their appeals. These extensions may consist of 15 days or more.

To standardize the appeal periods provided in the Rules and to afford litigants fair
opportunity to appeal their cases, the Court deems it practical to allow a fresh period of
15 days within which to file the notice of appeal in the Regional Trial Court, counted
from receipt of the order dismissing a motion for a new trial or motion for
reconsideration. 30

Henceforth, this "fresh period rule" shall also apply to Rule 40 governing appeals from
the Municipal Trial Courts to the Regional Trial Courts; Rule 42 on petitions for review
from the Regional Trial Courts to the Court of Appeals; Rule 43 on appeals from quasi-
judicial agencies31 to the Court of Appeals and Rule 45 governing appeals
by certiorari to the Supreme Court.32 The new rule aims to regiment or make the appeal
period uniform, to be counted from receipt of the order denying the motion for new trial,
motion for reconsideration (whether full or partial) or any final order or resolution.

We thus hold that petitioners seasonably filed their notice of appeal within the fresh
period of 15 days, counted from July 22, 1998 (the date of receipt of notice denying their
motion for reconsideration). This pronouncement is not inconsistent with Rule 41,
Section 3 of the Rules which states that the appeal shall be taken within 15 days from
notice of judgment or final order appealed from. The use of the disjunctive word "or"
signifies disassociation and independence of one thing from another. It should, as a
rule, be construed in the sense in which it ordinarily implies. 33 Hence, the use of "or" in
the above provision supposes that the notice of appeal may be filed within 15 days from
the notice of judgment or within 15 days from notice of the "final order," which we
already determined to refer to the July 1, 1998 order denying the motion for a new trial
or reconsideration.

Neither does this new rule run counter to the spirit of Section 39 of BP 129 which
shortened the appeal period from 30 days to 15 days to hasten the disposition of cases.
The original period of appeal (in this case March 3-18, 1998) remains and the
requirement for strict compliance still applies. The fresh period of 15 days becomes
significant only when a party opts to file a motion for new trial or motion for
reconsideration. In this manner, the trial court which rendered the assailed decision is
given another opportunity to review the case and, in the process, minimize and/or rectify
any error of judgment. While we aim to resolve cases with dispatch and to have
judgments of courts become final at some definite time, we likewise aspire to deliver
justice fairly.

In this case, the new period of 15 days eradicates the confusion as to when the 15-day
appeal period should be counted – from receipt of notice of judgment (March 3, 1998) or
from receipt of notice of "final order" appealed from (July 22, 1998).

To recapitulate, a party litigant may either file his notice of appeal within 15 days from
receipt of the Regional Trial Court’s decision or file it within 15 days from receipt of the
order (the "final order") denying his motion for new trial or motion for reconsideration.
Obviously, the new 15-day period may be availed of only if either motion is filed;
otherwise, the decision becomes final and executory after the lapse of the original
appeal period provided in Rule 41, Section 3.

Petitioners here filed their notice of appeal on July 27, 1998 or five days from receipt of
the order denying their motion for reconsideration on July 22, 1998. Hence, the notice of
appeal was well within the fresh appeal period of 15 days, as already discussed. 34

We deem it unnecessary to discuss the applicability of Denso (Philippines), Inc. v.

IAC35 since the Court of Appeals never even referred to it in its assailed decision.
WHEREFORE, the petition is hereby GRANTED and the assailed decision of the Court
of Appeals REVERSED and SET ASIDE. Accordingly, let the records of this case be
remanded to the Court of Appeals for further proceedings.

No costs.

SO ORDERED.
Sumbilla vs. Matrix Finance Corporation, G.R. No. 197582, June 29, 2015

G.R. No. 197582               June 29, 2015

JULIE S. SUMBILLA, Petitioner,
vs.
MATRIX FINANCE CORPORATION, Respondent.

DECISION

VILLARAMA, JR., J.:

In this petition for review on certiorari under Rule 45 of the 1997 Rules of Civil
Procedure, as amended, petitioner Julie S. Sumbilla seeks the liberal application of
procedural rules to correct the penalty imposed in the Decision 1 dated January 14, 2009
of the Metropolitan Trial Court (MeTC) of Makati City, Branch 67, in Criminal Case Nos.
321169 to 321174 which had already attained finality in view of petitioner's failure to
timely file an appeal.

The antecedent facts are not disputed.

Petitioner obtained a cash loan . from respondent Matrix Finance Corporation. As partial
payment for her loan, petitioner issued Philippine Business Bank Check Nos. 0032863
to 0032868. The six checks have a uniform face value of ₱6,667.00 each.

Upon maturity, the six checks were presented by respondent to the drawee bank for
payment. However, all the checks were dishonored on the ground that they were drawn
against a closed account.

Petitioner's refusal to heed the demand letter of respondent for the payment of the face
value of the dishonored checks culminated in her indictment for six counts of violation of
Batas Pambansa Blg. 22 (BP 22). The cases were docketed as Criminal Case Nos.
321169 to 321174, and were raffled off to Branch 67, MeTC of Makati.

In a Decision dated January 14, 2009, the MeTC found petitioner criminally and civilly
liable for the issuance of the six rubber checks. For each count of violation of BP 22
involving a check with a face value of ₱6,667.00, the MeTC meted petitioner a penalty
of fine amounting to ₱80,000.00, with subsidiary imprisonment. Her civil liability for the
six consolidated cases was computed in the total amount of ₱40,002.00. The fallo of the
decision provides:

WHEREFORE, the Court renders judgment finding accused Julie S. Sumbilla GUILTY
beyond reasonable doubt of six counts of violation of Batas Pambansa Big. 22. For
each count, she is sentenced to pay n. fine of ₱80,000.00, with subsidiary imprisonment
in case of non-payment. She is likewise ORDERED to indemnify private complainant
Matrix Finance Corporation the total amount of ₱40,002.00 plus 12% annual legal
interest from September 21, 2002 until full payment.

No costs.

SO ORDERED.2 (Emphasis and underscoring added.)

Instead of filing a Notice of Appeal, petitioner opted to file a Motion for

Reconsideration3 before the MeTC. The Motion was denied in the Order4 dated April 17,
2009 being a pleading barred under the Revised Rules on Summary Procedure. The
MeTC further noted that the prohibited motion for reconsideration filed by the petitioner
will not suspend the running of the period to perfect an appeal.

Subsequently, the Notice of Appeal filed by petitioner was also denied for having been
filed beyond the 15-day reglementary period.

With the denial5 of her Motion for Reconsideration of the Order denying her appeal,
petitioner filed a petition for certiorari6 under Rule 65 of the Rules which was docketed
as SCA No. 09-1125 and raffled off to Branch 61, Regional Trial Court (RTC) of Makati
City.

Ruling that the MeTC did not act with grave abuse of discretion in denying the Notice of
Appeal filed by petitioner, the RTC dismissed 7 the petition for certiorari. The Motion for
Reconsideration8 filed by petitioner met the same fate of dismissal. 9

Petitioner elevated the case to the Court of Appeals (CA) via a petition for
review10 under Rule 42 of the Rules of Court. The CA, however, ruled that an ordinary
appeal under Section 2(a), Rule 41 of the Rules of Court is the correct remedy under
the circumstances because the RTC rendered the decision in the petition for certiorari
under Rule 65 of the Rules of Court in the exercise of its original jurisdiction. 11

On July 27, 2011, after she received a copy of the June 28, 2011 Resolution 12 of the CA
denying her Motion for Reconsideration,13 petitioner filed a motion for extension of time
to file the instant petition.14

On August 11, 2011, petitioner filed her Petition for Review on Certiorari15 within the
period of extension granted in our Resolution 16 dated September 7, 2011. She ascribed
to the CA a sole error:

THE HONORABLE COURT OF APPEALS ERRED IN DENYING THE PETITION FOR

CERTIORARI ON TECHNICALITY AND NOT EXERCISING ITS POSITIVE DUTY OF
GIVING DUE IMPORTANCE ON THE SUBSTANTIVE AND CONSTITUTIONAL
RIGHTS OF THE PETITIONER DESPITE A CLEAR PRESENCE OF SUCH
VIOLATION OF LAW AS DEFINED BY PETITIONER IN HER PETITION WHICH
COULD HAVE MERIT A FULL DECISION BY A HIGHER COURT. 17
Petitioner acknowledged18 the procedural lapse of filing a petition for certiorari under
Rule 65 of the Rules of Court instead of an ordinary appeal before the CA. She also
fully grasped19 the effects of her erroneous filing of the Motion for Reconsideration to
challenge the MeTC Decision finding her guilty of six counts of violation of BP 22.
Knowing that her conviction had already attained finality, petitioner seeks the relaxation
of the rules of procedure so that the alleged erroneous penalty imposed by the MeTC
can be modified to make it in accord with existing law and jurisprudence.

Respondent countered that the right to appeal being a mere statutory privilege can only
be exercised in accordance with the rules, and the lost appeal cannot be resurrected
through the present remedial recourse of a petition for review on certiorari.

The main issue to be resolved is whether the penalty imposed in the MeTC Decision
dated January 14, 2009, which is already final and executory, may still be modified.

The petition is meritorious.

Petitioner does not dispute the finality of the Decision dated January 14, 2009 in
Criminal Case Nos. 321169 to 321174 rendered by the MeTC, finding her guilty beyond
reasonable doubt of six counts of violation of BP 22. For every count of violation of BP
22 involving a check with a face value of ₱6,667.00, petitioner was meted a penalty of
fine of PS0,000.00, with subsidiary imprisonment in case of non-payment. She assails
the penalty for being out of the range of the penalty prescribed in Section 1 of BP 22,
and the subsidiary imprisonment to be violative of Administrative Circular Nos. 12-2000
and 13-2001, and the holdings in Vaca v. Court of Appeals. 20 Petitioner asserted that
the maximum penalty of fine that can be imposed against her in each count of violation
of BP 22 is double the amount of the face value of the dishonored check only or
₱13,334.00. The fine of PS0,000.00 for each count is thus excessive. She further
implied that the imposition of subsidiary imprisonment contravened Section 20 of Article
III of the Constitution which proscribes imprisonment as a punishment for not paying a
debt.

Section 1 of BP 22 provides:

SECTION 1. Checks without sufficient funds. - Any person who makes or draws and
issues any check to apply on account or for value, knowing at the time of issue that he
does not have sufficient funds in or credit with the drawee bank for the payment of such
check in full upon its presentment, which check is subsequently dishonored by the
drawee bank for insufficiency of funds or credit or would have been dishonored for the
same reason had not the drawer, without any valid reason, ordered the bank to stop
payment, shall be punished by imprisonment of not less than thirty days but not more
than one (1) year or by a fine of not less than but not more than double the amount of
the check which fine shall in no case exceed Two hundred thousand pesos, or both
such fine and imprisonment at the discretion of the court.

x x x x (Emphasis supplied)
The court may thus impose any of the following alternative penalties against an accused
found criminally liable for violating BP 22: (1) imprisonment of not less than 30 days, but
not more than one year; or (2) a fine of not less or more than double the amount of the
check, and shall in no case exceed ₱200,000.00; or (3) both such fine and
imprisonment. The discretion to impose a single (imprisonment or fine) or conjunctive
(fine and imprisonment) penalty pertains to the court.

If fine alone is the penalty imposed, the maximum shall be double the amount of the
face value of the rubber check which in no case should exceed ₱200,000.00.

Here, the face value of each of the six checks that bounced is ₱6,667.00. Under Section
1 of BP 22, the maximum penalty of fine that can be imposed on petitioner is only 1!
13,334.00, or the amount double the face value of each check. Indubitably, the MeTC
meted the petitioner a penalty of fine way beyond the maximum limits prescribed under
Section 1 of BP 22. The fine of ₱80,000.00 is more than 11 times the amount of the
face value of each check that was dishonored.

Instead of using as basis the face value of each check (₱6,667.00), the MeTC
incorrectly computed the amount of fine using the total face value of the six checks
(₱40,002.00). The same error occurred in Abarquez v. Court of Appeals, 21 where we
modified the penalty of fine imposed in one of the consolidated cases therein (Criminal
Case No. D-8137) to only double the amount of the face value of the subject check.

Unfortunately, in the present case, the MeTC Decision is already final and executory
after petitioner failed to timely file a Notice of Appeal. Under the doctrine of finality and
immutability of judgments, a decision that has acquired finality becomes immutable and
unalterable and may no longer be modified in any respect, even if the modification is
meant to correct erroneous conclusions of fact or law, and whether it will be made by
the court that rendered it or by the highest court of the land. 22 Upon finality of the
judgment, the Court loses its jurisdiction to amend, modify or alter the same. 23

Nonetheless, the immutability of final judgments is not a hard and fast rule. The Court
has the power and prerogative to suspend its own rules and to exempt a case from their
operation if and when justice requires it.24 After all, procedural rules were conceived to
aid the attainment of justice. If a stringent application of the rules would hinder rather
than serve the demands of substantial justice, the former must yield to the latter,25 as
specifically mandated under Section 2, Rule 1 of the Rules of Court:

SEC. 2. Construction. - These rules shall be liberally construed in order to promote their
object and to assist the parties in obtaining just, speedy, and inexpensive determination
of every action and proceeding.

Consequently final and executory judgments were reversed when the interest of
substantial justice is at stake and where special and compelling reasons called for such
actions.26 In Barnes v. Judge Padilla,27 we declared as follows:
x x x a final and executory judgment can no longer be attacked by any of the parties or
be modified, directly or indirectly, even by the highest court of the land.

However, this Court has relaxed this rule in order to serve substantial justice
considering (a) matters of life, liberty, honor or property, (b) the existence of special or
compelling circumstances, (c) the merits of the case, (d) a cause not entirely attributable
to the fault or negligence of the party favored by the suspension of the rules, (e) a lack
of any showing that the review sought is merely frivolous and dilatory, and (f) the other
party will not be unjustly prejudiced thereby.

Invariably, rules of procedure should be viewed as mere tools designed to facilitate the
attainment of justice. Their strict and rigid application, which would result in
technicalities that tend to frustrate rather than promote substantial justice, must always
be eschewed. Even the Rules of Court reflects this principle. The power to suspend or
even disregard rules can be so pervasive and compelling as to alter even that which this
Court itself had already declared to be final.

The judgment of conviction was already final in Rigor v. The Superintendent, New
Bilibid Prison28 when the Court corrected the minimum and maximum periods of the
indeterminate sentence imposed on the accused which exceeded the period of the
imposable penalty. The correction was made in the interest of justice and only for the
penalty imposed against petitioner to be in accordance with law and nothing else. 29

Both People v. Gatward,30 and People v. Barro31 cited the duty and inherent power of
the Court to correct the erroneous penalties meted on the accused in a final and
executory judgments, and make it conform to the penalty prescribed by law.

The interest of justice and the duty and inherent power of the Court were the reasons
anchored upon in Estrada v. People32 in ruling that it is befitting to modify the penalty
imposed on petitioner even though the notice of appeal was belatedly filed.

In Almuete v. People,33 the penalty imposed upon the petitioner which is outside the
range of the penalty prescribed by law was duly corrected even if it was already final on
the ground of substantial justice, thus:

In this case, it cannot be gainsaid that what is involved is the life and liberty of
petitioner.1awp++i1 If his penalty of imprisonment remains uncorrected, it would be not
conformable with law and he would be made to suffer the penalty of imprisonment of 18
years, 2 months and 21 days of reclusion temporal as minimum, to 40 years of reclusion
perpetua, as maximum, which is outside the range of the penalty prescribed by law.
Contrast this to the proper imposable penalty the minimum of which should only be
within the range of 2 years, 4 months and 1 day to 6 years of prision correccional, while
the maximum should only be anywhere between 11 years, 8 months and 1 day of
prision mayor to 13 years of reclusion temporal. Substantial justice demands that we
suspend our Rules in this case. "It is always within the power of the court to suspend its
own [R]ules or except a particular case from its operation, whenever the purposes of
justice require. x x x Indeed, when there is a strong showing that a grave miscarriage of
justice would result from the strict application of the Rules, this Court will not hesitate to
relax the same in the interest of substantial justice." Suspending the Rules is justified
"where there exist strong compelling reasons, such as serving the ends of justice and
preventing a miscarriage thereof." After all, the Court's "primordial and most important
duty is to render justice x x x."34 All the accused in Almuete v. People,35 People v.
Barro,36 Estrada v. People,37 and Rigor v. The Superintendent, New Bilibid
Prison,38 failed to perfect their appeal on their respective judgments of conviction, but
the Court corrected the penalties imposed, notwithstanding the finality of the decisions
because they were outside the range of penalty prescribed by law. There is, thus, no
reason to deprive the petitioner in the present case of the relief afforded the accused in
the cited cases. Verily, a sentence which imposes upon the defendant in a criminal
prosecution a penalty in excess of the maximum which the court is authorized by law to
impose for the offense for which the defendant was convicted, is void for want or excess
of jurisdiction as to the excess.39

Here, the penalty imposed is obviously out of range of that prescribed in Section 1 of BP
22. Moreover, since the term of the subsidiary imprisonment is based on the total
amount of the fine or one day for each amount equivalent to the highest minimum wage
rate prevailing in the Philippines at the time of the rendition of judgment of conviction by
the trial court,40 if petitioner is insolvent, she will suffer a longer prison sentence.
Substantial justice dictates that the penalty of fine meted on the petitioner be
accordingly corrected within the maximum limits prescribed under Section 1 of BP 22.
Hence, the penalty of fine of ₱80,000.00 meted on petitioner in Criminal Case Nos.
321169 to 321174 for each count of violation of BP 22 is corrected to double the face
value of each rubber check involved or ₱13,334.00 only.

Anent the alleged violation of Vaca v. Court of Appeals, 41 and Administrative Circular
No. 12-200042 that supposedly limited to fine the imposable penalty for violation of BP
22, and without any subsidiary imprisonment, suffice it to quote the clarifications in
Administrative Circular No. 13-2001, issued on February 14, 2001:

x x x queries have been made regarding the authority of Judges to

1. Impose the penalty of imprisonment for violations of Batas Pambansa Big. 22;
and

2. Impose subsidiary imprisonment in the event that the accused, who is found
guilty of violating the provisions of B. P Big. 2 2, is unable to pay the fine which
he is sentenced to pay considering that Administrative Circular No. 12-2000
adopted the rulings in Eduardo Vaca v. Court of Appeals (G.R. No. 131714, 16
November 1998, 298 SCRA 656) and Rosa Lim v. People of the Philippines
(G.R. No. 130038, 18 September 2000) as a policy of the Supreme Court on the
matter of the imposition of penalties for violations of B. P Big. 22, without
mentioning whether subsidiary imprisonment could be resorted to in case of the
accused's inability to pay the fine.
The clear tenor and intention of Administrative Circular No. 12-2000 is not to remove
imprisonment as an alternative penalty, but to lay down a rule of preference in the
application of the penalties provided for in B.P. Big. 22.

The pursuit of this purpose clearly does not foreclose the possibility of imprisonment for
violators of B.P. Big. 22. Neither does it defeat the legislative intent behind the law.

Thus, Administrative Circular No. 12-2000 establishes a rule of preference in the

application of the penal provisions of B.P. Big. 22 such that where the circumstances of
both the offense and the offender clearly indicate good faith or a clear mistake of fact
without taint of negligence, the imposition of a fine alone should be considered as the
more appropriate penalty. Needless to say, the determination of whether the
circumstances warrant the imposition of a fine alone rests solely upon the Judge.
Should the Judge decide that imprisonment is the more appropriate penalty,
Administrative Circular No. 12-2000 ought not be deemed a hindrance.

It is, therefore, understood that

1 . Administrative Circular 12-2000 does not remove imprisonment as an alternative

penalty for violations of B.P Big. 22;

xxxx

3. Should only a fine be imposed and tile accused be unable to pay the fine, there is no
legal obstacle to the application of the Revised Penal Code provisions on subsidiary
imprisonment.

x x x x43 (Italics in the original; emphasis added)

In like manner, the issue of whether BP 22 violates Section 20 of Article III of the
Constitution which proscribes imprisonment as a punishment for not paying a debt was
already settled in the negative in Lozano v. Martinez. 44 Pertinent portions of the
Decision in the Lozano case read:

Has BP 22 transgressed the constitutional inhibition against imprisonment for debt? x x

x

The gravamen of the offense punished by BP 22 is the act of making and issuing a
worthless check or a check that is dishonored upon its presentation for
payment.1âwphi1 It is not the non-payment of an obligation which the law punishes.
The law is not intended or designed to coerce a debtor to pay his debt. The thrust of the
law is to prohibit, under pain of penal sanctions, the making of worthless checks and
putting them in circulation. Because of its deleterious effects on the public interest, the
practice is proscribed by the law. The law punishes the act not as an offense against
property, but an offense against public order.
 xxxx

In sum, we find the enactment of BP 22 a valid exercise of the police power and is not
repugnant to the constitutional inhibition against imprisonment for debt. 45 (Emphasis
added) WHEREFORE, the petition is GRANTED. In the interest of justice, the Decision
dated January 14, 2009 of Branch 67, Metropolitan Trial Court of Makati City in Criminal
Case Nos. 321169 to 321174 is MODIFIED.

Accused Julie S. Sumbilla is hereby found GUILTY beyond reasonable doubt of six
counts of violation of Batas Pambansa Big. 22, and is sentenced to pay a FINE of
THIRTEEN THOUSAND AND THREE HUNDRED THIRTY-FOUR PESOS
(₱13,334.00) for each count, and to indemnify private complainant Matrix Finance
Corporation the total amount of ₱40,002.00 plus 6% interest per annum from
September 21, 2002 until full payment.

No pronouncement as to costs.

SO ORDERED.
Macapagal-Arroyo vs. People, G.R. No. 220598, July 19, 2016

G.R. No. 220598, July 19, 2016

GLORIA MACAPAGAL-ARROYO, Petitioner, v. PEOPLE OF THE PHILIPPINES AND

THE SANDIGANBAYAN (FIRST DIVISION), Respondents.

G.R. No. 220953

BENIGNO B. AGUAS, Petitioner, v. SANDIGANBAYAN (FIRST

DIVISION), Respondent.

DECISION

BERSAMIN, J.:

We resolve the consolidated petitions for certiorari separately brought to assail and

annul the resolutions issued on April 6, 2015 1 and September 10, 2015,2 whereby
the Sandiganbayan respectively denied their demurrer to evidence, and their motions
for reconsideration, asserting such denials to be tainted with grave abuse of discretion
amounting to lack or excess of jurisdiction.

Antecedents

On July 10, 2012, the Ombudsman charged in the Sandiganbayan former President

Gloria Macapagal-Arroyo (GMA); Philippine Charity Sweepstakes Office (PCSO)
Budget and Accounts Officer Benigno Aguas; PCSO General Manager and Vice
Chairman Rosario C. Uriarte; PCSO Chairman of the Board of Directors Sergio O.
Valencia; Members of the PCSO Board of Directors, namely: Manuel L. Morato, Jose R.
Taruc V, Raymundo T. Roquero, and Ma. Fatima A.S. Valdes; Commission on Audit
(COA) Chairman Reynaldo A. Villar; and COA Head of Intelligence/Confidential Fund
Fraud Audit Unit Nilda B. Plaras with plunder. The case was docketed as Criminal Case
No. SB-12-CRM-0174 and assigned to the First Division of the Sandiganbayan.

The information3 reads:chanRoblesvirtualLawlibrary
The undersigned Assistant Ombudsman and Graft Investigation and Prosecution Officer
III, Office of the Ombudsman, hereby accuse GLORIA MACAPAGAL-ARROYO,
ROSARIO C. URIARTE, SERGIO O. VALENCIA, MANUEL L. MORATO, JOSE R.
TARUC V, RAYMUNDO T. ROQUERO, MA. FATIMA A.S. VALDES, BENIGNO B.
AGUAS, REYNALDO A. VILLAR and NILDA B. PLARAS, of the crime of PLUNDER, as
defined by, and penalized under Section 2 of Republic Act (R.A.) No. 7080, as amended
by R.A. No. 7659, committed, as follows:

That during the period from January 2008 to June 2010 or sometime prior or
subsequent thereto, in Quezon City, Philippines, and within the jurisdiction of this
Honorable Court, accused GLORIA MACAPAGAL-ARROYO, then the President of the
Philippines, ROSARIO C. URIARTE, then General Manager and Vice Chairman,
SERGIO O. VALENCIA, then Chairman of the Board of Directors, MANUEL L.
MORATO, JOSE R. TARUC V, RAYMUNDO T. ROQUERO, MA. FATIMA A.S.
VALDES, then members of the Board of Directors, BENIGNO B. AGUAS, then Budget
and Accounts Manager, all of the Philippine Charity Sweepstakes Office (PCSO),
REYNALDO A. VILLAR, then Chairman, and NILDA B. PLARAS, then Head of
Intelligence/Confidential Fund Fraud Audit Unit, both of the Commission on Audit, all
public officers committing the offense in relation to their respective offices and taking
undue advantage of their respective official positions, authority, relationships,
connections or influence, conniving, conspiring and confederating with one another, did
then and there willfully, unlawfully and criminally amass, accumulate and/or acquire.
Directly or indirectly, ill-gotten wealth in the aggregate amount or total value of THREE
HUNDRED SIXTY FIVE MILLION NINE HUNDRED NINETY SEVEN THOUSAND
NINE HUNDRED FIFTEEN PESOS (PHP365,997,915.00), more or less, through any or
a combination or a series of overt or criminal acts, or similar schemes or means,
described as follows:

(a) diverting in several instances, funds from the operating budget of PCSO to its
Confidential/Intelligence Fund that could be accessed and withdrawn at any time
with minimal restrictions, and converting, misusing, and/or illegally conveying or
transferring the proceeds drawn from said fund in the aforementioned sum, also
in several instances, to themselves, in the guise of fictitious expenditures, for
their personal gain and benefit;
(b) raiding the public treasury by withdrawing and receiving, in several instances, the
above-mentioned amount from the Confidential/Intelligence Fund from PCSO's
accounts, and or unlawfully transferring or conveying the same into their
possession and control through irregularly issued disbursement vouchers and
fictitious expenditures; and
(c) taking advantage of their respective official positions, authority, relationships,
connections or influence, in several instances, to unjustly enrich themselves in
the aforementioned sum, at the expense of, and the damage and prejudice of the
Filipino people and the Republic of the Philippines.

CONTRARY TO LAW.cralawred
By the end of October 2012, the Sandiganbayan already acquired jurisdiction over
GMA, Valencia, Morato and Aguas. Plaras, on the other hand, was able to secure a
temporary restraining order (TRO) from this Court in Plaras v. Sandiganbayan docketed
as G.R. Nos. 203693-94. Insofar as Roquero is concerned,
the Sandiganbayan acquired jurisdiction as to him by the early part of 2013. Uriarte and
Valdes remained at large.

Thereafter, several of the accused separately filed their respective petitions for bail. On
June 6, 2013, the Sandiganbayan granted the petitions for bail of Valencia, Morato and
Roquero upon finding that the evidence of guilt against them was not strong.4 In the
case of petitioners GMA and Aguas, the Sandiganbayan, through the resolution dated
November 5, 2013, denied their petitions for bail on the ground that the evidence of guilt
against them was strong.5 The motions for reconsideration filed by GMA and Aguas
were denied by the Sandiganbayan on February 19, 2014.6 Accordingly, GMA assailed
the denial of her petition for bail in this Court, but her challenge has remained pending
and unresolved to date.

Personal jurisdiction over Taruc and Villar was acquired by the Sandiganbayan in 2014.
Thereafter, said accused sought to be granted bail, and their motions were granted on
different dates, specifically on March 31, 20147 and May 9, 2014,8 respectively.

The case proceeded to trial, at which the State presented Atty. Aleta Tolentino as its
main witness against all the accused. The Sandiganbayan rendered the following
summary of her testimony and evidence in its resolution dated November 5, 2013
denying the petitions for bail of GMA and Aguas, to wit:chanRoblesvirtualLawlibrary
She is a certified public accountant and a lawyer. She is a member of the Philippine
Institute of Certified Public Accountants and the Integrated Bar of the Philippines. She
has been a CPA for 30 years and a lawyer for 20 years. She has practiced accountancy
and law. She became accounting manager of several companies. She has also taught
subjects in University of Santo Tomas, Manuel L. Quezon University, Adamson
University and the Ateneo de Manila Graduate School. She currently teaches
Economics, Taxation and Land Reform.

Presently, she is a Member of the Board of Directors of the PCSO. The Board
appointed her as Chairman of an Audit Committee. The audit review proceeded when
she reviewed the COA Annual Reports of the PCSO for 2006, 2007, 2008 and 2009
(Exhibits "D", "E", "F" and "G", respectively), and the annual financial statements
contained therein for the years 2005 to 2009. The reports were given to them by the
COA. These are transmitted to the PCSO annually after the subject year of audit.

One of her major findings was that the former management of the PCSO was
commingling the charity fund, the prize fund and the operating fund. By commingling
she means that the funds were maintained in only one main account. This violates
Section 6 of Republic Act 1169 (PCSO Charter) and generally accepted accounting
principles.

The Audit Committee also found out that there was excessive disbursement of the
Confidential and Intelligence Fund (CIF). There were also excessive disbursements for
advertising expenses. The internal audit department was also merged with the budget
and accounting department, which is a violation of internal audit rules.

There was excessive disbursement of the CIF because the PCSO was given only P10
million in 2002, i.e. P5 million for the Office of the Chairman and P5 million for the Office
of the General Manager. Such allocation was based on the letters of then Chairman
Lopez (Exh. "I") and then General Manager Golpeo (Exh. "J"), asking for P5 million
intelligence fund each. Both were dated February 21, 2000, and sent to then President
Estrada, who approved them. This allocation should have been the basis for the original
allocation of the CIF in the PCSO, but there were several subsequent requests made by
the General Manager during the time of, and which were approved by, former President
Arroyo.

The allocation in excess of P10 million was in violation of the PCSO Charter. PCSO did
not have a budget for this. They were working on a deficit from 2004 to 2009. The
charter allows only 15% of the revenue as operating fund, which was already exceeded.
The financial statements indicate that they were operating on a deficit in the years 2006
to 2009.

It is within the power of the General Manager to ask for additional funds from the
President, but there should be a budget for it. The CIF should come from the operating
fund, such that, when there is no more operating fund, the other funds cannot be used.

The funds were maintained in a commingled main account and PCSO did not have a
registry of budget utilization. The excess was not taken from the operating fund, but
from the prize fund and the charity fund.

In 2005, the deficit was P916 million; in 2006, P1,000,078,683.23. One of the causes of
the deficit for 2006 was the CIF expense of P215 million, which was in excess of the
approved allocation of P10 million. The net cash provided by operating expenses in
2006 is negative, which means that there were more expenses than what was received.

In the 2007 COA report, it was found that there was still no deposit to the prize and
charity funds. The COA made a recommendation regarding the deposits in one main
account. There were also excessive disbursements of CIF amounting to P77,478,705.

She received a copy of the PCSO corporate operating budget (COB) for the year 2008
in 2010 because she was already a member of its Board of Directors. The 2008
approved COB has a comparative analysis of the actual budget for 2007 (Exh. "K"). It is
stated there that the budget for CIF in 2007 is only P25,480,550. But the financial
statements reflect P77 million. The budget was prepared and signed by then PCSO
General Manager Rosario Uriarte. It had accompanying Board Resolution No. 305,
Series of 2008, which was approved by then Chairperson Valencia, and board members
Valdes, Morato, Domingo, and attested to by Board Secretary Atty. Ronald T. Reyes.

In the 2008 COA report, it was noted that there was still no deposit to the prize and
charity funds, adverted in the 2007 COA report. There was already a recommendation
by the COA to separate the deposits or funds in 2007. But the COA noted that this was
not followed. The financial statements show the Confidential and the Extra-Ordinary
Miscellaneous Expenses account is P38,293,137, which is more than the P10 million
that was approved.

In the Comparative Income Statement (Exh. "K"), the 2008 Confidential/Intelligence

Expense budget was approved for P28 million. The Confidential and Extra-Ordinary
Miscellaneous Expenses is the account being used for confidential and intelligence
expenses. The amount in the financial statements is over the budgeted amount of P28
million. Further, the real disbursement is more than that, based on a summary of
expenditures she had asked the treasurer to prepare.

In the Comparative Income Statement for 2009 Budget against the 2008 Actual Budget
(Exh. "L"), the budget for CIF and expenses was P60 million.

In the 2009 COA report, it was noted that there was still no deposit to the prize and
charity funds, despite the instruction or recommendation of COA. The funds were still
deposited in one account. The COA observation in 2007 states that there is juggling or
commingling of funds.

After she had concluded the audit review, she reported her findings to the Board of
Directors in one of their executive meetings. The Board instructed her to go in-depth in
the investigation of the disbursements of CIF.

The Audit Committee also asked Aguas why there were disbursements in excess of
P10 million. He explained that there were board resolutions confirming additional CIF
which were approved by former President Arroyo. Aguas mentioned this in one of their
meetings with the directors and corporate secretary. The board secretary, Atty. Ed
Araullo, gave them the records of those resolutions.

In the records that Araullo submitted to her, it appears that Uriarte would ask for
additional CIF, by letter and President Arroyo approves it by affixing her signature on
that same letter-request. There were seven letters or memoranda to then President
Arroyo, with the subject "Request for Intelligence Fund."

She then asked their Treasurer, Mercy Hinayon, to give her a summary of all the
disbursements from CIF from 2007 to 2010. The total of all the amounts in the
summaries for three years is P365,997,915.

After receiving the summaries of the disbursed checks, she asked Hinayon to give her
the checks or copies thereof. She also asked Dorothy Robles, Budget and Accounting
Manager, to give her the corresponding vouchers. Only two original checks were given
to her, as the rest were with the bank. She asked her to request certified true copies of
the checks.

They were then called to the Senate Blue Ribbon Committee, which was then
investigating the operation of PCSO, including the CIF. She was invited as a resource
speaker in an invitation from Chairman Tcoilsto Guingona III (Exh. "DD"). Before the
hearing, the Committee Chairman went to the PCSO and got some documents
regarding the subject matter being investigated. Araullo was tasked to prepare all the
documents needed by the Committee. These documents included the CIF summary of
disbursements, letters of Uriarte and the approval of the former president.

She attended whenever there were committee hearings. Among those who also
attended were the incoming members if the PCSO Board Directors and the directors.
Accused Valencia and Aguas were also present in some hearings as resources
speakers. They were invited in connection with the past disbursements of PCSO related
to advertising expenses, CIF, vehicles for the bishops, and the commingling of funds.

The proceedings in the Committee were recorded and she secured a copy of the
transcript of stenographic notes from the Office of the Blue Ribbon Committee. In the
proceeding on June 7, 2011 (Exh. "EE"), Uriarte testified. The witness was about two to
three meters away from Uriarte when the latter testified, and using a microphone.

According to the witness, Uriarte testified that all the confidential intelligence projects
she had proposed were approved by President Arroyo; all the requests she gave to the
President were approved and signed by the latter personally in her (Uriarte's) presence;
and all the documents pertaining to the CIF were submitted to President Arroyo. On the
other hand, Valencia and Taruc said they did not know about the projects. Statements
before the Committee are under oath.

After the Committee hearings, she then referred to the laws and regulations involved to
check whether the disbursements were in accordance with law. One of the duties and
responsibilities of the audit committee was to verify compliance with the laws.

She considered the following laws: R.A. 1169, as amended (PCSO Charter); P.D. 1445
(COA Code); LOI 1282; COA Circular 92-385, as amended by Circular 2003-002, which
provides the procedure for approval of disbursements and liquidation of confidential
intelligence funds. She made a handwritten flowchart (Exh. "II") of the
allocations/disbursements/liquidation and audit of the CIF, based on LOI 1282 and the
COA Circulars. A digital presentation of this flowchart was made available.

The first step is the provision or allotment of a budget because no CIF fund can be
disbursed without the allocation. This is provided in the second whereas clause of
Circular 92-385. For GOCCs, applying Circular 2003-002, there must be allocation or
budget for the CIF and it should be specifically in the corporate operating budget or
would be taken from savings authorized by special provisions.

This was not followed in the PCSO CIF disbursement in 2008. The disbursement for
that year was P86,555,060. The CIF budget for that year was only P28 million, and
there were no savings because they were on deficit. This was also not followed for the
year 2009. The CIF disbursement for that year was P139,420,875. But the CIF budget
was only P60 million, and there was also no savings, as they were in deficit. For the
year 2010, the total disbursement, as of June 2010, was P141,021,980. The budget
was only P60 million.

The requirements in the disbursement of the CIF are the budget and the approval of the
President. If the budget is correct, the President will approve the disbursement or
release of the CIF. In this case, the President approved the release of the fund without a
budget and savings. Also, the President approved the same in violation of LOI 1282,
because there were no detailed specific project proposals and specifications
accompanying the request for additional CIF. The requests for the year 2008, 2009 and
2010 were uniform and just enumerated the purposes, not projects. They did not
contain what was required in the LOI.

The purpose of this requirement is stated in the LOI itself. The request for allocations
must contain full details and specific purposes for which the fund will be used. A
detailed presentation is made to avoid duplication of expenditures, as what had
happened in the past, because of a lack of centralized planning and organization or
intelligence fund.

There was no reason for each additional intelligence fund that was approved by then
President Arroyo.

The third step is the designation of the disbursing officer. In this case, the Board of
Directors designated Uriarte as Special Disbursing Officer (SDO) for the portion of the
CIF that she withdrew. For the portion withdrawn by Valencia, there was no special
disbursing officer designated on record.

The designation of Uriarte was in violation of internal control which is the responsibility
of the department head, as required by Section 3 of Circular 2003-002. When she went
through copies of the checks and disbursement vouchers submitted to her, she found
out that Uriarte was both the SDO and the authorized officer to sign the vouchers and
checks. She was also the payee of the checks. All the checks withdrawn by Uriarte
were paid to her and she was also the signatory of the checks.

Aside from Uriarte, Valencia also disbursed funds in the CIF. For the funds withdrawn
by Valencia, he was also the authorized officer to sign the vouchers and checks. He
was also the payee of the checks.

The confidential funds were withdrawn through cash advance. She identified the
vouchers and checks pertaining to the disbursements made by Uriarte and Valencia in
2008, 2009 and 2010.

The checks of Uriarte and Valencia had the treasurer as cosignatory. The treasurer who
signed depends on when the checks were issued

She knows the signatures of Uriarte, Valencia and Aguas because they have their
signatures on the records.

Uriarte and Valencia signed the vouchers to certify to the necessity and legality of the
vouchers; they also signed to approve the same, signify they are "okay" for payment
and claim the amount certified and approved as payee. Gloria P. Araullo signed as
releasing officer, giving the checks to the claimants.

Accused Aguas signed the vouchers to certify that there are adequate funds and
budgetary allotment, that the expenditures were properly certified and supported by
documents, and that the previous cash advances were liquidated and accounted for.
This certification means that the cash advance voucher can be released. This is
because the COA rule on cash advance is that before any subsequent cash advance is
released, the previous cash advance must be liquidated first. This certification allowed
the requesting party and payee to get the cash advance from the voucher. Without this
certification, Uriarte and Valencia could not have been able to get the cash advance.
Otherwise, it was a violation of P.D. 1445 (Government Auditing Code).

The third box in the flowchart is the designation of the SDO. Board Resolutions No. 217,
Series of 2009 (Exh."M"), No. 2356, Series of 2009 (Exh."N"), and No. 029, Series of
2010 (Exh. "O"), resolved to designate Uriarte as SDO for the CIF. These resolutions
were signed and approved by Valencia, Taruc, Valdes, Uriarte, Roquero and Morato.
The witness is familiar with these persons' signature because their signatures appear on
PCSO official records.

Valencia designated himself as SDO upon the recommendation of COA Auditor Plaras.
There was no board resolution for this designation. There was just a certification dated
February 2, 2009 (Exh. "Z4"). This certification was signed by Valencia himself and
designates himself as the SDO since he is personally taking care of the funds which are
to be handled with utmost confidentiality. The witness is familiar with Valencia's
signature because it appears on PCSO official documents. Under COA rules, the Board
of Directors has authority to designate the SDO. The chairman could not do this by
himself.

Plaras wrote a letter dated December 15, 2008 to Valencia. It appears in the letter that
to substantiate the liquidation report, Plaras told Valencia to designate himself as SDO
because there was no disbursing officer. It was the suggestion of Plaras. Plaras is the
head of the CIF Unit under then COA Chairman Villar. Liquidation vouchers and
supporting papers were submitted to them, with corresponding fidelity bond.

COA Circulars 92-385 and 2003-002 indicate that to disburse CIF, one must be a
special disbursing officer or SDO. All disbursing officers of the government must have
fidelity bonds. The bond is to protect the government from and answer for
misappropriation that the disbursing officer may do. The bond amount required is the
same as the amount that may be disbursed by the officer. It is based on total
accountability and not determined by the head of the agency as a matter of discretion.
The head determines the accountability which will be the basis of the bond amount.

The Charter states that the head of the agency is the Board of Directors, headed by the
Chairman. But now, under the Governance of Government Corporation law, it is the
general manager.

Plaras should have disallowed or suspended the cash advances because there was no
fidelity bond and the disbursing officer was not authorized. There was no bond put up
for Valencia. The records show that the bond for Uriarte was only for the amount of P1.5
million. This is shown in a letter dated August 23, 2010, to COA Chairman Villar through
Plaras from Aguas (Exh. "B5"), with an attachment from the Bureau of Treasury, dated
March 2, 2009. It appears there that the bond for Uriarte for the CIF covering the period
February 2009 to February 2010 was only P1.5 million.

Aguas submitted this fidelity bond certification, which was received on August 24, 2010,
late, because under the COA Circulars, it should have been submitted when the
disbursing officer was designated. It should have been submitted to COA because a
disbursing officer cannot get cash advances if they do not have a fidelity bond.

Once an SDO is designated, the specimen signature must be submitted to COA,

together with the fidelity bond and the signatories for the cash advances.

The approval of the President pertains to the release of the budget, not its allocation.
She thinks the action of the Board was done because there was no budget. The Board's
confirmation was needed because it was in excess of the budget that was approved.
They were trying to give a color of legality to them approval of the CIF in excess of the
approved corporate operating budget. The Board approval was required for the amount
to be released, which amount was approved in excess of the allotted budget for the
year. The President cannot approve an additional amount, unless there is an
appropriation or a provision saying a particular savings will be used for the CIF. The
approvals here were all in excess of the approved budget.

Cash advances can be given on a per project basis for CIF. For one to get a cash
advance, one must state what the project is as to that cash advance. No subsequent
cash advance should be given, until previous cash advances have been liquidated and
accounted for. If it is a continuing project, monthly liquidation reports must be given. The
difference in liquidation process between CIF and regular cash advances is that for CIF,
the liquidation goes to the Chair and not to the resident auditor of the agency or the
GOCC. All of the liquidation papers should go to the COA Chair, given on a monthly
basis.

In this case, the vouchers themselves are couched generally and just say cash advance
from CIF of the Chairman or from the GM's office in accordance with her duties. There
is no particular project indicated for the cash advance. Also, the requirement that prior
advances be liquidated first for subsequent advances to be given was not followed. The
witness prepared a summary of the cash advances withdrawn by the two disbursing
officers covering the years 2008, 2009 and 2010 (Exh. "D 5"). The basis for this summary
is the record submitted to them by Aguas, which were supposedly submitted to COA. It
shows that there were subsequent cash advances, even if a prior advance has not yet
been liquidated. Valencia submitted liquidation reports to Villar, which consists of a
letter, certification and schedule of cash advances, and liquidation reports. One is dated
July 24, 2008 (Exh. "G5") and another is dated February 13, 2009 (Exh. "H 5").

When she secured Exhibit "G5", together with the attached documents, she did not find
any supporting documents despite the statement in Exhibit "G 5" that the supporting
details of the expenses that were incurred from the fund can be made available, if
required. Aguas, the person who processed the cash advances said he did not have the
details or supporting details of documents of the expenditures.

Normally, when liquidating CIF, the certification of the head of the agency is necessary.
If there were vouchers or receipts involved, then all these should be attached to the
liquidation report. There should also be an accomplishment report which should be
done on a monthly basis. All of these should be enclosed in a sealed envelope and sent
to the Chairman of the COA, although the agency concerned must retain a photocopy of
the documents. The report should have a cover/transmittal letter itemizing the
documents, as well as liquidation vouchers and other supporting papers. If the
liquidation voucher and the supporting papers are in order, then the COA Chairman or
his representative shall issue a credit memorandum. Supporting papers consist of
receipts and sales invoices. The head of the agency would have to certify that those
were all actually incurred and are legal. In this case, there were no supporting
documents submitted with respect to Valencia's cash advances in 2008. Only the
certifications by the SDO were submitted. These certifications stated that he has the
documents in his custody and they can be made available, if and when necessary.

When she reviewed the CIF, she asked Aguas to produce the supporting documents
which were indicated in Valencia's certification and Aguas's own certification in the cash
advance vouchers, where he also certified that the documents supporting the cash
advance were in their possession and that there was proper liquidation. Aguas replied
that he did not have them.

She identified the letter of Uriarte to Villar dated July 24, 2008 as well as a transmittal
letter by Uriarte for August 1, 2008, a certification and schedule of cash advances and
an undetailed liquidation report. Among the attachments is Board Resolution 305, a
copy of the COB for 2008, a document for the second half of 2008, a document dated
April 2, 2009, and a document for liquidation of P2,295,000. She also identified another
letter for P50 million, dated February 13, 2009, attached to the transmittal letter. There
is a certification attached to those two letters amounting to P2,295,000. Also attached is
the schedule of cash advances by Aguas and a liquidation report where Aguas certified
that the supporting documents are complete and proper although the supporting
documents and papers are not attached to the liquidation report, only the general
statement. These documents were submitted to them by Aguas.

She was shown the four liquidation reports (Exhibits "M 5", "N5", "O5" and "P5") attached
to the transmittal letter and was asked whether they were properly and legally
accomplished. She replied that they were couched in general terms and the voucher for
which the cash advance was liquidated is not indicated and only the voucher number is
specified. She adds that the form of the liquidation is correct, but the details are not
there and neither are the supporting papers.

The liquidation report was dated July 24, 2008, but it was submitted only on August 1,
2008 to COA, and it supposedly covered the cash advances of Uriarte from January to
May 2008. This is stated in her summary of liquidation that was earlier marked. There
were no supporting papers stated on or attached to the liquidation report.

She identified a set of documents to liquidate the cash advances from the CIF for the
second semester of 2008 by Uriarte. The transmittal letter of Uriarte was received by
the COA on April 2, 2009. Upon inquiry with Aguas, he said that he did not have any of
the supporting papers that he supposedly had according to the certification. According
to him, they are with Uriarte. Uriarte, on the other hand, said, during the Senate hearing,
that she gave them to President Arroyo.

When Plaras wrote Valencia on December 15, 2008, Aguas wrote back on behalf of
Valencia, who had designated himself as SDO. However, their designations, or in what
capacity they signed the voucher are not stated. Among the attachments is also a
memorandum dated April 2, 2008 (Exhibit "P 5"), containing the signature of Arroyo,
indicating her approval to the utilization of funds. Another memorandum, dated August
13, 2008, indicating the approval of Arroyo was also attached to the transmittal letter of
Aguas on April 4, 2009. These two memoranda bear the reasons for the cash
advances, couched in general terms. The reasons were donated medicines that were
sold and authorized expenditures on endowment fund. The reasons stated in the
memoranda are practically the same. Uriarte did not submit any accomplishment
reports regarding the intelligence fund. Aguas submitted an accomplishment report, but
the accomplishments were not indicated in definite fashion or with specificity.

The witness narrated, based on her Summary of Liquidation Reports in 2009, that the
total cash advance made by Uriarte was P132,760,096. Arroyo approved P90 million for
release. P10 million in January 2009 and April 27, 2009, and then P50 million in May 6,
2009 in July 2, 2009, P10 million or a total of P70 million. In October 2009, P20 million
or a total of P90 million. The amount that was cash advanced by Valencia was
P5,660,779. Therefore, the total cash advances by these two officials were
P138,420,875, but all of these were never liquidated in 2009. Uriarte and Valencia only
submitted a liquidation voucher and a report to COA on April 12, 2010. For the January
22, 2009 disbursements, the date of the liquidation voucher was June 30, 2009, but it
was submitted to COA on April 12, 2010. Witness identified the transmittal letter for P28
million by Uriarte, dated October 19, 2009, which was received by the COA only on April
12, 2010, with an accompanying certification from Uriarte as to some of the documents
from which the witness's Summary of Liquidation was based.

The cash advances made by Uriarte and Valencia violated par. 1, Sec. 4 and Sec. 84 of
P.D. 1445 and par. 2, III, COA Circular No. 92-385.

Since these cash advances were in excess of the appropriation, in effect, they were
disbursed without any appropriation. These cash advances were also made without any
specific project, in violation of par. 2 of COA Circular No. 92-385. In this case, the cash
advances were not for a specific project. The vouchers only indicate the source of the
fund. The vouchers did not specify specific projects.
The total cash advances for the years 2008, 2009 and 2010 to accused Uriarte and
Valencia is more than P366,000,000. Valencia cash advanced P13.3 million. The rest
was made by Uriarte.

The memoranda to President Arroyo stated only the problems encountered by the
PCSO. These problems, as stated in each memorandum, included donated medicines
sometimes ending up in store for sale, unofficial use of ambulances, rise of
expenditures of endowment fund, lotto sweepstakes scams, fixers for programs of the
PCSO, and other fraudulent schemes. No projects were mentioned.

As regards the sixth step - the credit notice, the same was not validly issued by the
COA. The credit notice is a settlement or an action made by the COA Auditors and is
given once the Chairman, in the case of CIF Fund, finds that the liquidation report and
all the supporting papers are in order. In this case, the supporting papers and the
liquidation report were not in order, hence, the credit notice should not have been
issued. Further, the credit notice has to follow a specific form. The COA Chairman or his
representative can: 1) settle the cash advance when everything is in order; 2) suspend
the settlement if there are deficiencies and then ask for submission of the deficiencies;
or 3) out rightly disallow it in case said cash advances are illegal, irregular or
unconscionable, extravagant or excessive. Instead of following this form, the COA
issued a document dated January 10, 2011, which stated that there is an irregular use
of the price fund and the charity fund for CIF Fund. The document bears an annotation
which says, "wait for transmittal, draft" among others. The document was not signed by
Plaras, who was the Head of the Confidential and Intelligence Fund Unit under COA
Chairman Villar. Instead, she instructed her staff to "please ask Aguas to submit the
supplemental budget." This document was not delivered to PCSO General Manager
J.M. Roxas. They instead received another letter dated January 13, 2011 which was
almost identical to the first document, except it was signed by Plaras, and the finding of
the irregular use of the prize fund and the charity fund was omitted. Instead, the work
"various" was substituted and then the amount of P137,500,000. Therefore, instead of
the earlier finding of irregularity, suddenly, the COA issued a credit notice as regards
the total of P140,000,000. The credit notice also did not specify that the transaction had
been audited, indicating that no audit was made.

A letter dated May 11, 2009 from the COA and signed by Plaras, states that the credit
notice is hereby issued. Thus, it is equivalent to the credit notice, although it did not
come in the required form. It merely stated that the credit notice is issued for
P29,700,000, without specifying for which vouchers and for which project the credit
notice was being given. It merely says "First Semester of 2008". In other words, it is a
"global" credit notice that she issued and it did not state that she made an audit.

Another letter, dated July 14, 2010 and signed by Plaras, supposedly covers all the
cash advances in 2009, but only up to the amount of P116,386,800. It also did not state
that an audit was made.

There were no supporting papers attached to the voucher, and the certification issued is
not in conformity with the required certification by COA Circular 2003-002. The
certification dated July 24, 2008 by Valencia was not in conformity with the certification
required by COA. The required form should specify the project for which the certification
was being issued, and file code of the specific project. The certification dated July 24,
2008, however, just specified that it was to certify that the P2 million from the 2008 CIF
Fund was incurred by the undersigned, in the exercise of his functions as PCSO
Chairman for the various projects, projects and activities related to the operation of the
office, and there was no specific project or program or file code of the intelligence fund,
as required by COA. Furthermore, the certification also did not contain the last
paragraph as required by COA. Instead, the following was stated in the certification: "He
further certifies that the details and supporting documents and papers on these highly
confidential missions and assignments are in our custody and kept in our confidential
file which can be made available if circumstances so demand." No details or supporting
documents were reviewed by the witness, and though she personally asked Aguas, the
latter said that he did not have the supporting papers, and they were not in the official
files of the PCSO. Two people should have custody of the papers, namely, The
Chairman of COA and the PCSO or its Special Disbursing Officer. The witness asked
Aguas because Valencia was not there, and also because Aguas was the one who
made the certification and was in-charge of accounting. The vouchers, supposedly
certified by Aguas, as Budget and Accounting Department Manager, each time cash
advances were issued, stated that the supporting documents are complete, so the
witness went to him to procure the documents.

A certification dated February 13, 2009, stating that P2,857,000 was incurred by
Valencia in the exercise of his function as PCSO Chairman, related to the operations of
his office without the specific intelligence project. In the same document, there is a
certification similar to one in the earlier voucher. No details of this certification were
submitted by Aguas.

Another certification dated July 24, 2008 was presented, and it also did not specify the
intelligence and confidential project, and it did not contain any certification that the
amount was disbursed legally or that no benefits was given to any person. Similarly, the
fourth paragraph of the same document states that Uriarte certified that details and
supporting papers of the cash advance that she made of P27,700,000 are "kept in their
confidential" (sic). The same were not in the PCSO official records.

The certification dated October 19, 2009 for the amount of P2,498,300, was submitted
to the witness by Aguas. It also did not conform to the COA requirements, as it also did
not specify the use of the cash advance, did not contain any certification that the cash
advance was incurred for legal purposes, or that no benefits to other people were paid
out of it. Again, no supporting documents were found and none were given by Aguas.
Similarly, a certification dated February 8, 2010 for the amount of P2,394,654 was
presented, and it also does not conform with the COA circular, as it only stated that the
amount was spent or incurred by Valencia for projects covering the period of July 1 to
December 31, 2009 to exercise his function as PCSO Chairman, thus no particular
intelligence fund or project was stated. As in the other certifications, though it was
stated that the details were in the confidential file, it appeared that these were not in the
possession of PCSO. Another certification dated October 19, 2009 submitted by Uriarte
was examined by the witness in the course of her audit, and found that it also did not
conform to the requirements, as it only stated that the P25 million and P10 million
intelligence and confidential fund dated January 29, 2009 and April 27, 2009 were used
in the exercise of her function as PCSO Vice Chairman and General Manager.

All the documents were furnished by Aguas during the course of the audit of the
financial transactions of PCSO. Other documents given by Aguas include a letter by
Valencia to COA Chairman Villar, which was attached to the letter dated July 24, 2008.
For the Certification issued by Valencia for P2,857,000, there was also a certification
attached dated February 13, 2009. As to Exhibit "J 5", together with the certification,
there was a letter but no other documents were submitted. Similarly, as to Exhibit "M 6",
it was attached to a letter dated October 19, 2009 and was submitted to the witness by
Aguas. Exhibit "N6" was attached to the letter of Valencia dated February 8, 2010, the
October 19, 2009 certification was attached to the October 19, 2009 letter to Chairman
Villar.

The certification dated June 29, 2010, signed by Valencia in the amount of P2,075,000,
also does not conform with the COA requirement as it only specifies that the fund was
disbursed by Valencia under his office for various programs in the exercise of his
function as Chairman. Though there was a certification that the supporting papers were
kept in the office, these papers were not found in the records of the PCSO and Aguas
did not have any of the records. The certification was attached to the letter of Valencia
to Villar dated June 29, 2010.

In the certification dated June 29, 2010 signed by Uriarte in the amount of
P137,500,000, the witness also said that the certification did not conform to the COA
Circular because it only stated that the amount was disbursed from a special
intelligence fund, authorized and approved by the President under the disposition of the
Office of the Vice Chairman. Despite the statement certifying that there were documents
for the audit, no documents were provided and the same were not in the official files of
PCSO. The certification was attached to a letter by Uriarte dated July 1, 2010
addressed to Villar.

In the certification dated October 19, 2009 signed by Uriarte in the amount of
P2,500,000, the witness made the same finding that it also did not conform to the COA
Circular, as it did not specify the project for which the cash advance was obtained and
there were also no records in the PCSO. It was attached to the letter dated October 19,
2009.

Finally, in the certification dated February 9, 2010 signed by Uriarte in the amount of
P73,993,846, the witness likewise found that it did not conform with the requirements of
the COA, as all it said was the amount was used for the exercise of the functions of the
PCSO Chairman and General Manager. The documents related to this were also not in
the PCSO records and Aguas did not submit the same. It was attached to a letter dated
February 8, 2010 from Uriarte to Villar.

There are two kinds of audit on disbursements of government funds: pre-audit and post-
audit. Both are defined in COA Circular 2009-002. Pre-audit is the examination of
documents supporting the transaction, before these are paid for and recorded. The
auditor determines whether: (1) the proposed expenditure was in compliance with the
appropriate law, specific statutory authority or regulations; (2) sufficient funds are
available to enable payment of the claim; (3) the proposed expenditure is not illegal,
irregular, extravagant, unconscionable or unnecessary, and (4) the transaction is
approved by the proper authority and duly supported by authentic underlying evidence.
On the other hand, the post-audit requirement is the process where the COA or the
auditor will have to do exactly what was done in the pre-audit, and in addition, the
auditor must supplement what she did by tracing the transaction under audit to the
books of accounts, and that the transaction is all recorded in the books of accounts. The
auditor, in post-audit, also makes the final determination of whether the transaction was
not illegal, irregular, extravagant, excessive, unconscionable or unnecessary.

In this case, no audit was conducted. In a letter dated May 11, 2009 signed by Plaras, it
was stated that a credit advice was given. However, the letter did not conform to the
requirements or form of a credit notice. Such form was in COA Circular 2003-002, and
should specify the liquidation report number, the amount, check numbers, and the
action taken by the auditor. The auditor should also include a certification that these
have been audited. In this instance, no certification that the transaction was audited was
given by Plaras. Other similar letters did not conform with the COA Circular. All
transactions of the government must be subject to audit in accordance with the
provisions of the Constitution. Nevertheless, the requirements for audit are the same.

The effect of the issuance of the credit notice by the COA was that the agency will take
it up in the books and credit the cash advance. This is the seventh step in the flowchart.
Once there is a cash advance, the liability of the officers who obtained the cash
advance would be recorded in the books. The credit notice, when received, would
indicate that the account was settled. The agency will credit the receivable or the cash
advance, and remove from the books as a liability of the person liable lor the cash
advance. The effect of this was that the financial liabilities of Uriarte and Valencia were
removed from the books, but they could still be subject to criminal liability based on Sec.
10 of COA Circular 91-368 (Government Accounting and Auditing Manuals, Vol. 1,
implementing P.D. 1445), which states: "The settlement of an account whether or not on
appeal has been made within the statutory period is no bar to criminal prosecution
against persons liable." From the 2008 COA Annual Audited Financial Statements of
PCSO, it was seen that the procedure was not followed because the liability of the
officers was already credited even before the credit notice was received. In the financial
statements, it was stated that the amount due from officers and employees, which
should include the cash advances obtained by Uriarte and Valencia, were not included
because the amount stated therein was P35 million, while the total vouchers of Uriarte
and Valencia was P86 million.
The witness also related that she traced the records of the CIF fund (since such was no
longer stated as a receivable), and reviewed whether it was recorded as an expense in
2008. She found out that the recorded CIF fund expense, as recorded in the corporate
operating budget as actually disbursed, was only P21,102,000. As such, she confronted
her accountants and asked them "Saan tinago itong amount na to?" The personnel in
the accounting office said that the balance of the P86 million or the additional P21
million was not recorded in the operating fund budget because they used the prize fund
and charity fund as instructed by Aguas. Journal Entry Voucher No. 8121443 dated
December 31, 2008, signed by Elmer Camba, Aguas (Head of the Accounting
Department), and Hutch Balleras (one of the staff in the Accounting Department),
showed that this procedure was done.

The contents of the Journal Entry Voucher are as follows:chanRoblesvirtualLawlibrary

(a) Accounts and Explanation: Due to other funds. This means that the amount of
P63,750,000 was credited as confidential expense from the operating fund. The
amount was then removed from the operating fund, and it was passed on to
other funds.
(b) PF Miscellaneous, Account No. 424-1-L P41,250,000 and CF Miscellaneous for
424-2-G for P22,500,000. PF Miscellaneous means Prize Fund Miscellaneous
and CF stands for Charity Fund Miscellaneous. This means that funds used to
release the cash advances to Uriarte and Valencia were from the prize fund and
charity.
Attached to the Journal Entry Voucher was a document which reads "Allocation of
Confidential and Intelligence Fund Expenses", and was the basis of Camba in doing the
Journal Entry Voucher. In the same document, there was a written annotation dated 12-
31-2008 which reads that the adjustment of CIF, CF and IF, beneficiary of the fund is
CF and PF and signed by Aguas.

The year 2009 was a similar case, as the witness traced the recording of the credit
notice at the end of 2009, and despite the absence of the credit notice, the Accounting
Department removed from the books of PCSO the liability of Uriarte and Valencia,
corresponding to the cash advances obtained in 2009. She based this finding on the
COA Annual Audit Report on the PCSO for the year ended December 31, 2009. It was
stated in the Audit Report that the total liability due from officers and employees was
only P87,747,280 and it was less than the total cash advances of Uriarte and Valencia,
which was P138 million. As a result, the witness checked the corresponding entry for
the expenses in the corporate operating budget and found out that the same was
understated. The CIF expenses were only P24,968,300, as against the actual amount
per vouchers, which was P138,420,875. Upon checking with the Accounting
Department, the department showed her another Journal Entry Voucher No. 9121157,
dated December 29, 2009, where the personnel removed immediately the expense and
recorded it as expense for the prize fund and charity fund by the end of December 31.

The contents of the Journal Entry Voucher, especially the notation "due from", means
the accountability of those who had cash advance was instead credited. It was
removed, and the amount was P106 million. The entry was confidential expense for
P15,958,020 and then the due to other funds was P90,428,780. The explanation for
"424" was found in the middle part, stating: "424-1-L" of miscellaneous prize fund was
used in the amount of P58,502,740 and the charity fund was used in the amount of
P31,916,040. The total amount of the receivables from Uriarte and Valencia that was
removed was P106,386,800 and P90,428,780 respectively which came from the prize
fund and charity fund.

The witness reported the discrepancy because there were violations of R.A. 1169, Sec.
6, which provides for the different funds of PCSO namely: prize fund (55% of the net
receipts), charity fund (30% of the net receipts), and operating fund (15%). The
proceeds of the lotto and sweepstakes ticket sales provide the money for these different
funds, removing first the printing cost and the net proceeds (98%) is divided among the
three funds mentioned. The prize fund is the fund set aside to be used to pay the prizes
for the winnings in the lotto or sweepstakes draws, whether they are jackpot or
consolation prizes. Incentives to the lotto operators or horse owners are also drawn
from this fund, as all of the expenses connected to the winnings of the draw. On the
other hand, the charity fund is reserved for charity programs approved by the board of
PCSO, and constitutes hospital and medical assistance to individuals, or to help
facilities and other charities of national character. Operating expenses are charged to
the expenses to operate, personnel services, and MOOE. One kind of fund cannot be
used for another kind, as they become a trust fund which should only be used for the
purpose for which it was authorized, not even with the approval of the board.

The amounts obtained from the charity fund and prize fund for 2008 was P63,750,000,
and in 2009 P90,428,780. The Board of Directors was given a copy of the COA Audit
Reports for years 2008 and 2009. The Board of Directors for both years was composed
of: Chairman Valencia, and Board Members Morato, Roquero, Taruc and Valdez.
Uriarte was the Vice Chairman of the Board of Directors. The witness did not know
whether the Board checked the COA reports, but there was no action on their part, and
neither did they question the correctness of the statements. They also had the Audit
Committee (which was composed of members of the board) at that time, and one of the
duties of the Audit Committee was to verify the balances.

The witness identified the documents referring to the confirmation by the Board of
Directors of PCSO of the GIF. Board Resolution No. 217, approved on February 18,
2009, confirms the CIF approved by the President. It did not state which CIF they were
approving. They also assigned Uriarte as the Special Disbursing Officer of the CIF, but
it did say for what year. The signatories to the same Board Resolution were Valencia,
Taruc, Valdes, Uriarte, Roquero and Morato. The same were the witness's findings for
Board Resolution No. 2356 S. 2009, approved on December 9, 2009. As for Board
Resolution No. 29, S. 2010, approved on January 6, 2010, the Board confirmed the fund
approved by the President for 2010, though the approval of the President was only
received on August 13, 2010 as shown in the Memorandum dated January 4. In effect,
the Board was aware of the requests, and because they ratified the cash advances,
they agreed to the act of obtaining the same.
Apart from the President violating LOI 1282, the witness also observed that the
President directly dealt with the PCSO, although the President, by Executive Order No.
383 dated November 14, 2004, and Executive Order No. 455 dated August 22, 2005,
transferred the direct control and supervision of the PCSO to the Department of Social
Welfare and Development (DSWD), and later to the Department of Health (DOH). A
project should first be approved by the Supervising and Controlling Secretary of the
Secretary of Health; that the President had transferred her direct control and
supervision, and lost the same. The witness said her basis was administrative
procedure. In this regard, President Aquino now has transferred the control and
supervision of the PCSO back to the Office of the President through Executive Order
No. 14, S. 2010, dated November 19, 2010.

Uriarte should not have gone directly to the President to ask for the latter's approval for
allocation. Nonetheless, the release of the CIF must still be approved by the
President.9cralawred
The State also presented evidence consisting in the testimonies of officers coming from
different law enforcement agencies10 to corroborate Tolentino's testimony to the effect
that the PCSO had not requested from their respective offices any intelligence
operations contrary to the liquidation report submitted by Uriarte and Aguas.

To complete the evidence for the Prosecution, Atty. Anamarie Villaluz Gonzales, Office-
in-Charge and Department Manager of the Human Resources of PCSO; Flerida Africa
Jimenez, Head of the Intelligence and Confidential Fund Audit Unit of the COA; and
Noel Clemente, Director of COA were presented as additional witnesses.

After the Prosecution rested its case, GMA, Aguas, Valencia, Morato, Taruc V, Roquero
and Villar separately filed their demurrers to evidence asserting that the Prosecution did
not establish a case for plunder against them.

On April 6, 2015, the Sandiganbayan granted the demurrers to evidence of Morato,

Roquero, Taruc and Villar, and dismissed the charge against them. It held that said
accused who were members of the PCSO Board of Directors were not shown to have
diverted any PCSO funds to themselves, or to have raided the public treasury by
conveying and transferring into their possession and control any money or funds from
PCSO account; that as to Villar, there had been no clear showing that his designation of
Plaras had been tainted with any criminal design; and that the fact that Plaras had
signed "by authority" of Villar as the COA Chairman could not criminally bind him in the
absence of any showing of conspiracy.

However, the Sandiganbayan denied the demurrers of GMA, Aguas and Valencia,

holding that there was sufficient evidence showing that they had conspired to commit
plunder; and that the Prosecution had sufficiently established a case of malversation
against Valencia, pertinently saying:chanRoblesvirtualLawlibrary
Demurrer to evidence is an objection by one of the parties in an action, to the effect that
the evidence which his adversary produced is insufficient in point of law, whether true or
not, to make out a case or sustain the issue. The party demurring challenges the
sufficiency of the whole evidence to sustain a verdict. The court then ascertains
whether there is a competent or sufficient evidence to sustain the indictment or
to support a verdict of guilt.

xxxx

Sufficient evidence for purposes of frustrating a demurrer thereto is such evidence in

character, weight or amount as will legally justify the judicial or official action demanded
to accord to circumstances. To be considered sufficient therefore, the evidence must
prove (a) the commission of the crime, and (b) the precise degree of participation
therein by the accused (Gutib v. CA, 110 SCAD 743, 312 SCRA 365 [1999]).

x x x    x x x    x x x

A. Demurrer filed by Arroyo and Aguas:

It must be remembered that in Our November 5, 2013 Resolution, We found strong

evidence of guilt against Arroyo and Aguas, only as to the second predicate act
charged in the Information, which reads:chanRoblesvirtualLawlibrary
(b) raiding the public treasury by withdrawing and receiving, in several instances, the
above-mentioned amount from the Confidential/Intelligence Fund from PCSO's
accounts, and/or unlawfully transferring or conveying the same into their
possession and control through irregularly issued disbursement vouchers and
fictitious expenditures.
In the November 5, 2013 Resolution, We said:chanRoblesvirtualLawlibrary
It should be noted that in both R.A. No. 7080 and the PCGG rules, the enumeration of
the possible predicate acts in the commission of plunder did not associate or require the
concept of personal gain/benefit or unjust enrichment with respect to raids on the public
treasury, as a means to commit plunder. It would, therefore, appear that a "raid on the
public treasury" is consummated where all the acts necessary for its execution and
accomplishment are present. Thus a "raid on the public treasury" can be said to have
been achieved thru the pillaging or looting of public coffers either through misuse,
misappropriation or conversion, without need of establishing gain or profit to the
raider. Otherwise stated, once a "raider" gets material possession of a
government asset through improper means and has free disposal of the same,
the raid or pillage is completed. x x x

xxxx

Clearly, the improper acquisition and illegal use of CIF funds, which is obviously a
government asset, will amount to a raid on the public treasury, and therefore fall into the
category of ill-gotten wealth.

xxxx
x x x It is not disputed that Uriarte asked for and was granted authority by Arroyo to use
additional CIF funds during the period 2008-2010. Uriarte was able [to] accumulate
during that period CIF funds in the total amount of P352,681,646. This was through
a series of withdrawals as cash advances of the CIF funds from the PCSO coffers, as
evidenced by the disbursement vouchers and checks issued and encashed by her,
through her authorized representative.

These flagrant violations of the rules on the use of CIF funds evidently characterize
the series of withdrawals by and releases to Uriarte as "raids" on the PCSO
coffers, which is part of the public treasury. These were, in every sense, "pillage,"
as Uriarte looted government funds and appears to have not been able to account
for it. The monies came into her possession and, admittedly, she disbursed it for
purposes other than what these were intended for, thus, amounting to "misuse" of the
same. Therefore, the additional CIF funds are ill-gotten, as defined by R.A. 7080, the
PCGG rules, and Republic v. Sandiganbayan. The encashment of the checks, which
named her as the "payee," gave Uriarte material possession of the CIF funds
which she disposed of at will.

As to the determination whether the threshold amount of P50 million was met by the
prosecution's evidence, the Court believes this to have been established. Even if the
computation is limited only to the cash advances/releases made by accused Uriarte
alone AFTER Arroyo had approved her requests and the PCSO Board approved CIF
budget and the "regular" P5 million CIF budget accorded to the PCSO Chairman and
Vice Chairman are NOT taken into account, still the total cash advances through
accused Uriarte's scries of withdrawals will total P189,681,646. This amount
surpasses the P50 million threshold.

The evidence shows that for the year 2010 alone, Uriarte asked for P150 million
additional CIF funds, and Arroyo granted such request and authorized its use. From
January 8, 2010 up to June 18, 2010, Uriarte made a series of eleven (11) cash
advances in the total amount of P138,223,490. According to Uriarte's testimony
before the Senate, the main purpose for these cash advances was for the "roll-out" of
the small town lottery program. However, the accomplishment report submitted by
Aguas shows that P137,500,000 was spent on non-related PCSO activities, such as
"bomb threat, kidnapping, terrorism and bilateral and security relations." All the cash
advances made by Uriarte in 2010 were made in violation of LOI 1282, and CO A
Circulars 2003-002 and 92-385. These were thus improper use of the additional CIF
funds amounting to raids on the PCSO coffers and were ill-gotten because Uriarte had
encashed the checks and came into possession of the monies, which she had complete
freedom to dispose of, but was not able to properly account for.cralawred
These findings of the Court clearly point out the commission by Uriarte of the crime
of Plunder under the second predicate act charged in the Information. As to
Arroyo's participation, the Court stated in its November 5, 2013 Resolution
that:chanRoblesvirtualLawlibrary
The evidence shows that Arroyo approved not only Uriarte's request for additional CIF
funds in 2008-2010, but also authorized the latter to use such funds. Arroyo's "OK"
notation and signature on Uriarte's letter-requests signified unqualified approval
of Uriarte's request to use the additional CIF funds because the last paragraph of
Uriarte's requests uniformly ended with this phrase: With the use of intelligence
fund, PCSO can protect its image and integrity of its operations.

The letter-request of Uriarte in 2010 was more explicit because it categorically asked
for: "The approval on the use of the fifty percent of the PR Fund as PCSO Intelligence
Fund will greatly help PCSO in the disbursement of funds to immediately address
urgent issues."

Arroyo cannot, therefore, successfully argue that what she approved were only the
request for the grant or allocation of additional CIF funds, because Arroyo's "OK"
notation was unqualified and, therefore, covered also the request to use such
funds, through releases of the same in favor of Uriarte.11cralawred
The Sandiganbayan later also denied the respective Motions for Reconsideration of
GMA and Aguas, observing that:chanRoblesvirtualLawlibrary
In this case, to require proof that monies went to a plunderer's bank account or
was used to acquire real or personal properties or used for any other purpose to
personally benefit the plunderer, is absurd. Suppose a plunderer had already
illegally amassed, acquired or accumulated P50 Million or more of government funds
and just decided to keep it in his vault and never used such funds for any purpose to
benefit him, would that not be plunder? Or, if immediately right after such amassing, the
monies went up in flames or recovered by the police, negating any opportunity for the
person to actually benefit, would that not still be plunder? Surely, in such cases, a
plunder charge could still prosper and the argument that the fact of personal benefit
should still be evidence-based must fail.

Also, accused Arroyo insists that there was no proof of the fact of amassing the ill-
gotten wealth, and that the "overt act" of approving the disbursement is not the "overt
act" contemplated by law. She further stresses that there was no proof of conspiracy
between accused Arroyo and her co-accused and that the Prosecution was unable to
prove their case against accused Arroyo. What accused Arroyo forgets is that
although she did not actually commit any "overt act" of illegally amassing CIF
funds, her act of approving not only the additional CIF funds but also their
releases, aided and abetted accused Uriarte's successful raids on the public
treasury. Accused Arroyo is therefore rightly charged as a co-conspirator of Uriarte who
accumulated the CIF funds. Moreover, the performance of an overt act is not
indispensable when a conspirator is the mastermind. 12cralawred
Considering that the Sandiganbayan denied the demurrers to evidence of GMA and
Aguas, they have come to the Court on certiorari to assail and set aside said denial,
claiming that the denial was with grave abuse of discretion amounting to lack or excess
of jurisdiction.

Issues

GMA pleads that the denial of her demurrer to evidence was in patent and flagrant
violation of Republic Act No. 7080, the law on plunder, and was consequently arbitrary
and oppressive, not only in grave abuse of discretion but rendered without jurisdiction
because:chanRoblesvirtualLawlibrary
First Ground

On the basis of the above Resolutions, the Sandiganbayan has denied petitioner

Arroyo's Demurrer to Evidence and considering the reasons for doing so, would
find petitioner Arroyo guilty of the offense of plunder under Republic Act No.
7080 as charged in the Information notwithstanding the following:
While the gravamen, indeed corpus delicti of the offense of plunder under R.A.
No. 7080, and as charged in the Information, is that the public officer . . .
"amasses, accumulates or acquires ill-gotten wealth through a combination or
series of overt or criminal acts as described in Section 1(d) hereof, in the
aggregate amount or total value of at least Fifty million pesos (P50,000,000.00)",
the Sandiganbayan Resolutions extirpate this vital element of the offense of
plunder;

In point of fact, not a single exhibit of the 637 exhibits offered by the prosecution
nor a single testimony of the 21 witnesses of the prosecution was offered by the
prosecution to prove that petitioner amassed, accumulated or acquired even a
single peso of the alleged ill-gotten wealth amounting to P365,997,915.00 or any
part of that amount alleged in the Information;

Implicitly confirming the above, and aggravating its error, on the basis solely of
petitioner Arroyo's authorization of the release of the Confidential/Intelligence
Fund from PCSO's accounts, the Sandiganbayan ruled that she has committed
the offense of plunder under R.A. No. 7080 for the reason that her release of CIF
funds to the PCSO amount to a violation of Sec. 1(d) [1] of R.A. No. 7080 which
reads, as follows:
1) Through misappropriation, conversion, misuse, or malversation of public
funds or raids on the public treasury;cralawred
which, "did not associate or require the concept of personal gain/benefit or unjust
enrichment with respect to raids on the public treasury", thereby disregarding the
gravamen or the corpus delicti of the offense of plunder under R.A. No. 7080.

Second Ground

Worsening the above error of the Sandiganbayan, the Resolutions, with

absolutely no justification in law or in the evidence, purportedly as the
"mastermind" of a conspiracy, and without performing any overt act, would
impute to petitioner Arroyo the "series of withdrawals as cash advances of the
CIF funds from the PCSO coffers" by Uriarte as "raids on the PCSO coffers, which
is part of the public treasury" and "in every sense, 'pillage' as Uriarte looted
government funds and appears to have not been able to account for it".
Parenthetically, Uriarte has not been arrested, was not arraigned and did not
participate in the trial of the case.
 Third Ground

That as an obvious consequence of the above, denial of petitioner Arroyo's

Demurrer To Evidence for the reasons stated in the Sandiganbayan Resolutions,
amounting no less to convicting her on the basis of a disjointed reading of the
crime of plunder as defined in R.A. No. 7080, aggravated by the extirpation in the
process of its "corpus delicti" - the amassing, accumulation or acquisition of ill-
gotten wealth, hence, of a crime that does not exist in law and consequently a
blatant deprivation of liberty without due process of law.

Fourth Ground

The Information alleges that the ten (10) persons accused in Crim. Case No. SB-
12-CRM-0174, namely: Gloria Macapagal-Arroyo, Rosario C. Uriarte, Sergio O.
Valencia, Manuel L. Morato, Jose R. Taruc V, Raymundo T. Roquero, [M]a. Fatima
A.S. Valdes, Benigno B. Aguas, Reynaldo A. Villar and Nilda B. Plaras . . . all
public officers committing the offense in relation to their respective offices and
taking undue advantage of their respective official positions, authority,
relationships, connections or influence, conniving, conspiring and confederating
with one another, did then and there willfully, unlawfully and criminally amass,
accumulate and/or acquire, directly or indirectly, ill-gotten wealth in the aggregate
amount or total value of THREE HUNDRED SIXTY FIVE MILLION NINE HUNDRED
NINETY SEVEN THOUSAND NINE HUNDRED FIFTEEN PESOS
(PHP365,997,915.00), more or less, through any or a combination or a series of
overt or criminal acts, or similar schemes or means, described as follows . . . or
each of them, P36,599,791.50 which would not qualify the offense charged as
"plunder" under R.A. No. 7080 against all ten (10) accused together, for which
reason the Information docs not charge the offense of plunder and, as a
consequence, all proceedings thereafter held under the Information are
void.13cralawred
On his part, Aguas contends that:chanRoblesvirtualLawlibrary

A. In light of the factual setting described above and the evidence

offered and admitted, does proof beyond reasonable doubt exist to
warrant a holding that Prosecution proved the guilt of the accused
such that there is legal reason to deny Petitioner's Demurrer?

B. Did the Prosecution's offered evidence squarely and properly

support the allegations in the Information?

PETITIONER STRONGLY SUBMITS THAT PROSECUTION FAILED TO ESTABLISH

BY PROOF BEYOND REASONABLE DOUBT THE EXISTENCE OF THE CORE
ELEMENTS OF THE CRIME OF PLUNDER.14cralawred
On the other hand, the Prosecution insists that the petitions for certiorari should be
dismissed upon the following grounds, namely:chanRoblesvirtualLawlibrary
 A. CERTIORARI IS NOT THE PROPER REMEDY FROM AN ORDER OR
RESOLUTION DENYING DEMURRER TO EVIDENCE.

B. THERE IS NO GRAVE ABUSE OF DISCRETION BECAUSE THE

SANDIGANBAYAN MERELY INTERPRETED WHAT CONSTITUTES
PLUNDER UNDER LAW AND JURISPRUDENCE IN LIGHT OF FACTS
OF THE CASE. IT DID NOT JUDICIALLY LEGISLATE A "NEW"
OFFENSE.
1. ACTUAL PERSONAL GAIN, BENEFIT OR ENRICHMENT IS NOT
AN ELEMENT OF PLUNDER UNDER R.A. NO. 7080.

2. EVIDENCE SHOWS THAT ARROYO, BY INDISPENSABLE

COOPERATION, CONSPIRED WITH HER CO-ACCUSED AND
PARTICIPATED IN THE COMPLEX, ILLEGAL SCHEME WHICH
DEFRAUDED PCSO IN HUNDREDS OF MILLIONS OF PESOS,
WHICH CONSTITUTES PLUNDER.

3. ARROYO IS NOT SIMILARLY SITUATED WITH ACCUSED

PCSO BOARD MEMBERS AND CANNOT THUS DEMAND THAT
THE SANDIGANBAYAN DISMISS THE PLUNDER CASE
AGAINST HER.

C. ARROYO'S BELATED, COLLATERAL ATTACK ON THE

INFORMATION CHARGING HER AND CO-ACCUSED FOR PLUNDER
IS HIGHLY IMPROPER, ESPECIALLY AT THIS LATE STAGE OF THE
PROCEEDING.
1. THE FACTS CONSTITUTING THE OFFENSE ARE CLEARLY
ALLEGED IN THE INFORMATION.

2. ARROYO'S ACTIVE PARTICIPATION IN THE PROCEEDINGS

ARISING FROM OR RELATING TO SB- 12-CRM-0174 PROVES
THAT SHE HAS ALWAYS KNOWN AND UNDERSTOOD THE
NATURE AND SCOPE OF THE ACCUSATIONS AGAINST HER.

D. ARROYO IS NOT ENTITLED TO A TEMPORARY RESTRAINING

ORDER BECAUSE THE CRIMINAL PROSECUTION IN SB-12-CRM-
0174 CANNOT BE ENJOINED.15

Based on the submissions of the parties, the Court synthesizes the decisive issues to
be considered and resolved, as follows:

Procedural Issue:
 1. Whether or not the special civil action for certiorari is proper to assail the denial
of the demurrers to evidence.

Substantive Issues:

1. Whether or not the State sufficiently established the existence of conspiracy

among GMA, Aguas, and Uriarte;

2. Whether or not the State sufficiently established all the elements of the crime of
plunder:
a. Was there evidence of amassing, accumulating or acquiring ill-gotten
wealth in the total amount of not less than P50,000,000.00?

b. Was the predicate act of raiding the public treasury alleged in the
information proved by the Prosecution?

Ruling of the Court

The consolidated petitions for certiorari are meritorious.

I.
The Court cannot be deprived of its jurisdiction to correct grave abuse of
discretion

The Prosecution insists that the petition for certiorari of GMA was improper to challenge
the denial of her demurrer to evidence; that she also thereby failed to show that there
was grave abuse of discretion on the part of the Sandiganbayan in denying her
demurrer to evidence; and that, on the contrary, the Sandiganbayan only interpreted
what constituted plunder under the law and jurisprudence in light of the established
facts, and did not legislate a new offense, by extensively discussing how she had
connived with her co-accused to commit plunder.16ChanRoblesVirtualawlibrary

The Court holds that it should take cognizance of the petitions for certiorari because
the Sandiganbayan, as shall shortly be demonstrated, gravely abused its discretion
amounting to lack or excess of jurisdiction.

The special civil action for certiorari is generally not proper to assail such an
interlocutory order issued by the trial court because of the availability of another remedy
in the ordinary course of law.17 Moreover, Section 23, Rule 119 of the Rules of
Court expressly provides that "the order denying the motion for leave of court to file
demurrer to evidence or the demurrer itself shall not be reviewable by appeal or
by certiorari before judgment." It is not an insuperable obstacle to this action, however,
that the denial of the demurrers to evidence of the petitioners was an interlocutory order
that did not terminate the proceedings, and the proper recourse of the demurring
accused was to go to trial, and that in case of their conviction they may then appeal the
conviction, and assign the denial as among the errors to be reviewed.18 Indeed, it is
doctrinal that the situations in which the writ of certiorari may issue should not be
limited,19 because to do so -
x x x would be to destroy its comprehensiveness and usefulness. So wide is the
discretion of the court that authority is not wanting to show that certiorari is more
discretionary than either prohibition or mandamus. In the exercise of our
superintending control over other courts, we are to be guided by all the
circumstances of each particular case 'as the ends of justice may require.' So it is
that the writ will be granted where necessary to prevent a substantial wrong or to
do substantial justice.20cralawred
The Constitution itself has imposed upon the Court and the other courts of justice the
duty to correct errors of jurisdiction as a result of capricious, arbitrary, whimsical and
despotic exercise of discretion by expressly incorporating in Section 1 of Article VIII the
following provision:chanRoblesvirtualLawlibrary
Section 1. The judicial power shall be vested in one Supreme Court and in such lower
courts as may be established by law.

Judicial power includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to determine
whether or not there has been a grave abuse of discretion amounting to lack or excess
of jurisdiction on the part of any branch or instrumentality of the Government.cralawred
The exercise of this power to correct grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality of the Government
cannot be thwarted by rules of procedure to the contrary or for the sake of the
convenience of one side. This is because the Court has the bounden constitutional duty
to strike down grave abuse of discretion whenever and wherever it is committed. Thus,
notwithstanding the interlocutory character and effect of the denial of the demurrers to
evidence, the petitioners as the accused could avail themselves of the remedy
of certiorari when the denial was tainted with grave abuse of discretion.21 As we shall
soon show, the Sandiganbayan as the trial court was guilty of grave abuse of discretion
when it capriciously denied the demurrers to evidence despite the absence of
competent and sufficient evidence to sustain the indictment for plunder, and despite the
absence of the factual bases to expect a guilty verdict. 22ChanRoblesVirtualawlibrary

II.
The Prosecution did not properly allege and prove the existence of conspiracy
among GMA, Aguas and Uriarte

Conspiracy exists when two or more persons come to an agreement concerning the
commission of a felony, and decide to commit it.23 In this jurisdiction, conspiracy is
either a crime in itself or a mere means to commit a crime.

As a rule, conspiracy is not a crime unless the law considers it a crime, and prescribes a
penalty for it.24 The exception is exemplified in Article 115 (conspiracy and proposal to
commit treason), Article 136 (conspiracy and proposal to commit coup d'etat, rebellion
or insurrection) and Article 141 (conspiracy to commit sedition) of the Revised Penal
Code. When conspiracy is a means to commit a crime, it is indispensable that the
agreement to commit the crime among all the conspirators, or their community of
criminal design must be alleged and competently shown.

We also stress that the community of design to commit an offense must be a conscious
one.25 Conspiracy transcends mere companionship, and mere presence at the scene of
the crime does not in itself amount to conspiracy. Even knowledge of, or acquiescence
in, or agreement to cooperate is not enough to constitute one a party to a conspiracy,
absent any active participation in the commission of the crime with a view to the
furtherance of the common design and purpose. 26 Hence, conspiracy must be
established, not by conjecture, but by positive and conclusive evidence.

In terms of proving its existence, conspiracy takes two forms. The first is the express
form, which requires proof of an actual agreement among all the co-conspirators to
commit the crime. However, conspiracies are not always shown to have been expressly
agreed upon. Thus, we have the second form, the implied conspiracy. An implied
conspiracy exists when two or more persons are shown to have aimed by their acts
towards the accomplishment of the same unlawful object, each doing a part so that their
combined acts, though apparently independent, were in fact connected and
cooperative, indicating closeness of personal association and a concurrence of
sentiment.27 Implied conspiracy is proved through the mode and manner of the
commission of the offense, or from the acts of the accused before, during and after the
commission of the crime indubitably pointing to a joint purpose, a concert of action and
a community of interest.28ChanRoblesVirtualawlibrary

But to be considered a part of the conspiracy, each of the accused must be shown to
have performed at least an overt act in pursuance or in furtherance of the conspiracy,
for without being shown to do so none of them will be liable as a co-conspirator, and
each may only be held responsible for the results of his own acts. In this connection, the
character of the overt act has been explained in People v. Lizada:29
An overt or external act is defined as some physical activity or deed, indicating the
intention to commit a particular crime, more than a mere planning or preparation, which
if carried out to its complete termination following its natural course, without being
frustrated by external obstacles nor by the spontaneous desistance of the perpetrator,
will logically and necessarily ripen into a concrete offense. The raison d'etre for the
law requiring a direct overt act is that, in a majority of cases, the conduct of the
accused consisting merely of acts of preparation has never ceased to be
equivocal; and this is necessarily so, irrespective of his declared intent. It is that
quality of being equivocal that must be lacking before the act becomes one which
may be said to be a commencement of the commission of the crime, or an overt
act or before any fragment of the crime itself has been committed, and this is so
for the reason that so long as the equivocal quality remains, no one can say with
certainty what the intent of the accused is. It is necessary that the overt act should
have been the ultimate step towards the consummation of the design. It is sufficient if it
was the "first or some subsequent step in a direct movement towards the commission of
the offense after the preparations are made." The act done need not constitute the
last proximate one for completion. It is necessary, however, that the attempt must
have a causal relation to the intended crime. In the words of Viada, the overt acts
must have an immediate and necessary relation to the offense. (Bold underscoring
supplied for emphasis)cralawred
In her case, GMA points out that all that the State showed was her having affixed her
unqualified "OK" on the requests for the additional CIFs by Uriarte. She argues that
such act was not even an overt act of plunder because it had no immediate and
necessary relation to plunder by virtue of her approval not being per se illegal or
irregular. However, the Sandiganbayan, in denying the Motions for Reconsideration of
GMA and Aguas vis-a-vis the denial of the demurrers, observed
that:chanRoblesvirtualLawlibrary
x x x x accused Arroyo insists that there was no proof of the feet of amassing the ill-
gotten wealth, and that the "overt act" of approving the disbursement is not the "overt
act" contemplated by law. She further stresses that there was no proof of conspiracy
between accused Arroyo and her co-accused and that the Prosecution was unable to
prove their case against accused Arroyo. What accused Arroyo forgets is that although
she did not actually commit any "overt act" of illegally amassing CIF funds, her act of
approving not only the additional CIF funds but also their releases, aided and abetted
accused Uriarte's successful raids on the public treasury. Accused Arroyo is therefore
rightly charged as a co-conspirator of Uriarte who accumulated the CIF funds.
Moreover, the performance of an overt act is not indispensable when a conspirator is
the mastermind.30cralawred
It is in this regard that the Sandiganbayan gravely abused its discretion amounting to
lack or excess of its jurisdiction. To start with, its conclusion that GMA had been the
mastermind of plunder was plainly conjectural and outrightly unfounded considering that
the information did not aver at all that she had been the mastermind; hence,
the Sandiganbayan thereby acted capriciously and arbitrarily. In the second place, the
treatment by the Sandiganbayan of her handwritten unqualified "OK" as an overt act of
plunder was absolutely unwarranted considering that such act was a common legal and
valid practice of signifying approval of a fund release by the President. Indeed, pursuant
to People v. Lizada, supra, an act or conduct becomes an overt act of a crime only
when it evinces a causal relation to the intended crime because the act or conduct will
not be an overt act of the crime if it does not have an immediate and necessary relation
to the offense.

In Estrada v. Sandiganbayan,31 the Court recognized two nuances of appreciating

conspiracy as a means to commit a crime, the wheel conspiracy and the chain
conspiracy.

The wheel conspiracy occurs when there is a single person or group (the hub) dealing
individually with two or more other persons or groups (the spokes). The spoke typically
interacts with the hub rather than with another spoke. In the event that the spoke shares
a common purpose to succeed, there is a single conspiracy. However, in the instances
when each spoke is unconcerned with the success of the other spokes, there are
multiple conspiracies.32ChanRoblesVirtualawlibrary

An illustration of wheel conspiracy wherein there is only one conspiracy involved was
the conspiracy alleged in the information for plunder filed against former President
Estrada and his co-conspirators. Former President Estrada was the hub while the
spokes were all the other accused individuals. The rim that enclosed the spokes was
the common goal in the overall conspiracy, i.e., the amassing, accumulation and
acquisition of ill-gotten wealth.

On the other hand, the American case of Kotteakos v. United States33 illustrates a wheel
conspiracy where multiple conspiracies were established instead of one single
conspiracy. There, Simon Brown, the hub, assisted 31 independent individuals to obtain
separate fraudulent loans from the US Government. Although all the defendants were
engaged in the same type of illegal activity, there was no common purpose or overall
plan among them, and they were not liable for involvement in a single conspiracy. Each
loan was an end in itself, separate from all others, although all were alike in having
similar illegal objects. Except for Brown, the common figure, no conspirator was
interested in whether any loan except his own went through. Thus, the US Supreme
Court concluded that there existed 32 separate conspiracies involving Brown rather
than one common conspiracy.34ChanRoblesVirtualawlibrary

The chain conspiracy recognized in Estrada v. Sandiganbayan exists when there is

successive communication and cooperation in much the same way as with legitimate
business operations between manufacturer and wholesaler, then wholesaler and
retailer, and then retailer and consumer. 35ChanRoblesVirtualawlibrary

This involves individuals linked together in a vertical chain to achieve a criminal

objective.36 Illustrative of chain conspiracy was that involved in United States v.
Bruno,37 of the US Court of Appeals for the Second Circuit. There, 88 defendants were
indicted for a conspiracy to import, sell, and possess narcotics. This case involved
several smugglers who had brought narcotics to retailers who, in turn, had sold the
narcotics to operatives in Texas and Louisiana for distribution to addicts. The US Court
of Appeals for the Second Circuit ruled that what transpired was a single chain
conspiracy in which the smugglers knew that the middlemen must sell to retailers for
distribution to addicts, and the retailers knew that the middle men must purchase drugs
from smugglers. As reasoned by the court, "the conspirators at one end of the chain
knew that the unlawful business would not and could not, stop with their buyers; and
those at the other end knew that it had not begun with their sellers." Each conspirator
knew that "the success of that part with which he was immediately concerned was
dependent upon success of the whole." This means, therefore, that "every member of
the conspiracy was liable for every illegal transaction carried out by other members of
the conspiracy in Texas and in Louisiana." 38ChanRoblesVirtualawlibrary

Once the State proved the conspiracy as a means to commit a crime, each co-
conspirator is as criminally liable as the others, for the act of one is the act of all. A co-
conspirator does not have to participate in every detail of the execution; neither does he
have to know the exact part performed by the co-conspirator in the execution of the
criminal act.39 Otherwise, the criminal liability of each accused is individual and
independent.
The Prosecution insisted that a conspiracy existed among GMA, Uriarte, Valencia and
the Members of the PCSO Board of Directors, Aguas, Villar and Plaras.
The Sandiganbayan agreed with the Prosecution as to the conspirators involved,
declaring that GMA, Aguas, and Uriarte had conspired and committed plunder.

A review of the records of the case compels us to reject the Sandiganbayan's

declaration in light of the information filed against the petitioners, and the foregoing
exposition on the nature, forms and extent of conspiracy. On the contrary, the
Prosecution did not sufficiently allege the existence of a conspiracy among GMA, Aguas
and Uriarte.

A perusal of the information suggests that what the Prosecution sought to show was an
implied conspiracy to commit plunder among all of the accused on the basis of their
collective actions prior to, during and after the implied agreement. It is notable that the
Prosecution did not allege that the conspiracy among all of the accused was by express
agreement, or was a wheel conspiracy or a chain conspiracy.

This was another fatal flaw of the Prosecution.

In its present version, under which the petitioners were charged, Section 2 of Republic
Act No. 7080 (Plunder Law) states:chanRoblesvirtualLawlibrary
Section 2. Definition of the Crime of Plunder; Penalties. - Any public officer who, by
himself or in connivance with members of his family, relatives by affinity or
consanguinity, business associates, subordinates or other persons, amasses,
accumulates or acquires ill-gotten wealth through a combination or series of overt
criminal acts as described in Section 1 (d) hereof in the aggregate amount or total value
of at least Fifty million pesos (P50,000,000.00) shall be guilty of the crime of plunder
and shall be punished by reclusion perpetua to death. Any person who participated with
the said public officer in the commission of an offense contributing to the crime of
plunder shall likewise be punished for such offense. In the imposition of penalties, the
degree of participation and the attendance of mitigating and extenuating circumstances,
as provided by the Revised Penal Code, shall be considered by the court. The court
shall declare any and all ill-gotten wealth and their interests and other incomes and
assets including the properties and shares of stocks derived from the deposit or
investment thereof forfeited in favor of the State. [As Amended by Section 12, Republic
Act No. 7659 (The Death Penalty Law)]cralawred
Section 1(d) of Republic Act No. 7080 provides:chanRoblesvirtualLawlibrary
Section 1. Definition of terms. - As used in this Act, the term:

xxxx

d. "Ill-gotten wealth" means any asset, property, business enterprise or material

possession of any person within the purview of Section two (2) hereof, acquired by him
directly or indirectly through dummies, nominees, agents, subordinates and/or business
associates by any combination or series of the following means or similar schemes:
1. Through misappropriation, conversion, misuse, or malversation of public funds or
raids on the public treasury;

2. By receiving, directly or indirectly, any commission, gilt, share, percentage, kickbacks

or any/or entity in connection with any government contract or project or by reason of
the office or position of the public officer concerned;

3. By the illegal or fraudulent conveyance or disposition of assets belonging to the

National Government or any of its subdivisions, agencies or instrumentalities or
government-owned or controlled corporations and their subsidiaries;

4. By obtaining, receiving or accepting directly or indirectly any shares of stock, equity

or any other form of interest or participation including the promise of future employment
in any business enterprise or undertaking;

5. By establishing agricultural, industrial or commercial monopolies or other

combinations and/or implementation of decrees and orders intended to benefit particular
persons or special interests; or

6. By taking undue advantage of official position, authority, relationship, connection or

influence to unjustly enrich himself or themselves at the expense and to the damage
and prejudice of the Filipino people and the Republic of the Philippines.cralawred
The law on plunder requires that a particular public officer must be identified as the one
who amassed, acquired or accumulated ill-gotten wealth because it plainly states that
plunder is committed by any public officer who, by himself or in connivance with
members of his family, relatives by affinity or consanguinity, business associates,
subordinates or other persons, amasses, accumulates or acquires ill-gotten wealth in
the aggregate amount or total value of at least P50,000,000.00 through
a combination or series of overt criminal acts as described in Section 1(d) hereof.
Surely, the law requires in the criminal charge for plunder against several individuals
that there must be a main plunderer and her co-conspirators, who may be members of
her family, relatives by affinity or consanguinity, business associates, subordinates or
other persons. In other words, the allegation of the wheel conspiracy or express
conspiracy in the information was appropriate because the main plunderer would then
be identified in either manner. Of course, implied conspiracy could also identify the main
plunderer, but that fact must be properly alleged and duly proven by the Prosecution.

This interpretation is supported by Estrada v. Sandiganbayan,40 where the Court

explained the nature of the conspiracy charge and the necessity for the main plunderer
for whose benefit the amassment, accumulation and acquisition was made,
thus:chanRoblesvirtualLawlibrary
There is no denying the fact that the "plunder of an entire nation resulting in material
damage to the national economy" is made up of a complex and manifold network of
crimes. In the crime of plunder, therefore, different parties may be united by a common
purpose. In the case at bar, the different accused and their different criminal acts have
a commonality - to help the former President amass, accumulate or acquire ill-gotten
wealth. Sub-paragraphs (a) to (d) in the Amended Information alleged the different
participation of each accused in the conspiracy. The gravamen of the conspiracy
charge, therefore, is not that each accused agreed to receive protection money from
illegal gambling, that each misappropriated a portion of the tobacco excise tax, that
each accused ordered the GSIS and SSS to purchase shares of Belle Corporation and
receive commissions from such sale, nor that each unjustly enriched himself from
commissions, gifts and kickbacks; rather, it is that each of them, by their individual
acts, agreed to participate, directly or indirectly, in the amassing, accumulation
and acquisition of ill-gotten wealth of and/or for former President Estrada. [bold
underscoring supplied for emphasis]cralawred
Here, considering that 10 persons have been accused of amassing, accumulating
and/or acquiring ill-gotten wealth aggregating P365,997,915.00, it would be improbable
that the crime charged was plunder if none of them was alleged to be the main
plunderer. As such, each of the 10 accused would account for the aliquot amount of
only P36,599,791.50, or exactly 1/10 of the alleged aggregate ill-gotten wealth, which is
far below the threshold value of ill-gotten wealth required for plunder.

We are not unmindful of the holding in Estrada v. Sandiganabayan41 to the effect that
an information alleging conspiracy is sufficient if the information alleges conspiracy
either: (1) with the use of the word conspire, or its derivatives or synonyms, such
as confederate, connive, collude, etc.; or (2) by allegations of the basic facts
constituting the conspiracy in a manner that a person of common understanding would
know what is being conveyed, and with such precision as would enable the accused to
competently enter a plea to a subsequent indictment based on the same facts. We are
not talking about the sufficiency of the information as to the allegation of conspiracy,
however, but rather the identification of the main plunderer sought to be prosecuted
under R.A. No. 7080 as an element of the crime of plunder. Such identification of the
main plunderer was not only necessary because the law required such identification,
but also because it was essential in safeguarding the rights of all of the accused to be
properly informed of the charges they were being made answerable for. The main
purpose of requiring the various elements of the crime charged to be set out in the
information is to enable all the accused to suitably prepare their defense because they
are presumed to have no independent knowledge of the facts that constituted the
offense charged.42ChanRoblesVirtualawlibrary

For sure, even the Sandiganbayan was at a loss in this respect. Despite the silence of
the information on who the main plunderer or the mastermind was,
the Sandiganbayan readily condemned GMA in its resolution dated September 10,
2015 as the mastermind despite the absence of the specific allegation in the information
to that effect. Even worse, there was no evidence that substantiated such sweeping
generalization.

In fine, the Prosecution's failure to properly allege the main plunderer should be fatal to
the cause of the State against the petitioners for violating the rights of each accused to
be informed of the charges against each of them.
Nevertheless, the Prosecution insists that GMA, Uriarte and Aguas committed acts
showing the existence of an implied conspiracy among themselves, thereby making all
of them the main plunderers. On this score, the Prosecution points out that the sole
overt act of GMA to become a part of the conspiracy was her approval via the marginal
note of "OK" of all the requests made by Uriarte for the use of additional intelligence
fund. The Prosecution stresses that by approving Uriarte's requests in that manner,
GMA violated the following:chanRoblesvirtualLawlibrary
Letter of Instruction 1282, which required requests for additional confidential and
intelligence funds (CIFs) to be accompanied with detailed, specific project proposals
and specifications; and

COA Circular No. 92-385, which allowed the President to approve the release of
additional CIFs only if there was an existing budget to cover the request.
The insistence of the Prosecution is unwarranted. GMA's approval of Uriarte's requests
for additional CIFs did not make her part of any design to raid the public treasury as the
means to amass, accumulate and acquire ill-gotten wealth. Absent the specific
allegation in the information to that effect, and competent proof thereon, GMA's
approval of Uriarte's requests, even if unqualified, could not make her part of any
criminal conspiracy to commit plunder or any other crime considering that her approval
was not by any means irregular or illegal.

The Prosecution takes GMA to task for approving Uriarte's request despite the requests
failing to provide "the full detail [of] the specific purposes for which said funds shall be
spent and shall explain the circumstances giving rise to the necessity for the
expenditure and the particular aims to be accomplished." It posits that the requests
were not specific enough, contrary to what is required by LOI 1282.

LOI 1282 reads:chanRoblesvirtualLawlibrary

LETTER OF INSTRUCTION NO. 1282

To: All Ministries and Offices Concerned

In recent years intelligence funds appropriated for the various ministries and certain
offices have been, as reports reaching me indicate, spent with less than full regard for
secrecy and prudence. On the one hand, there have been far too many leakages of
information on expenditures of said funds; and on the other hand, where secrecy has
been observed, the President himself was often left unaware of how these funds had
been utilized.

Effective immediately, all requests for the allocation or release of intelligence funds
shall indicate in full detail the specific purposes for which said funds shall be spent and
shall explain the circumstances giving rise to the necessity for the expenditure and the
particular aims to be accomplished.

The requests and the detailed explanations shall be submitted to the President
personally.

It is imperative that such detailed presentations be made to the President in order to

avoid such duplication of expenditures as has taken place in the past because of the
lack of centralized planning and organized disposition of intelligence funds.

Full compliance herewith is desired.

Manila, January 12, 1983.

(Sgd.) FERDINAND E. MARCOS

President of the Philippines
However, an examination of Uriarte's several requests indicates their compliance with
LOI No. 1282. The requests, similarly worded, furnished: (a) the full details of the
specific purposes for which the funds would be spent; (b) the explanations of the
circumstances giving rise to the necessity of the expenditure; and (c) the particular aims
to be accomplished.

The specific purposes and circumstances for the necessity of the expenditures were
laid down as follows:chanRoblesvirtualLawlibrary
In dispensing its mandate, PCSO has been constantly encountering a number of
fraudulent schemes and nefarious activities on a continuing basis which affect the
integrity of our operations, to wit:
Donated medicines sometimes end up in drug stores for sale even if they were labeled
"Donated by PCSO - Not for Sale";

Unwarranted or unofficial use of ambulances by beneficiary-donees;

Unauthorized expenditures of endowment fund for charity patients and organizations;

Lotto and sweepstakes scams victimizing innocent people of winning the jackpot and
selling tampered tickets as winning tickets;

Fixers for the different programs of PCSO such as Ambulance Donation Project,
Endowment Fund Program and Individual Medical Assistance Program;

Other fraudulent schemes and activities which put the PCSO in bad light. 43
A reading of the requests also reveals that the additional CIFs requested were to be
used to protect PCSO's image and the integrity of its operations. The Court thus cannot
share the Prosecution's dismissiveness of the requests for not being compliant with LOI
No. 1282. According to its terms, LOI No. 1282 did not detail any qualification as to how
specific the requests should be made. Hence, we should not make any other
pronouncement than to rule that Uriarte's requests were compliant with LOI No. 1282.

COA Circular No. 92-385 required that additional request for CIFs would be approved
only when there was available budget. In this regard, the Prosecution suggests that
there was no longer any budget when GMA approved Uriarte's requests because the
budget had earmarked intelligence funds that had already been maxed out and used.
The suggestion is not acceptable, however, considering that the funds of the PCSO
were co-mingled into one account as early as 2007. Consequently, although only 15%
of PCSO's revenues was appropriated to an operation fund from which the CIF could be
sourced, the remaining 85% of PCSO's revenues, already co-mingled with the
operating fund, could still sustain the additional requests. In short, there was available
budget from which to draw the additional requests for CIFs.

It is notable that the COA, although frowning upon PCSO's co-mingling of funds, did not
rule such co-mingling as illegal. As such, sourcing the requested additional CIFs from
one account was far from illegal.

Lastly, the Prosecution's effort to show irregularities as badges of bad faith has led it to
claim that GMA had known that Uriarte would raid the public treasury, and would
misuse the amounts disbursed. This knowledge was imputed to GMA by virtue of her
power of control over PCSO.

The Prosecution seems to be relying on the doctrine of command responsibility to

impute the actions of subordinate officers to GMA as the superior officer. The reliance is
misplaced, for incriminating GMA under those terms was legally unacceptable and
incomprehensible. The application of the doctrine of command responsibility is limited,
and cannot be true for all litigations. The Court ruled in Rodriguez v. Macapagal-
Arroyo44 that command responsibility pertains to the responsibility of commanders for
crimes committed by subordinate members of the armed forces or other persons
subject to their control in international wars or domestic conflict. The doctrine has also
found application in civil actions for human rights abuses. But this case involves neither
a probe of GMA's actions as the Commander-in-Chief of the Armed Forces of the
Philippines, nor of a human rights issue. As such, it is legally improper to impute the
actions of Uriarte to GMA in the absence of any conspiracy between them.

On the part of Aguas, the Sandiganbayan pronounced him to be as much a member of

the implied conspiracy as GMA was, and detailed his participation in this
manner:chanRoblesvirtualLawlibrary
In all of the disbursement vouchers covering the cash advances/releases to Uriarte of
the CIF funds, Aguas certified that:chanRoblesvirtualLawlibrary
CERTIFIED: Adequate available funds/budgetary allotment in the amount of
P_________; expenditure properly certified; supported by documents marked (X) per
checklist and back hereof; account codes proper; previous cash advance
liquidated/accounted for.cralawred
These certifications, after close scrutiny, were not true because: 1.) there were no
documents which lent support to the cash advances on a per project basis. The
particulars of payment simply read: "To draw cash advance form the CIF Fund of the
Office of the Vice-Chairman and General Manager". No particular purpose or project
was specified contrary to the requirement under CO A Circular 2003-002 that cash
advances must be on a per project basis. Without specifics on the project covered by
each cash advance. Aguas could not certify that supporting documents existed simply
because he would not know what project was being funded by the cash advances; and
2.) There were no previous liquidations made of prior cash advances when Aguas
made the certifications. COA circular 2003-002 required that cash advances be
liquidated within one (1) month from the date the purpose of the cash advance was
accomplished. If the completion of the projects mentioned were for more than one
month, a monthly progress liquidation report was necessary. In the case of Uriarte's
cash advances certified to by Aguas, the liquidation made was wholesale, i.e. these
were done on a semi-annual basis without a monthly liquidation or at least a monthly
liquidation progress report. How then could Aguas correctly certify that previous
liquidations were accounted for? Aguas's certification also violated Sec. 89 of P.D. 1445
which states:chanRoblesvirtualLawlibrary
Limitations on cash advance. No cash advance shall be given unless for a legally
authorized specific purpose. A cash advance shall be reported on and liquidated as
soon as the purpose for which it was given has been served. No additional cash
advance shall be allowed to any official or employee unless the previous cash advance
given to him is first settled or a proper accounting thereof is made.cralawred
There is a great presumption of guilt against Aguas, as his action aided and abetted
Uriarte's being able to draw these irregular CIF funds in contravention of the rules on
CIF funds. Without Aguas's certification, the disbursement vouchers could not have
been processed for payment. Accordingly, the certification that there were supporting
documents and prior liquidation paved the way for Uriarte to acquire ill-gotten wealth by
raiding the public coffers of the PCSO.

By just taking cognizance of the series and number of cash advances and the
staggering amounts involved, Aguas should have been alerted that something was
greatly amiss and that Uriarte was up to something. If Aguas was not into the scheme, it
would have been easy for him to refuse to sign the certification, but he did not. The
conspiracy "gravamen" is therefore present in the case of Aguas. Moreover, Aguas's
attempt to cover-up Uriarte's misuse of these CIF funds in his accomplishment report
only contributed to unmasking the actual activities for which these funds were utilized.
Aguas's accomplishment report, which was conformed to by Uriarte, made it self-
evidence that the bulk of the CIF funds in 2009 and 2010 were allegedly spend for non-
PCSO related activities, e.g. bomb threats, kidnapping, terrorism, and
others.45cralawred
Thus, the Sandiganbayan concluded that Aguas became a part of the implied
conspiracy when he signed the disbursement vouchers despite the absence of certain
legal requirements, and issued certain certifications to the effect that the budgetary
allotment/funds for cash advance to be withdrawn were available; that the expenditures
were supported by documents; and that the previous cash advances had been
liquidated or accounted for.

We opine and declare, however, that Aguas' certifications and signatures on the
disbursement vouchers were insufficient bases to conclude that he was into any
conspiracy to commit plunder or any other crime. Without GMA's participation, he could
not release any money because there was then no budget available for the additional
CIFs. Whatever irregularities he might have committed did not amount to plunder, or to
any implied conspiracy to commit plunder.

Under the circumstances, the Sandiganbayan's finding on the existence of the

conspiracy to commit plunder was unsustainable. It then becomes unavoidable for the
Court to rule that because the Prosecution failed to properly allege the elements of the
crime, as well as to prove that any implied conspiracy to commit plunder or any other
crime existed among GMA, Aguas and Uriarte there was no conspiracy to commit
plunder among them. As a result, GMA and Aguas could be criminally responsible only
for their own respective actions, if any.

III.
No proof of amassing, or accumulating, or acquiring ill-gotten wealth of at least
P50 Million was adduced against GMA and Aguas

The Sandiganbayan sustained the sufficiency of the evidence to convict the petitioners

for plunder on the basis that the Prosecution established all the elements of plunder.

After a review of the records, we find and rule that the Prosecution had no case for
plunder against the petitioners.

To successfully mount a criminal prosecution for plunder, the State must allege and
establish the following elements, namely:chanRoblesvirtualLawlibrary

1. That the offender is a public officer who acts by herself or in connivance

with members of her family, relatives by affinity or consanguinity, business
associates, subordinates or other persons;

2. That the offender amasses, accumulates or acquires ill- gotten wealth

through a combination or series of the following overt or criminal acts: (a)
through misappropriation, conversion, misuse, or malversation of public
funds or raids on the public treasury; (b) by receiving, directly or indirectly,
any commission, gift, share, percentage, kickback or any other form of
pecuniary benefits from any person and/or entity in connection with any
government contract or project or by reason of the office or position of the
public officer; (c) by the illegal or fraudulent conveyance or disposition of
assets belonging to the National Government or any of its subdivisions,
agencies or instrumentalities of Government owned or controlled
corporations or their subsidiaries; (d) by obtaining, receiving or accepting
directly or indirectly any shares of stock, equity or any other form of
interest or participation including the promise of future employment in any
business enterprise or undertaking; (e) by establishing agricultural,
industrial or commercial monopolies or other combinations and/or
implementation of decrees and orders intended to benefit particular
persons or special interests; or (f) by taking advantage of official position,
authority, relationship, connection or influence to unjustly enrich himself or
 themselves at the expense and to the damage and prejudice of the
Filipino people and the Republic of the Philippines; and.

3. That the aggregate amount or total value of the ill-gotten wealth amassed,
accumulated or acquired is at least P50,000,000.00. 46

The corpus delicti of plunder is the amassment, accumulation or acquisition of ill-gotten

wealth valued at not less than P50,000,000.00. The failure to establish the corpus
delicti should lead to the dismissal of the criminal prosecution.

As regards the element that the public officer must have amassed, accumulated or
acquired ill-gotten wealth worth at least P50,000,000.00, the Prosecution adduced no
evidence showing that either GMA or Aguas or even Uriarte, for that matter, had
amassed, accumulated or acquired ill-gotten wealth of any amount. There was also no
evidence, testimonial or otherwise, presented by the Prosecution showing even the
remotest possibility that the CIFs of the PCSO had been diverted to either GMA or
Aguas, or Uriarte.

The absolute lack of evidence on this material but defining and decisive aspect of the
criminal prosecution was explicitly noted in the concurring and partial dissenting opinion
of Justice Rodolfo A. Ponferrada of the Sandiganbayan, to
wit:chanRoblesvirtualLawlibrary
Here the evidence of the prosecution failed to show the existence of the crime of
plunder as no evidence was presented that any of the accused, accumulated and/or
acquired ill-gotten wealth. In fact, the principal witness of the prosecution when asked,
said that she does not know the existence or whereabouts of the alleged ill-gotten
wealth, to wit:chanRoblesvirtualLawlibrary
Q: Of course, you don't know where is this ill-gotten wealth are (sic) now?
A: Yes, Your Honors. We don't know whether they saved it, squandered it or
what? We don't know, Your Honor.47 [bold Emphasis supplied]
After Atty. Tolentino, as the Prosecution's main witness, conceded lack of any
knowledge of the amassing, accumulating or acquiring of ill-gotten wealth of at least
P50,000,000.00, nothing more remained of the criminal prosecution for plunder. Hence,
the Sandiganbayan should have granted the demurrers of GMA and Aguas, and
dismissed the criminal action against them.

IV.
The Prosecution failed to prove the predicate act of raiding the public treasury

The Sandiganbayan observed that the Prosecution established the predicate act of

raiding the public treasury, to wit:chanRoblesvirtualLawlibrary
Secondly, the terms "unjust enrichment," "benefit," and "pecuniary benefit" are only
mentioned in the predicate acts mentioned in par. 2, 5 and 6 of Section 1 (d) of the
Plunder Law. Paragraph 1 of the same section where "raids on the public treasury" is
mentioned did not mention "unjust enrichment" or "personal benefit". Lastly, the
predicate act covering "raids on the public treasury" is lumped up with the phrases
misappropriation, conversion, misuse and malversation of public funds. Thus, once
public funds, as in the case of CIF funds, are illegally accumulated, amassed or
acquired. To the tune of P50 Million or more, there will be no need to establish any
motive to gain, or much more establish where the money eventually ended up. As
stated in Our Resolution dated November 5, 2013:

It should be noted that in both R.A. No. 7080 and the PCGG rules, the enumeration of
the possible predicate acts in the commission of plunder did not associate or require the
concept of personal gain/benefit or unjust enrichment with respect to raids on the public
treasury, as a means to commit plunder. It would, therefore, appear that a "raid on the
public treasury" is consummated where all the acts necessary for its execution and
accomplishment are present. Thus a "raid on the public treasury" can be said to have
been achieved thru the pillaging or looting of public coffers either through misuse,
misappropriation or conversion, without need of establishing gain or profit to the "raider"
gets material possession of a government asset through improper means and has free
disposal of the same, the raid or pillage is completed.

xxxx

Clearly, the improper acquisition and illegal use of CIF funds, which is obviously a
government asset, will amount to a raid on the public treasury, and therefore fall into the
category of ill-gotten wealth.

xxxx

x x x It is not disputed that Uriarte asked for and was granted authority by Arroyo to use
additional CIF funds during the period 2008-2010. Uriarte was able to accumulate
during that period CIF funds in the total amount of P352,681,646. This was through a
series of withdrawals as cash advances of the CIF funds from the PCSO coffers, as
evidenced by the disbursement vouchers and checks issued and encashed by her,
through her authorized representatives.

These flagrant violations of the rules on the use of CIF funds evidently characterize the
series of withdrawals by and releases to Uriarte as "raids" on the PCSO coffers, which
is part of the public treasury. These were, in every sense, "pillage," as Uriarte looted
government funds and appears to have not been able to account for it. The monies
came into her possession and, admittedly, she disbursed it for purposes other than what
these were intended for, thus amounting to "misuse" of the same. x x x

In this case, to require proof that monies went to a plunderer's bank account or was
used to acquire real or personal properties or used for any other purpose to personally
benefit the plunderer, is absurd. Suppose a plunderer had already amassed, acquired
or accumulated P50 Million or more of government funds and just decide to keep it in
his vault and never used such funds for any purpose to benefit him, would that not be
plunder? Or, if immediately right after such amassing, the monies went up in flames or
recovered by the police, negating any opportunity for the purpose to actually benefit,
would that not still be plunder? Surely, in such cases, a plunder charge could still
prosper and the argument that the fact of personal benefit should still be evidence-
based must fail.48cralawred
The Sandiganbayan contended that in order to prove the predicate act of raids of the
public treasury, the Prosecution need not establish that the public officer had benefited
from such act; and that what was necessary was proving that the public officer had
raided the public coffers. In support of this, it referred to the records of the deliberations
of Congress to buttress its observation.

We do not share the Sandiganbayan's contention.

The phrase raids on the public treasury is found in Section 1 (d) of R.A. No. 7080, which
provides:chanRoblesvirtualLawlibrary
Section 1. Definition of Terms. - x x x

xxxx

d) Ill-gotten wealth means any asset, property, business enterprise or material

possession of any person within the purview of Section Two (2) hereof, acquired by him
directly or indirectly through dummies, nominees, agents, subordinates and/or business
associates by any combination or series of the following means or similar schemes:

1) Through misappropriation, conversion, misuse, or malversation of public funds or

raids on the public treasury;

x x x xcralawred
To discern the proper import of the phrase raids on the public treasury, the key is to look
at the accompanying words: misappropriation, conversion, misuse or malversation of
public funds. This process is conformable with the maxim of statutory
construction noscitur a sociis, by which the correct construction of a particular word or
phrase that is ambiguous in itself or is equally susceptible of various meanings may be
made by considering the company of the words in which the word or phrase is found or
with which it is associated. Verily, a word or phrase in a statute is always used in
association with other words or phrases, and its meaning may, therefore, be modified or
restricted by the latter.49ChanRoblesVirtualawlibrary

To convert connotes the act of using or disposing of another's property as if it were

one's own; to misappropriate means to own, to take something for one's own
benefit;50misuse means "a good, substance, privilege, or right used improperly,
unforeseeably, or not as intended;"51 and malversation occurs when "any public officer
who, by reason of the duties of his office, is accountable for public funds or property,
shall appropriate the same or shall take or misappropriate or shall consent, through
abandonment or negligence, shall permit any other person to take such public funds, or
property, wholly or partially."52 The common thread that binds all the four terms together
is that the public officer used the property taken. Considering that raids on the public
treasury is in the company of the four other terms that require the use of the property
taken, the phrase raids on the public treasury similarly requires such use of the property
taken. Accordingly, the Sandiganbayan gravely erred in contending that the mere
accumulation and gathering constituted the forbidden act of raids on the public treasury.
Pursuant to the maxim of noscitur a sociis, raids on the public treasury requires the
raider to use the property taken impliedly for his personal benefit.

The Prosecution asserts that the Senate deliberations removed personal benefit as a

requirement for plunder. In not requiring personal benefit, the Sandiganbayan quoted
the following exchanges between Senator Enrile and Senator
Tañada, viz.:chanRoblesvirtualLawlibrary
Senator Enrile. The word here, Mr. President, "such public officer or person who
conspired or knowingly benefited". One docs not have to conspire or rescheme.
The only element needed is that he "knowingly benefited". A candidate for the Senate
for instance, who received a political contribution from a plunderer, knowing that the
contributor is a plunderer and therefore, he knowingly benefited from the plunder, would
he also suffer the penalty, Mr. President, for life imprisonment?

Senator Tañada. In the committee amendments, Mr. President, we have deleted these
lines 1 to 4 and part of line 5, on page 3. But, in a way, Mr. President, it is good that the
Gentleman is bringing out these questions, I believe that under the examples he has
given, the Court will have to . . .

Senator Enrile. How about the wife, Mr. President, he may not agree with the plunderer
to plunder the country but because she is a dutiful wife or a faithful husband, she has to
keep her or his vow of fidelity to the spouse. And, of course, she enjoys the benefits out
of the plunder. Would the Gentleman now impute to her or him the crime of plunder
simply because she or he knowingly benefited out of the fruits of the plunder and,
therefore, he must suffer or he must suffer the penalty of life imprisonment?

The President. That was stricken out already in the Committee amendment.

Senator Tañada. Yes, Mr. President. Lines 1 to 4 and part of line 5 were stricken out in
the Committee amendment. But, as I said, the camples of the Minority Floor Leader are
still worth spreading the Record. And, I believe that in those examples, the Court will
have just to take into consideration all the other circumstances prevailing in the case
and the evidence that will be submitted.

The President. In any event, 'knowingly benefited' has already been stricken
off.53cralawred
The exchanges between Senator Enrile and Senator Tañada reveal, therefore, that
what was removed from the coverage of the bill and the final version that eventually
became the law was a person who was not the main plunderer or a co-conspirator, but
one who personally benefited from the plunderers' action. The requirement of personal
benefit on the part of the main plunderer or his co-conspirators by virtue of their plunder
was not removed.
As a result, not only did the Prosecution fail to show where the money went but, more
importantly, that GMA and Aguas had personally benefited from the same. Hence, the
Prosecution did not prove the predicate act of raids on the public treasury beyond
reasonable doubt.

V.
Summation

In view of the foregoing, the Court inevitably concludes that

the Sandiganbayan completely ignored the failure of the information to sufficiently
charge conspiracy to commit plunder against the petitioners; and ignored the lack of
evidence establishing the corpus delicti of amassing, accumulation and acquisition of ill-
gotten wealth in the total amount of at least P50,000,000.00 through any or all of the
predicate crimes. The Sandiganbayan thereby acted capriciously, thus gravely abusing
its discretion amounting to lack or excess of jurisdiction.

Grave abuse of discretion means such capricious or whimsical exercise of judgment

which is equivalent to lack of jurisdiction.54 To justify the issuance of the writ of certiorari,
the abuse of discretion must be grave, as when the power is exercised in an arbitrary or
despotic manner by reason of passion or personal hostility, and the abuse must be so
patent and gross as to amount to an evasion of a positive duty or to a virtual refusal to
perform the duty enjoined, or to act at all, in contemplation of law, as to be equivalent to
having acted without jurisdiction.55ChanRoblesVirtualawlibrary

WHEREFORE, the Court GRANTS the petitions for certiorari; ANNULS and SETS

ASIDE the resolutions issued in Criminal Case No. SB-12-CRM-0174 by
the Sandiganbayan on April 6, 2015 and September 10, 2015; GRANTS the petitioners'
respective demurrers to evidence; DISMISSES Criminal Case No. SB-12-CRM-0174 as
to the petitioners GLORIA MACAPAGAL-ARROYO and BENIGNO AGUAS for
insufficiency of evidence; ORDERS the immediate release from detention of said
petitioners; and MAKES no pronouncements on costs of suit.

SO ORDERED.
Sarmiento vs. Zaratan, 514 SCRA 246, 260

G.R. No. 167471             February 5, 2007

GLICERIA SARMIENTO, Petitioner,
vs.
EMERITA ZARATAN, Respondent.

DECISION

CHICO-NAZARIO, J.:

This petition for Review on Certiorari under Rule 45 of the Rules of Court seeks to
nullify the Court of Appeals Decision1 in CA-G.R. SP No. 79001 entitled, "Emerita
Zaratan v. Hon. Ramon A. Cruz, as Presiding Judge of RTC, Quezon City, Branch 223,
and Gliceria Sarmiento," dated 17 August 2004, which reversed and set side the Orders
dated 19 June 2003 and 31 July 2003 of the Regional Trial Court (RTC) of Quezon City
in Civil Case No. Q-03-49437, dismissing respondent’s appeal for failure to file the
memorandum within the period provided for by law.

On 2 September 2002, petitioner Gliceria Sarmiento filed an ejectment case2 against

respondent Emerita Zaratan, in the Metropolitan Trial Court (MeTC) of Quezon City,
Branch 36, docketed as Civil Case No. 29109.

On 31 March 2003, the MeTC rendered a decision in favor of petitioner, the dispositive
portion of which reads:

WHEREFORE, the Court finds that plaintiff has sufficiently established her causes
against the defendant and hereby order the defendant and all persons claiming rights
under her:

1. to pay plaintiff the monthly rentals of ₱3,500.00 for the said premises from
August 1, 2002 until defendant vacates the premises;

2. to pay plaintiff the sum of ₱20,000.00 plus ₱1,500.00 per appearance of

counsel in court, as and for attorney’s fees; and

to pay the cost of suit.3

Respondent filed her notice of appeal.4 Thereafter, the case was raffled to the RTC of
Quezon City, Branch 223, docketed as Civil Case No. Q-03-49437.
In the Notice of Appealed Case,5 the RTC directed respondent to submit her
memorandum in accordance with the provisions of Section 7(b) of Rule 40 of the Rules
of Court and petitioner to file a reply memorandum within 15 days from receipt.

Respondent’s counsel having received the notice on 19 May 2003, he had until 3 June
2003 within which to file the requisite memorandum. But on 3 June 2003, he filed a
Motion for Extension of Time of five days due to his failure to finish the draft of the said
Memorandum. He cited as reasons for the delay of filing his illness for one week, lack of
staff to do the work due to storm and flood compounded by the grounding of the
computers because the wirings got wet.6 But the motion remained unacted.

On 9 June 2003, respondent filed her Memorandum. On 19 June 2003, the RTC
dismissed the appeal as follows:

Record shows that defendant-appellant received the Notice of Appealed Case, through
counsel, on May 19, 2003 (Registry Return Receipt dated May 12, 2003, Record, back
of p. 298). Thus, under Section 7(b), Rule 40 of the 1997 Rules of Civil Procedure, she
had fifteen (15) days or until June 3, 2003 within which to submit a memorandum on
appeal. As further appears on record, however, the required Memorandum was filed by
defendant-appellant only on June 9, 2003 (Record, p. 623), or six (6) days beyond the
expiration of the aforesaid fifteen day period.

It should be stressed that while the rules should be liberally construed, the provisions on
reglemenatry periods are strictly applied as they are "deemed indispensable to the
prevention of needless delays and necessary to the orderly and speedy discharge of
judicial business" (Legaspi-Santos vs. Court of Appeals, G.R. No. 60577, October 11,
1983) and strict compliance therewith is mandatory and imperative (FJR Garments
Industries vs. Court of Appeals, G.R. No. L-49329, June 29, 1984). The same is true
with respect to the rules on the manner and periods for perfecting appeals (Gutierrez vs.
Court of Appeals, L-25972, November 26, 1968).

Premises considered, the instant appeal is hereby DISMISSED. This renders academic
defendant-appellant’s application for a writ of preliminary injunction. 7 1awphi1.net

On the basis of the above-quoted Order, petitioner filed a Motion for Immediate
Execution,8 while respondent moved for the Reconsideration. 9 Both motions were
denied by the RTC on 31 July 2003. The Order in part reads:

In the main, defendant-appellants Motion for Reconsideration is premised on the

argument that she filed a timely "Motion for Extension of Time To File Memorandum,"
dated and filed on June 3, 2003, but that her motion was not acted upon by this Court.
She adds that her appeal memorandum was filed well within the period sought by her in
her "Motion for Extension of Time to File Memorandum" so that her appeal should not
have been dismissed.
The argument is without merit. This Court did not take cognizance of defendant-
appellant’s "Motion for Extension of Time to File Memorandum," and rightly so, because
it did not contain a notice of hearing as required by Sections 4 and 5, Rule 15 of the
Rules of Court, an omission for which it could offer no explanation. As declared in the
case of Gozon, et al. v. court of Appeals (G.R. No. 105781, June 17, 1993);

xxx

It is well-entrenched in this jurisdiction that a motion does not meet the requirements of
Sections 4 and 5 of Rule 15 of the Rules of Court is considered a worthless piece of
paper which the clerk has no right to receive, and the court has no authority to act upon.

xxx

Moreover, parties and counsel should not assume that courts are bound to grant the
time they pray for. A motion that is not acted upon in due time is deemed denied (Orosa
vs. Court of Appeals, 261 SCRA 376 [1996]). Thus, defendant-appellant’s appeal was
properly dismissed on account of her failure to file an appeal memorandum within the
fifteen (15) day period provided under Section 7(b), Rule 40 of the 1997 Rules of Civil
Procedure.

With regard to the "Motion for Immediate Execution," dated June 23, 2003, filed by
plaintiff-appellee, the rule is explicit that the execution of a judgment in an ejectment
case, must be sought with the inferior court which rendered the same. The appellate
court which affirms a decision brought before it on appeal cannot decree its execution in
the guise of an execution of the affirming decision. The only exception is when said
appellate court grants an execution pending appeal, which is not the case herein (City
of Manila vs. Court of Appeals, 204 SCRA 362; Sy vs. Romero, 214 SCRA 187). 10

Petitioner moved for reconsideration of the said Order, while respondent sought
clarification on whether the 31 July 2003 Order dismissing the appeal was anchored on
Section (b), Rule 40 or Section 7(c) of the same Rule.

On 27 August 2003, the RTC reconsidered its previous Order by granting petitioner’s
motion for Immediate Execution, but denied respondent’s Motion for Clarification, in this
wise:

Section 21, Rule 70 of the Rules of Court provides that "the judgment of the Regional
Trial Court against the defendant shall be immediately executory, without prejudice to a
further appeal that may be taken therefrom. Pursuant to this Rule and taking into
account the arguments of the plaintiff in her "Urgent Motion for Reconsideration," the
Court is inclined to grant the same. As further correctly argued by the plaintiff, through
counsel, during the hearing on her motion on August 15, 2003, the cases of City of
Manila v. Court of Appeals (204 SCRA 362) and Sy vs. Romero (214 SCRA 187) cited
in the July 31, 2003 Order refer to ejectment cases which has (sic) been decided with
finality and hence, inapplicable to this case where a further appeal is still available to the
defendant. It should likewise be noted that while the Supreme Court ruled in these
cases that execution of a judgment in an ejectment case must be sought with the
inferior court which rendered the same, it likewise provided that for an exception to this
rule, that is, in cases where the appellate court grants an execution pending appeal, as
the case herein.

With regard to defendant’s Motion for Clarification, contained in her Opposition, the
Court notes that the issues raised therein have already been squarely dealt with in the
July 31, 2003 Order. The same must, therefore, be denied. 11

Aggrieved, respondent filed a Petition for Certiorari in the Court of Appeals, which was
granted in a decision dated 17 August 2004. The appellate court nullified and set aside
the 19 June 2003 and 31 July 2003 Orders of the RTC and ordered the reinstatement of
respondent’s appeal. Consequently, respondent’s appeal memorandum was admitted
and the case remanded to the RTC for further proceedings. 12

Petitioner filed a motion for reconsideration13 on 13 September 2004, followed by a

Motion for Inhibition14 of the members of the Eighth Division of the Court of Appeals on
20 September 2004. Both motions were denied for lack of merit on 10 March 2005.15

Hence, this appeal by petitioner posing the following issues, 16 thus:

1. Whether respondent’s petition for certiorari should have been dismissed in the
first place;

2. Whether the trial court committed grave abuse of discretion in denying

respondent’s motion for extension;

3. Whether it is Section 19 of Rule 7 that applies, and not Section 21; and

4. Whether the Court of Appeals Justices should have inhibited themselves from
further proceeding with the subject case.

Stated otherwise, the main issue for resolution is whether the Court of Appeals
committed a reversible error of law in granting the Writ of Certiorari. In granting the
petition, the Court of Appeals ruled that the RTC erred in dismissing respondent’s
appeal for failure to file the required Memorandum within the period provided by law and
in granting petitioner’s Motion for Immediate Execution of the MeTC decision.

Before resolving the substantive issues raised by petitioner, the Court will first address
the procedural infirmities ascribed by petitioner. Petitioner assails the correctness and
propriety of the remedy resorted to by respondent by filing a Petition for Certiorari in the
Court of Appeals. According to petitioner, certiorari is not appropriate and unavailing as
the proper remedy is an appeal.
It must be noted that respondent’s appeal in the RTC was dismissed for failure to file
the required memorandum within the period allowed by law, as the Motion for Extension
of Time to file Memorandum was not acted upon for failure to attach a notice of hearing.
From the said dismissal, respondent filed a Petition for Certiorari in the Court of
Appeals.

Respondent correctly filed said petition pursuant to Section 41 of the Rules of Court,
which 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 particular matter therein when declared by
these Rules to be appealable.

No appeal may be taken:

xxxx

(d) An order disallowing or dismissing an appeal;

xxxx

In all the above instances where the judgment or final order is not appealable, the
aggrieved party may file an appropriate civil action under Rule 65. (Underscoring
supplied.)

Petitioner also contends that the Petition for Certiorari filed in the Court of Appeals
should be dismissed as the certification of non-forum shopping was defective. The
verification in part reads:

I, EMERITA ZARATAN, of legal age, after having been duly sworn to, according to law,
depose and say:

That I, Emerita Zaratan is one of the respondent (sic) in the above entitled case, hereby
declare, that I have caused the preparation and filing of the foregoing Comment on the
Petition; that I have read all the allegations therein, which are true and correct to the
best of my own knowledge.

That as respondent, I further certify that I have not commenced any other action or
proceeding involving the same issues in the foregoing Petition in the Court of Appeals,
the Supreme Court, or different Divisions thereof, respectively, or any tribunal, or
agency; and should it be known that a similar action or proceeding has been filed or is
pending in any of the abovementioned Courts or different Divisions thereof, the
petitioner shall notify the Honorable Court to which this certification is filed, within five
(5) days from such notice. (Underscoring ours.)
Petitioner avers that respondent by stating in the above-quoted certification that she
was the respondent, while in truth she was the petitioner and by stating that respondent
caused the preparation of the comment on the petition, instead of the petition itself,
indicate that respondent did not understand what she was signing. The defect of the
verification all renders the petition in the Court of Appeals without legal effect and
constitutes ground for its dismissal.

The contention is baseless.

The purpose of requiring a verification is to secure an assurance that the allegations of

the petition have been made in good faith, or are true and correct, not merely
speculative. This requirement is simply a condition affecting the form of pleadings and
non-compliance therewith does not necessarily render it fatally defective.17 Perusal of
the verification in question shows there was sufficient compliance with the requirements
of the Rules and the alleged defects are not so material as to justify the dismissal of the
petition in the Court of Appeals. The defects are mere typographical errors. There
appears to be no intention to circumvent the need for proper verification and
certification, which are intended to assure the truthfulness and correctness of the
allegations in the petition and to discourage forum shopping. 18

Now, the substantial issues.

Corollary to the dismissal of the appeal by the RTC is the question of whether the lack
of notice of hearing in the Motion for Extension of Time to file Memorandum on Appeal
is fatal, such that the filing of the motion is a worthless piece of paper.

Petitioner avers that, because of the failure of respondent to include a Notice of Hearing
in her Motion for Extension of Time to file Memorandum on Appeal in the RTC, the
latter’s motion is a worthless piece of paper with no legal effect.

It is not disputed that respondent perfected her appeal on 4 April 2003 with the filing of
her Notice of Appeal and payment of the required docket fees. However, before the
expiration of time to file the Memorandum, she filed a Motion for Extension of Time
seeking an additional period of five days within which to file her Memorandum, which
motion lacked the Notice of Hearing required by Section 4, Rule 15 of the 1997 Rules of
Court which provides:

SEC. 4. Hearing of Motion. - Except for motions which the court may act upon without
prejudicing the rights of the adverse party, every written motion shall be set for hearing
by the applicant.

Every written motion required to be heard and the notice of the hearing thereof shall be
served in such a manner as to ensure its receipt by the other party at least three (3)
days before the date of hearing, unless the court for good cause sets the hearing on
shorter notice.
As may be gleaned above and as held time and again, the notice requirement in a
motion is mandatory. As a rule, a motion without a Notice of Hearing is considered pro
forma and does not affect the reglementary period for the appeal or the filing of the
requisite pleading.19

As a general rule, notice of motion is required where a party has a right to resist the
relief sought by the motion and principles of natural justice demand that his right be not
affected without an opportunity to be heard. 20 The three-day notice required by law is
intended not for the benefit of the movant but to avoid surprises upon the adverse party
and to give the latter time to study and meet the arguments of the motion. 21 Principles of
natural justice demand that the right of a party should not be affected without giving it an
opportunity to be heard.22

The test is the presence of the opportunity to be heard, as well as to have time to study
the motion and meaningfully oppose or controvert the grounds upon which it is
based.23 Considering the circumstances of the present case, we believe that procedural
due process was substantially complied with.

There are, indeed, reasons which would warrant the suspension of the Rules: (a) the
existence of special or compelling circumstances, b) the merits of the case, (c) a cause
not entirely attributable to the fault or negligence of the party favored by the suspension
of rules, (d) a lack of any showing that the review sought is merely frivolous and dilatory,
and (e) the other party will not be unjustly prejudiced thereby.24 Elements or
circumstances (c), (d) and (e) exist in the present case.

The suspension of the Rules is warranted in this case. The motion in question does not
affect the substantive rights of petitioner as it merely seeks to extend the period to file
Memorandum. The required extension was due to respondent’s counsel’s illness, lack
of staff to do the work due to storm and flood, compounded by the grounding of the
computers. There is no claim likewise that said motion was interposed to delay the
appeal.25 As it appears, respondent sought extension prior to the expiration of the time
to do so and the memorandum was subsequently filed within the requested extended
period. Under the circumstances, substantial justice requires that we go into the merits
of the case to resolve the issue of who is entitled to the possession of the land in
question.

Further, it has been held that a "motion for extension of time x x x is not a litigated
motion where notice to the adverse party is necessary to afford the latter an opportunity
to resist the application, but an ex parte motion made to the court in behalf of one or the
other of the parties to the action, in the absence and usually without the knowledge of
the other party or parties." As a general rule, notice of motion is required where a party
has a right to resist the relief sought by the motion and principles of natural justice
demand that his rights be not affected without an opportunity to be heard. It has been
said that "ex parte motions are frequently permissible in procedural matters, and also in
situations and under circumstances of emergency; and an exception to a rule requiring
notice is sometimes made where notice or the resulting delay might tend to defeat the
objective of the motion."26

It is well to remember that this Court, in not a few cases, has consistently held that
cases shall be determined on the merits, after full opportunity to all parties for ventilation
of their causes and defense, rather than on technicality or some procedural
imperfections. In so doing, the ends of justice would be better served. 27 Furthermore,
this Court emphasized its policy that technical rules should accede to the demands of
substantial justice because there is no vested right in technicalities. Litigations, should,
as much as possible, be decided on their merits and not on technicality. Dismissal of
appeals purely on technical grounds is frowned upon, and the rules of procedure ought
not to be applied in a very rigid, technical sense, for they are adopted to help secure,
not override, substantial justice, and thereby defeat their very aims. As has been the
constant rulings of this Court, every party-litigant should be afforded the amplest
opportunity for the proper and just disposition of his cause, free from constraints of
technicalities.28 Indeed, rules of procedure are mere tools designed to expedite the
resolution of cases and other matters pending in court. A strict and rigid application of
the rules that would result in technicalities that tend to frustrate rather than promote
justice must be avoided.29

The visible emerging trend is to afford every party-litigant the amplest opportunity for the
proper and just determination of his cause, free from constraints and technicalities.

Parenthetically, it must be noted also that when the appeal was dismissed on 19 June
2003, the memorandum was already filed in court on 9 June 2003.

On the issue of immediate execution of judgment.

The applicable provision is Section 19, Rule 70 of the Rules of Court, which reads:

SEC. 19. Immediate Execution of judgment; how to stay the same.- If judgment is
rendered against the defendant, execution shall issue immediately upon motion, unless
an appeal has been perfected and the defendant to stay execution files a sufficient
supersedeas bond, approved by the Municipal Trial Court and executed in favor of the
plaintiff to pay the rents, damages, and costs accruing down to the time of the judgment
appealed from, and unless, during the pendency of the appeal, he deposits with the
appellate court the amount of rent due from time to time under the contract, if any, as
determined by the judgment of the Municipal Trial Court. x x x.

To stay the immediate execution of judgment in ejectment proceedings, Section 19

requires that the defendant-appellant must (a) perfect his appeal, (b) file a supersedeas
bond, and (c) periodically deposit the rentals falling due during the pendency of the
appeal.
As correctly observed by the Court of Appeals, execution pending appeal was
premature as respondent had already filed a supersedeas bond and the monthly rental
for the current month of the premises in question. 30

The invocation of petitioner of the provisions of Section 21, Rule 70 of the Rules of
Court, which runs:

Sec. 21. Immediate execution on appeal to Court of Appeals or Supreme Court.- The
judgment of the Regional Trial Court against the defendant shall be immediately
executory, without prejudice to a further appeal that may be taken therefrom.

to justify the issuance of the writ of execution pending appeal in this case is misplaced.

A closer examination of the above-quoted provision reveals that said provision applies
to decision of the RTC rendered in its appellate jurisdiction, affirming the decision of the
MeTC. In the case at bar, the RTC order was an order dismissing respondent’s appeal
based on technicality. It did not resolve substantive matters delving on the merits of the
parties’ claim in the ejectment case. Thus, the case brought to the Court of Appeals was
the dismissal of the appeal for failure to file the required memorandum within the period
provided by law, and not on the merits of the ejectment case.

Lastly, petitioner posited the view that the Court of Appeals’ justices should have
inhibited themselves because of bias and partiality for deciding the case within eight
months and for being very selective in discussing the issues.

We reject the proposition.

Inhibition must be for just and valid causes. The mere imputation of bias and partiality is
not enough ground for judges to inhibit, especially when the charge is without basis.
This Court has to be shown acts or conduct clearly indicative of arbitrariness or
prejudice before it can brand them with the stigma of bias and partiality. 31 This Court
has invariably held that for bias and prejudice to be considered valid reasons for the
voluntary inhibition of judges, mere suspicion is not enough. Bare allegations of their
partiality will not suffice "in the absence of clear and convincing evidence to overcome
the presumption that the judge will undertake his noble role to dispense justice
according to law and evidence and without fear and favor." 32

There is no factual support to petitioner’s charge of bias and partiality. A perusal of the
records of the case fails to reveal that any bias or prejudice motivated the Court of
Appeals in granting respondent’s petition. Neither did this Court find any questionable or
suspicious circumstances leading to the issuance of the questioned decision, as
suggested by petitioner.

The fact alone that the Court of Appeals decided the case within eight months does not
in any way indicate bias and partiality against petitioner. It is within the constitutional
mandate to decide the case within 12 months.33
As to petitioner’s allegation that the Court of Appeals was selective in choosing what
issues to resolve, it bears to stress again that "a judge’s appreciation or misappreciation
of the sufficiency of evidence x x x adduced by the parties, x x x, without proof of malice
on the part of respondent judge, is not sufficient to show bias and partiality." 34 We also
emphasized that "repeated rulings against a litigant, no matter how erroneously,
vigorously and consistently expressed, do not amount to bias and prejudice which can
be bases for the disqualification of a judge." 35

IN ALL, petitioner utterly failed to show that the appellate court erred in issuing the
assailed decision. On the contrary, it acted prudently in accordance with law and
jurisprudence.

WHEREFORE, the instant petition is hereby DENIED for lack of merit. The Decision
dated 17 August 2004 and the Resolution dated 10 March 2005 of the Court of Appeals
in CA-G.R. SP No. 79001 are hereby AFFIRMED. No costs.

SO ORDERED.
Estipona vs. Lobrigo, G.R. No. 226679, August 15, 2017

G.R. No. 226679

SALVADOR ESTIPONA, JR. y ASUELA, Petitioner,

vs.
HON. FRANK E. LOBRIGO, Presiding Judge of the Regional Trial Court, Branch 3,
Legazpi City, Albay, and PEOPLE OF THE PHILIPPINES, Respondents.

DECISION

PERALTA, J.:

Challenged in this petition for certiorari and prohibition1 is the constitutionality of Section

23 of Republic Act (R.A.) No. 9165, or the "Comprehensive Dangerous Drugs Act of
2002, "2 which provides:

SEC 23. Plea-Bargaining Provision. - Any person charged under any provision of this
Act regardless of the imposable penalty shall not be allowed to avail of the provision on
plea-bargaining.3

The facts are not in dispute.

Petitioner Salvador A. Estipona, Jr. (Estipona) is the accused in Criminal Case No.

13586 for violation of Section 11, Article II of R.A. No. 9165 (Possession of Dangerous
Drugs). The Information alleged:

That on or about the 21st day of March, 2016, in the City of Legazpi, Philippines, and
within the jurisdiction of this Honorable Court, the above-named accused, not being
lawfully authorized to possess or otherwise use any regulated drug and without the
corresponding license or prescription, did then and there, willfully, unlawfully and
feloniously have, in his possession and under his control and custody, one (1) piece
heat-sealed transparent plastic sachet marked as VOP 03/21/16- l G containing 0.084
[gram] of white crystalline substance, which when examined were found to be positive
for Methamphetamine Hydrocloride (Shabu), a dangerous drug.

CONTRARY TO LAW.4

On June 15, 2016, Estipona filed a Motion to Allow the Accused to Enter into a Plea
Bargaining Agreement,5 praying to withdraw his not guilty plea and, instead, to enter a
plea of guilty for violation of Section 12, Article II of R.A. No. 9165 (Possession of
Equipment, Instrument, Apparatus and Other Paraphernalia for Dangerous Drugs) with
a penalty of rehabilitation in view of his being a first-time offender and the minimal
quantity of the dangerous drug seized in his possession. He argued that Section 23 of
R.A. No. 9165 violates: (1) the intent of the law expressed in paragraph 3, Section 2
thereof; (2) the rule-making authority of the Supreme Court under Section 5(5), Article
VIII of the 1987 Constitution; and (3) the principle of separation of powers among the
three equal branches of the government.

In its Comment or Opposition6 dated June 27, 2016, the prosecution moved for the
denial of the motion for being contrary to Section 23 of R.A. No. 9165, which is said to
be justified by the Congress' prerogative to choose which offense it would allow plea
bargaining. Later, in a Comment or Opposition 7 dated June 29, 2016, it manifested that
it "is open to the Motion of the accused to enter into plea bargaining to give life to the
intent of the law as provided in paragraph 3, Section 2 of [R.A. No.] 9165, however, with
the express mandate of Section 23 of [R.A. No.] 9165 prohibiting plea bargaining, [it] is
left without any choice but to reject the proposal of the accused."

On July 12, 2016, respondent Judge Frank E. Lobrigo of the Regional Trial
Court (RTC), Branch 3, Legazpi City, Albay, issued an Order denying Estipona's motion.
It was opined:

The accused posited in his motion that Sec. 23 of RA No. 9165, which prohibits plea
bargaining, encroaches on the exclusive constitutional power of the Supreme Court to
promulgate rules of procedure because plea bargaining is a "rule of procedure." Indeed,
plea bargaining forms part of the Rules on Criminal Procedure, particularly under Rule
118, the rule on pre-trial conference. It is only the Rules of Court promulgated by the
Supreme Court pursuant to its constitutional rule-making power that breathes life to plea
bargaining. It cannot be found in any statute.

Without saying so, the accused implies that Sec. 23 of Republic Act No. 9165 is
unconstitutional because it, in effect, suspends the operation of Rule 118 of the Rules of
Court insofar as it allows plea bargaining as part of the mandatory pre-trial conference
in criminal cases.

The Court sees merit in the argument of the accused that it is also the intendment of the
law, R.A. No. 9165, to rehabilitate an accused of a drug offense. Rehabilitation is thus
only possible in cases of use of illegal drugs because plea bargaining is disallowed.
However, by case law, the Supreme Court allowed rehabilitation for accused charged
with possession of paraphernalia with traces of dangerous drugs, as held in People v.
Martinez, G.R. No. 191366, 13 December 2010. The ruling of the Supreme Court in this
case manifested the relaxation of an otherwise stringent application of Republic Act No.
9165 in order to serve an intent for the enactment of the law, that is, to rehabilitate the
offender.

Within the spirit of the disquisition in People v. Martinez, there might be plausible basis
for the declaration of Sec. 23 of R.A. No. 9165, which bars plea bargaining as
unconstitutional because indeed the inclusion of the provision in the law encroaches on
the exclusive constitutional power of the Supreme Court.
While basic is the precept that lower courts are not precluded from resolving, whenever
warranted, constitutional questions, the Court is not unaware of the admonition of the
Supreme Court that lower courts must observe a becoming modesty in examining
constitutional questions. Upon which admonition, it is thus not for this lower court to
declare Sec. 23 of R.A. No. 9165 unconstitutional given the potential ramifications that
such declaration might have on the prosecution of illegal drug cases pending before this
judicial station.8

Estipona filed a motion for reconsideration, but it was denied in an Order 9 dated July 26,
2016; hence, this petition raising the issues as follows:

I.

WHETHER SECTION 23 OF REPUBLIC ACT NO. 9165, WHICH PROHIBITS PLEA

BARGAINING IN ALL VIOLATIONS OF THE SAID LAW, IS UNCONSTITUTIONAL
FOR BEING VIOLATIVE OF THE CONSTITUTIONAL RIGHT TO EQUAL
PROTECTION OF THE LAW.

II.

WHETHER SECTION 23 OF REPUBLIC ACT NO. 9165 IS UNCONSTITUTIONAL AS

IT ENCROACHED UPON THE POWER OF THE SUPREME COURT TO
PROMULGATE RULES OF PROCEDURE.

III.

WHETHER THE REGIONAL TRIAL COURT, AS PRESIDED BY HON. FRANK E.

LOBRIGO, COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK
OR EXCESS OF JURISDICTION WHEN IT REFUSED TO DECLARE SECTION 23 OF
REPUBLIC ACT NO. 9165 AS UNCONSTITUTIONAL. 10

We grant the petition.

PROCEDURAL MATTERS

The People of the Philippines, through the Office of the Solicitor

General (OSG), contends that the petition should be dismissed outright for being
procedurally defective on the grounds that: (1) the Congress should have been
impleaded as an indispensable party; (2) the constitutionality of Section 23 of R.A. No.
9165 cannot be attacked collaterally; and (3) the proper recourse should have been a
petition for declaratory relief before this Court or a petition for certiorari before the RTC.
Moreover, the OSG argues that the petition fails to satisfy the requisites of judicial
review because: (1) Estipona lacks legal standing to sue for failure to show direct injury;
(2) there is no actual case or controversy; and (3) the constitutionality of Section 23 of
R.A. No. 9165 is not the lis mota of the case.
On matters of technicality, some points raised by the OSG maybe
correct.1âwphi1 Nonetheless, without much further ado, it must be underscored that it is
within this Court's power to make exceptions to the rules of court. Under proper
conditions, We may permit the full and exhaustive ventilation of the parties' arguments
and positions despite the supposed technical infirmities of a petition or its alleged
procedural flaws. In discharging its solemn duty as the final arbiter of constitutional
issues, the Court shall not shirk from its obligation to determine novel issues, or issues
of first impression, with far-reaching implications. 11

Likewise, matters of procedure and technicalities normally take a backseat when issues
of substantial and transcendental importance are present. 12 We have acknowledged
that the Philippines' problem on illegal drugs has reached "epidemic," "monstrous," and
"harrowing" proportions,13 and that its disastrously harmful social, economic, and
spiritual effects have broken the lives, shattered the hopes, and destroyed the future of
thousands especially our young citizens.14 At the same time, We have equally noted
that "as urgent as the campaign against the drug problem must be, so must we as
urgently, if not more so, be vigilant in the protection of the rights of the accused as
mandated by the Constitution x x x who, because of excessive zeal on the part of the
law enforcers, may be unjustly accused and convicted." 15 Fully aware of the gravity of
the drug menace that has beset our country and its direct link to certain crimes, the
Court, within its sphere, must do its part to assist in the all-out effort to lessen, if not
totally eradicate, the continued presence of drug lords, pushers and users. 16

Bearing in mind the very important and pivotal issues raised in this petition, technical
matters should not deter Us from having to make the final and definitive pronouncement
that everyone else depends for enlightenment and guidance. 17 When public interest
requires, the Court may brush aside procedural rules in order to resolve a constitutional
issue.18

x x x [T]he Court is invested with the power to suspend the application of the rules of
procedure as a necessary complement of its power to promulgate the same. Barnes v.
Hon. Quijano Padilla discussed the rationale for this tenet, viz. :

Let it be emphasized that the rules of procedure should be viewed as mere tools
designed to facilitate the attainment of justice. Their strict and rigid application, which
would result in technicalities that tend to frustrate rather than promote substantial
justice, must always be eschewed. Even the Rules of Court reflect this principle. The
power to suspend or even disregard rules can be so pervasive and compelling as to
alter even that which this Court itself has already declared to be final, x x x.

The emerging trend in the rulings of this Court is to afford every party litigant the
amplest opportunity for the proper and just determination of his cause, free from the
constraints of technicalities. Time and again, this Court has consistently held that rules
must not be applied rigidly so as not to override substantial justice. 19

SUBSTANTIVE ISSUES
Rule-making power of the Supreme
Court under the 1987 Constitution

Section 5(5), A1iicle VIII of the 1987 Constitution explicitly provides:

Sec. 5. The Supreme Court shall have the following powers:

xxxx

(5) Promulgate rules concerning the protection and enforcement of constitutional rights,
pleading, practice, and procedure in all courts, the admission to the practice of law, the
Integrated Bar, and legal assistance to the underprivileged. Such rules shall provide a
simplified and inexpensive procedure for the speedy disposition of cases, shall be
uniform for all courts of the same grade, and shall not diminish, increase, or modify
substantive rights. Rules of procedure of special courts and quasi-judicial bodies shall
remain effective unless disapproved by the Supreme Court.

The power to promulgate rules of pleading, practice and procedure is now Our exclusive
domain and no longer shared with the Executive and Legislative
departments.20 In Echegaray v. Secretary of Justice, 21 then Associate Justice (later
Chief Justice) Reynato S. Puno traced the history of the Court's rule-making power and
highlighted its evolution and development.

x x x It should be stressed that the power to promulgate rules of pleading, practice and
procedure was granted by our Constitutions to this Court to enhance its
independence, for in the words of Justice Isagani Cruz "without independence and
integrity, courts will lose that popular trust so essential to the maintenance of their vigor
as champions of justice." Hence, our Constitutions continuously vested this power to
this Court for it enhances its independence. Under the 1935 Constitution, the power of
this Court to promulgate rules concerning pleading, practice and procedure was
granted but it appeared to be co-existent with legislative power for it was subject to the
power of Congress to repeal, alter or supplement. Thus, its Section 13, Article VIII
provides:

"Sec. 13. The Supreme Court shall have the power to promulgate rules concerning
pleading, practice and procedure in all courts, and the admission to the practice of law.
Said rules shall be uniform for all courts of the same grade and shall not diminish,
increase, or modify substantive rights. The existing laws on pleading, practice and
procedure are hereby repealed as statutes, and are declared Rules of Court, subject to
the power of the Supreme Court to alter and modify the same. The Congress shall have
the power to repeal, alter or supplement the rules concerning pleading, practice and
procedure, and the admission to the practice of law in the Philippines."

The said power of Congress, however, is not as absolute as it may appear on its
surface. In In re: Cunanan Congress in the exercise of its power to amend rules of the
Supreme Court regarding admission to the practice of law, enacted the Bar Flunkers Act
of 1953 which considered as a passing grade, the average of 70% in the bar
examinations after July 4, 1946 up to August 1951 and 71 % in the 1952 bar
examinations. This Court struck down the law as unconstitutional. In his ponencia, Mr.
Justice Diokno held that "x x x the disputed law is not a legislation; it is a judgment - a
judgment promulgated by this Court during the aforecited years affecting the bar
candidates concerned; and although this Court certainly can revoke these judgments
even now, for justifiable reasons, it is no less certain that only this Court, and not the
legislative nor executive department, that may do so. Any attempt on the part of these
departments would be a clear usurpation of its function, as is the case with the law in
question." The venerable jurist further ruled: "It is obvious, therefore, that the ultimate
power to grant license for the practice of law belongs exclusively to this Court, and the
law passed by Congress on the matter is of permissive character, or as other authorities
say, merely to fix the minimum conditions for the license." By its ruling, this Court
qualified the absolutist tone of the power of Congress to "repeal, alter or supplement the
rules concerning pleading, practice and procedure, and the admission to the practice of
law in the Philippines.

The ruling of this Court in In re Cunanan was not changed by the 1973 Constitution. For
the 1973 Constitution reiterated the power of this Court "to promulgate rules concerning
pleading, practice and procedure in all courts, x x x which, however, may be repealed,
altered or supplemented by the Batasang Pambansa x x x." More completely, Section
5(2)5 of its Article X provided:

xxxx

"Sec. 5. The Supreme Court shall have the following powers.

xxxx

(5) Promulgate rules concerning pleading, practice, and procedure in all courts, the
admission to the practice of law, and the integration of the Bar, which, however, may be
repealed, altered, or supplemented by the Batasang Pambansa. Such rules shall
provide a simplified and inexpensive procedure for the speedy disposition of cases,
shall be uniform for all courts of the same grade, and shall not diminish, increase, or
modify substantive rights."

Well worth noting is that the 1973 Constitution further strengthened the independence of

the judiciary by giving to it the additional power to promulgate rules governing the
integration of the Bar.

The 1987 Constitution molded an even stronger and more independent

judiciary. Among others, it enhanced the rule making power of this Court. Its Section
5(5), Article VIII provides:

xxxx
"Section 5. The Supreme Court shall have the following powers:

xxx

(5) Promulgate rules concerning the protection and enforcement of constitutional

rights, pleading, practice and procedure in all courts, the admission to the practice of
law, the Integrated Bar, and legal assistance to the underprivileged. Such rules shall
provide a simplified and inexpensive procedure for the speedy disposition of cases,
shall be uniform for all courts of the same grade, and shall not diminish, increase, or
modify substantive rights. Rules of procedure of special courts and quasi-judicial bodies
shall remain effective unless disapproved by the Supreme Court. "

The rule making power of this Court was expanded. This Court for the first time was
given the power to promulgate rules concerning the protection and enforcement of
constitutional rights. The Court was also granted for the .first time the power to
disapprove rules of procedure of special courts and quasi-judicial bodies. But most
importantly, the 1987 Constitution took away the power of Congress to repeal, alter, or
supplement rules concerning pleading, practice and procedure. In fine, the power to
promulgate rules of pleading, practice and procedure is no longer shared by this Court
with Congress, more so with the Executive. x x x.22

Just recently, Carpio-Morales v. Court of Appeals (Sixth Division) 23 further elucidated:

While the power to define, prescribe, and apportion the jurisdiction of the various courts
is, by constitutional design, vested unto Congress, the power to promulgate rules
concerning the protection and enforcement of constitutional rights, pleading,
practice, and procedure in all courts belongs exclusively to this Court. Section 5
(5), Article VIII of the 1987 Constitution reads:

xxxx

In Echegaray v. Secretary of Justice (Echegaray), the Court traced the evolution of its

rule-making authority, which, under the 1935 and 1973 Constitutions, had been priorly
subjected to a power-sharing scheme with Congress. As it now stands, the 1987
Constitution textually altered the old provisions by deleting the concurrent power
of Congress to amend the rules, thus solidifying in one body the Court's rule-
making powers, in line with the Framers' vision of institutionalizing a " [ s] tronger and
more independent judiciary."

The records of the deliberations of the Constitutional Commission would show that the
Framers debated on whether or not the Court's rulemaking powers should be shared
with Congress. There was an initial suggestion to insert the sentence "The National
Assembly may repeal, alter, or supplement the said rules with the advice and
concurrence of the Supreme Court," right after the phrase "Promulgate rules concerning
the protection and enforcement of constitutional rights, pleading, practice, and
procedure in all courts, the admission to the practice of law, the integrated bar, and
legal assistance to the underprivileged[,]" in the enumeration of powers of the Supreme
Court. Later, Commissioner Felicitas S. Aquino proposed to delete the former sentence
and, instead, after the word "[under]privileged," place a comma(,) to be followed by "the
phrase with the concurrence of the National Assembly." Eventually, a compromise
formulation was reached wherein (a) the Committee members agreed to Commissioner
Aquino's proposal to delete the phrase "the National Assembly may repeal, alter, or
supplement the said rules with the advice and concurrence of the Supreme Court"
and (b) in turn, Commissioner Aquino agreed to withdraw his proposal to add "the
phrase with the concurrence of the National Assembly." The changes were approved,
thereby leading to the present lack of textual reference to any form of
Congressional participation in Section 5 (5), Article VIII, supra. Theprevailing
consideration was that "both bodies, the Supreme Court and the Legislature,
have their inherent powers."

Thus, as it now stands, Congress has no authority to repeal, alter, or supplement rules
concerning pleading, practice, and procedure.x x x. 24

The separation of powers among the three co-equal branches of our government has
erected an impregnable wall that keeps the power to promulgate rules of pleading,
practice and procedure within the sole province of this Court. 25 The other branches
trespass upon this prerogative if they enact laws or issue orders that effectively repeal,
alter or modify any of the procedural rules promulgated by the Court. 26 Viewed from this
perspective, We have rejected previous attempts on the part of the Congress, in the
exercise of its legislative power, to amend the Rules of Court (Rules), to wit:

1. Fabian v. Desierto27 -Appeal from the decision of the Office of the Ombudsman in an

administrative disciplinary case should be taken to the Court of Appeals under the
provisions of Rule 43 of the Rules instead of appeal by certiorari under Rule 45 as
provided in Section 27 of R.A. No. 6770.

2. Cathay Metal Corporation v. Laguna West Multi-Purpose Cooperative, Inc. 28 - The

Cooperative Code provisions on notices cannot replace the rules on summons under
Rule 14 of the Rules.

3. RE: Petition for Recognition of the Exemption of the GSIS from Payment of Legal
Fees; 29 Baguio Market Vendors Multi-Purpose Cooperative (BAMARVEMPCO) v. Hon.
Judge Cabato-Cortes;30 In Re: Exemption of the National Power Corporation from
Payment of Filing/Docket Fees; 31 and Rep. of the Phils. v. Hon. Mangotara, et al. 32 -
Despite statutory provisions, the GSIS, BAMARVEMPCO, and NPC are not exempt
from the payment of legal fees imposed by Rule 141 of the Rules.

4. Carpio-Morales v. Court of Appeals (Sixth Division)33 - The first paragraph of Section

14 of R.A. No. 6770, which prohibits courts except the Supreme Court from issuing
temporary restraining order and/or writ of preliminary injunction to enjoin an
investigation conducted by the Ombudsman, is unconstitutional as it contravenes Rule
58 of the Rules.
Considering that the aforesaid laws effectively modified the Rules, this Court asserted
its discretion to amend, repeal or even establish new rules of procedure, to the
exclusion of the legislative and executive branches of government. To reiterate, the
Court's authority to promulgate rules on pleading, practice, and procedure is exclusive
and one of the safeguards of Our institutional independence. 34

Plea bargaining in criminal cases

Plea bargaining, as a rule and a practice, has been existing in our jurisdiction since July
1, 1940, when the 1940 Rules took effect. Section 4, Rule 114 (Pleas) of which stated:

SEC. 4. Plea of guilty of lesser offense. - The defendant, with the consent of the court
and of the fiscal, may plead guilty of any lesser offense than that charged which is
necessarily included in the offense charged in the complaint or information.

When the 1964 Rules became effective on January 1, 1964, the same provision was
retained under Rule 118 (Pleas).1âwphi1 Subsequently, with the effectivity of the
1985 Rules on January 1, 1985, the provision on plea of guilty to a lesser offense was
amended. Section 2, Rule 116 provided:

SEC. 2. Plea of guilty to a lesser offense. - The accused with the consent of the
offended party and the fiscal, may be allowed by the trial court to plead guilty to a lesser
offense, regardless of whether or not it is necessarily included in the crime charged, or
is cognizable by a court of lesser jurisdiction than the trial court. No amendment of the
complaint or information is necessary. (4a, R-118)

As well, the term "plea bargaining" was first mentioned and expressly required during
pre-trial. Section 2, Rule 118 mandated:

SEC. 2. Pre-trial conference; subjects. - The pre-trial conference shall consider the
following:

(a) Plea bargaining;

(b) Stipulation of facts;

(c) Marking for identification of evidence of the parties;

(d) Waiver of objections to admissibility of evidence; and

(e) Such other matters as will promote a fair and expeditious trial. (n)

The 1985 Rules was later amended. While the wordings of Section 2, Rule 118 was
retained, Section 2, Rule 116 was modified in 1987. A second paragraph was added,
stating that "[a] conviction under this plea shall be equivalent to a conviction of the
offense charged for purposes of double jeopardy."
When R.A. No. 8493 ("Speedy Trial Act of 1998 ') was enacted,35 Section 2, Rule 118 of
the Rules was substantially adopted. Section 2 of the law required that plea bargaining
and other matters36 that will promote a fair and expeditious trial are to be considered
during pre-trial conference in all criminal cases cognizable by the Municipal Trial Court,
Municipal Circuit Trial Court, Metropolitan Trial Court, Regional Trial Court, and the
Sandiganbayan.

Currently, the pertinent rules on plea bargaining under the 2000 Rules37 are quoted
below:

RULE 116 (Arraignment and Plea):

SEC. 2. Plea of guilty to a lesser offense. - At arraignment, the accused, with the
consent of the offended party and the prosecutor, may be allowed by the trial court to
plead guilty to a lesser offense which is necessarily included in the offense charged.
After arraignment but before trial, the accused may still be allowed to plead guilty to said
lesser offense after withdrawing his plea of not guilty. No amendment of the complaint
or information is necessary. (Sec. 4, Cir. 38-98)

RULE 118 (Pre-trial):

SEC. 1. Pre-trial; mandatory in criminal cases. - In all criminal cases cognizable by

the Sandiganbayan, Regional Trial Court, Metropolitan Trial Court, Municipal Trial Court
in Cities, Municipal Trial Court and Municipal Circuit Trial Court, the court shall, after
arraignment and within thirty (30) days from the date the court acquires jurisdiction over
the person of the accused, unless a shorter period is provided for in special laws or
circulars of the Supreme Court, order a pre-trial conference to consider the following:

(a) plea bargaining;

(b) stipulation of facts;

(c) marking for identification of evidence of the parties;

(d) waiver of objections to admissibility of evidence;

(e) modification of the order of trial if the accused admits the charge but interposes a
lawful defense; and

(f) such matters as will promote a fair and expeditious trial of the criminal and civil
aspects of the case. (Sec. 2 & 3, Cir. 38-98)

Plea bargaining is a rule of procedure

The Supreme Court's sole prerogative to issue, amend, or repeal procedural rules is
limited to the preservation of substantive rights, i.e., the former should not diminish,
increase or modify the latter.38 "Substantive law is that part of the law which creates,
defines and regulates rights, or which regulates the right and duties which give rise to a
cause of action; that part of the law which courts are established to administer; as
opposed to adjective or remedial law, which prescribes the method of enforcing rights or
obtain redress for their invasions."39 Fabian v. Hon. Desierto40 laid down the test for
determining whether a rule is substantive or procedural in nature.

It will be noted that no definitive line can be drawn between those rules or statutes
which are procedural, hence within the scope of this Court's rule-making power, and
those which are substantive. In fact, a particular rule may be procedural in one context
and substantive in another. It is admitted that what is procedural and what is substantive
is frequently a question of great difficulty. It is not, however, an insurmountable problem
if a rational and pragmatic approach is taken within the context of our own procedural
and jurisdictional system.

In determining whether a rule prescribed by the Supreme Court, for the practice and
procedure of the lower courts, abridges, enlarges, or modifies any substantive right, the
test is whether the rule really regulates procedure, that is, the judicial process for
enforcing rights and duties recognized by substantive law and for justly administering
remedy and redress for a disregard or infraction of them. If the rule takes away a vested
right, it is not procedural. If the rule creates a right such as the right to appeal, it may be
classified as a substantive matter; but if it operates as a means of implementing an
existing right then the rule deals merely with procedure. 41

In several occasions, We dismissed the argument that a procedural rule violates

substantive rights. For example, in People v. Lacson, 42 Section 8, Rule 117 of
the Rules on provisional dismissal was held as a special procedural limitation qualifying
the right of the State to prosecute, making the time-bar an essence of the given right or
as an inherent part thereof, so that its expiration operates to extinguish the right of the
State to prosecute the accused.43 Speaking through then Associate Justice Romeo J.
Callejo, Sr., the Court opined:

In the new rule in question, as now construed by the Court, it has fixed a time-bar of one
year or two years for the revival of criminal cases provisionally dismissed with the
express consent of the accused and with a priori notice to the offended party. The time-
bar may appear, on first impression, unreasonable compared to the periods under
Article 90 of the Revised Penal Code. However, in fixing the time-bar, the Court
balanced the societal interests and those of the accused for the orderly and speedy
disposition of criminal cases with minimum prejudice to the State and the accused. It
took into account the substantial rights of both the State and of the accused to due
process. The Court believed that the time limit is a reasonable period for the State to
revive provisionally dismissed cases with the consent of the accused and notice to the
offended parties. The time-bar fixed by the Court must be respected unless it is shown
that the period is manifestly short or insufficient that the rule becomes a denial of
justice. The petitioners failed to show a manifest shortness or insufficiency of the time-
bar.
The new rule was conceptualized by the Committee on the Revision of the Rules and
approved by the Court en banc primarily to enhance the administration of the criminal
justice system and the rights to due process of the State and the accused by eliminating
the deleterious practice of trial courts of provisionally dismissing criminal cases on
motion of either the prosecution or the accused or jointly, either with no time-bar for the
revival thereof or with a specific or definite period for such revival by the public
prosecutor. There were times when such criminal cases were no longer revived or
refiled due to causes beyond the control of the public prosecutor or because of the
indolence, apathy or the lackadaisical attitude of public prosecutors to the prejudice of
the State and the accused despite the mandate to public prosecutors and trial judges to
expedite criminal proceedings.

It is almost a universal experience that the accused welcomes delay as it usually

operates in his favor, especially if he greatly fears the consequences of his trial and
conviction. He is hesitant to disturb the hushed inaction by which dominant cases have
been known to expire.

The inordinate delay in the revival or refiling of criminal cases may impair or reduce the
capacity of the State to prove its case with the disappearance or nonavailability of its
witnesses. Physical evidence may have been lost. Memories of witnesses may have
grown dim or have faded. Passage of time makes proof of any fact more difficult. The
accused may become a fugitive from justice or commit another crime. The longer the
lapse of time from the dismissal of the case to the revival thereof, the more difficult it is
to prove the crime.

On the other side of the fulcrum, a mere provisional dismissal of a criminal case does
not terminate a criminal case. The possibility that the case may be revived at any time
may disrupt or reduce, if not derail, the chances of the accused for employment, curtail
his association, subject him to public obloquy and create anxiety in him and his family.
He is unable to lead a normal life because of community suspicion and his own anxiety.
He continues to suffer those penalties and disabilities incompatible with the presumption
of innocence. He may also lose his witnesses or their memories may fade with the
passage of time. In the long run, it may diminish his capacity to defend himself and thus
eschew the fairness of the entire criminal justice system.

The time-bar under the new rule was fixed by the Court to excise the malaise that
plagued the administration of the criminal justice system for the benefit of the State and
the accused; not for the accused only.44

Also, We said in Jaylo, et al. v. Sandiganbayan, et al. 45 that Section 6, Rule 120 of

the Rules, which provides that an accused who failed to appear at the promulgation of
the judgment of conviction shall lose the remedies available against the judgment, does
not take away substantive rights but merely provides the manner through which an
existing right may be implemented.
Section 6, Rule 120, of the Rules of Court, does not take away per se the right of the
convicted accused to avail of the remedies under the Rules. It is the failure of the
accused to appear without justifiable cause on the scheduled date of promulgation of
the judgment of conviction that forfeits their right to avail themselves of the remedies
against the judgment.

It is not correct to say that Section 6, Rule 120, of the Rules of Court diminishes or
modifies the substantive rights of petitioners. It only works in pursuance of the power of
the Supreme Court to "provide a simplified and inexpensive procedure for the speedy
disposition of cases." This provision protects the courts from delay in the speedy
disposition of criminal cases - delay arising from the simple expediency of
nonappearance of the accused on the scheduled promulgation of the judgment of
conviction.46

By the same token, it is towards the provision of a simplified and inexpensive procedure
for the speedy disposition of cases in all courts 47 that the rules on plea bargaining was
introduced. As a way of disposing criminal charges by agreement of the parties, plea
bargaining is considered to be an "important," "essential," "highly desirable," and
"legitimate" component of the administration of justice. 48 Some of its salutary effects
include:

x x x For a defendant who sees slight possibility of acquittal, the advantages of pleading
guilty and limiting the probable penalty are obvious - his exposure is reduced, the
correctional processes can begin immediately, and the practical burdens of a trial are
eliminated. For the State there are also advantages - the more promptly imposed
punishment after an admission of guilt may more effectively attain the objectives of
punishment; and with the avoidance of trial, scarce judicial and prosecutorial resources
are conserved for those cases in which there is a substantial issue of the defendant's
guilt or in which there is substantial doubt that the State can sustain its burden of
proof. (Brady v. United States, 397 U.S. 742, 752 [1970])

Disposition of charges after plea discussions x x x leads to prompt and largely final
disposition of most criminal cases; it avoids much of the corrosive impact of enforced
idleness during pretrial confinement for those who are denied release pending trial; it
protects the public from those accused persons who are prone to continue criminal
conduct even while on pretrial release; and, by shortening the time between charge and
disposition, it enhances whatever may be the rehabilitative prospects of the guilty when
they are ultimately imprisoned. (Santobello v. New York, 404 U.S. 257, 261 [1971])

The defendant avoids extended pretrial incarceration and the anxieties and
uncertainties of a trial; he gains a speedy disposition of his case, the chance to
acknowledge his guilt, and a prompt start in realizing whatever potential there may be
for rehabilitation. Judges and prosecutors conserve vital and scarce resources. The
public is protected from the risks posed by those charged with criminal offenses who are
at large on bail while awaiting completion of criminal proceedings. (Blackledge v.
Allison, 431 U.S. 63, 71 [1977])
In this jurisdiction, plea bargaining has been defined as "a process whereby the
accused and the prosecution work out a mutually satisfactory disposition of the case
subject to court approval."49 There is give-and-take negotiation common in plea
bargaining.50 The essence of the agreement is that both the prosecution and the
defense make concessions to avoid potential losses. 51 Properly administered, plea
bargaining is to be encouraged because the chief virtues of the system - speed,
economy, and finality - can benefit the accused, the offended party, the prosecution,
and the court.52

Considering the presence of mutuality of advantage, 53 the rules on plea bargaining

neither create a right nor take away a vested right. Instead, it operates as a means to
implement an existing right by regulating the judicial process for enforcing rights and
duties recognized by substantive law and for justly administering remedy and redress
for a disregard or infraction of them.

The decision to plead guilty is often heavily influenced by the defendant's appraisal of
the prosecution's case against him and by the apparent likelihood of securing leniency
should a guilty plea be offered and accepted. 54 In any case, whether it be to the offense
charged or to a lesser crime, a guilty plea is a "serious and sobering occasion"
inasmuch as it constitutes a waiver of the fundamental rights to be presumed innocent
until the contrary is proved, to be heard by himself and counsel, to meet the witnesses
face to face, to bail (except those charged with offenses punishable by reclusion
perpetua when evidence of guilt is strong), to be convicted by proof beyond reasonable
doubt, and not to be compelled to be a witness against himself. 55

Yet a defendant has no constitutional right to plea bargain. No basic rights are infringed
by trying him rather than accepting a plea of guilty; the prosecutor need not do so if he
prefers to go to trial.56 Under the present Rules, the acceptance of an offer to plead
guilty is not a demandable right but depends on the consent of the offended party 57 and
the prosecutor, which is a condition precedent to a valid plea of guilty to a lesser offense
that is necessarily included in the offense charged. 58 The reason for this is that the
prosecutor has full control of the prosecution of criminal actions; his duty is to always
prosecute the proper offense, not any lesser or graver one, based on what the evidence
on hand can sustain.59

[Courts] normally must defer to prosecutorial decisions as to whom to prosecute. The

reasons for judicial deference are well known. Prosecutorial charging decisions are
rarely simple. In addition to assessing the strength and importance of a case,
prosecutors also must consider other tangible and intangible factors, such as
government enforcement priorities. Finally, they also must decide how best to allocate
the scarce resources of a criminal justice system that simply cannot accommodate the
litigation of every serious criminal charge. Because these decisions "are not readily
susceptible to the kind of analysis the courts are competent to undertake," we have
been "properly hesitant to examine the decision whether to prosecute. " 60
The plea is further addressed to the sound discretion of the trial court, which may allow
the accused to plead guilty to a lesser offense which is necessarily included in the
offense charged. The word may denotes an exercise of discretion upon the trial court on
whether to allow the accused to make such plea. 61 Trial courts are exhorted to keep in
mind that a plea of guilty for a lighter offense than that actually charged is not supposed
to be allowed as a matter of bargaining or compromise for the convenience of the
accused.62

Plea bargaining is allowed during the arraignment, the pre-trial, or even up to the point
when the prosecution already rested its case. 63 As regards plea bargaining during the
pre-trial stage, the trial court's exercise of discretion should not amount to a grave
abuse thereof.64 "Grave abuse of discretion" is a capricious and whimsical exercise of
judgment 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, as where the power is exercised in an
arbitrary and despotic manner because of passion or hostility; it arises when a court or
tribunal violates the Constitution, the law or existing jurisprudence. 65

If the accused moved to plead guilty to a lesser offense subsequent to a bail hearing or
after the prosecution rested its case, the rules allow such a plea only when the
prosecution does not have sufficient evidence to establish the guilt of the crime
charged.66 The only basis on which the prosecutor and the court could rightfully act in
allowing change in the former plea of not guilty could be nothing more and nothing less
than the evidence on record. As soon as the prosecutor has submitted a comment
whether for or against said motion, it behooves the trial court to assiduously study the
prosecution's evidence as well as all the circumstances upon which the accused made
his change of plea to the end that the interests of justice and of the public will be
served.67 The ruling on the motion must disclose the strength or weakness of the
prosecution's evidence.68 Absent any finding on the weight of the evidence on hand, the
judge's acceptance of the defendant's change of plea is improper and irregular. 69

On whether Section 23 of R.A. No.

9165 violates the equal protection
clause

At this point, We shall not resolve the issue of whether Section 23 of R.A. No. 9165 is
contrary to the constitutional right to equal protection of the law in order not to preempt
any future discussion by the Court on the policy considerations behind Section 23 of
R.A. No. 9165. Pending deliberation on whether or not to adopt the statutory
provision in toto or a qualified version thereof, We deem it proper to declare as invalid
the prohibition against plea bargaining on drug cases until and unless it is made part of
the rules of procedure through an administrative circular duly issued for the purpose.

WHEREFORE, the petition for certiorari and prohibition is GRANTED. Section 23 of

Republic Act No. 9165 is declared unconstitutional for being contrary to the rule-making
authority of the Supreme Court under Section 5(5), Article VIII of the 1987 Constitution.
SO ORDERED.
Carpio-Morales vs. CA, G.R. Nos. 217126-27. November 10, 2015
[ G.R. Nos. 217126-27, November 10, 2015 ]
CONCHITA CARPIO MORALES, IN HER CAPACITY AS THE OMBUDSMAN,
PETITIONER, VS. COURT OF APPEALS (SIXTH DIVISION) AND JEJOMAR ERWIN
S. BINAY, JR., RESPONDENTS.

DECISION
PERLAS-BERNABE, J.:
"All government is a trust, every branch of government is a trust, and immemorially
acknowledged so to be[.]"[1]

The Case

Before the Court is a petition for certiorari and prohibition[2] filed on March 25, 2015 by

petitioner Conchita Carpio Morales, in her capacity as the Ombudsman (Ombudsman),
through the Office of the Solicitor General (OSG), assailing: (a) the Resolution [3] dated
March 16, 2015 of public respondent the Court of Appeals (CA) in CA-G.R. SP No.
139453, which granted private respondent Jejomar Erwin S. Binay, Jr.'s (Binay, Jr.)
prayer for the issuance of a temporary restraining order (TRO) against the
implementation of the Joint Order[4] dated March 10, 20,15 of the Ombudsman in OMB-
C-A-15-0058 to 0063 (preventive suspension order) preventively suspending him and
several other public officers and employees of the City Government of Makati, for six (6)
months without pay; and (b) the Resolution [5] dated March 20, 2015 of the CA, ordering
the Ombudsman to comment on Binay, Jr.'s petition for contempt [6] in CA-G.R. SP No.
139504.

Pursuant to the Resolution[7] dated April 6, 2015, the CA issued a writ of preliminary

injunction[8] (WPI) in CA-G.R. SP No. 139453 which further enjoined the implementation
of the preventive suspension order, prompting the Ombudsman to file a supplemental
petition[9] on April 13, 2015.

The Facts

On July 22, 2014, a complaint/affidavit[10] was filed by Atty. Renato L. Bondal and

Nicolas "Ching" Enciso VI before the Office of the Ombudsman against Binay, Jr. and
other public officers and employees of the City Government of Makati (Binay, Jr., et al),
accusing them of Plunder[11] and violation of Republic Act No. (RA) 3019,[12] otherwise
known as "The Anti-Graft and Corrupt Practices Act," in connection with the five (5)
phases of the procurement and construction of the Makati City Hall Parking Building
(Makati Parking Building).[13]
On September 9, 2014, the Ombudsman constituted a Special Panel of
Investigators[14] to conduct a fact-finding investigation, submit an investigation report,
and file the necessary complaint, if warranted (1st Special Panel). [15] Pursuant to the
Ombudsman's directive, on March 5, 2015, the 1st Special Panel filed a
complaint[16] (OMB Complaint) against Binay, Jr., et al, charging them with six (6)
administrative cases[17] for Grave Misconduct, Serious Dishonesty, and Conduct
Prejudicial to the Best Interest of the Service, and six (6) criminal cases [18] for violation of
Section 3 (e) of RA 3019, Malversation of Public Funds, and Falsification of Public
Documents (OMB Cases).[19]

As to Binay, Jr., the OMB Complaint alleged that he was involved in anomalous
activities attending the following procurement and construction phases of the Makati
Parking Building project, committed during his previous and present terms as City
Mayor of Makati:

Binay, Jr.'s First Term (2010 to 2013)[20]

(a) On September 21, 2010, Binay, Jr. issued the Notice of Award[21] for Phase III of the
Makati Parking Building project to Hilmarc's Construction Corporation (Hilmarc's), and
consequently, executed the corresponding contract [22] on September 28, 2010,
[23]
 without the required publication and the lack of architectural design, [24] and approved
the release of funds therefor in the following amounts as follows: (1) P130,518,394.80
on December 15, 2010;[25] (2) P134,470,659.64 on January 19, 2011; [26] (3)
P92,775,202.27 on February 25, 2011;[27] (4) P57,148,625.51 on March 28, 2011;[28] (5)
P40,908,750.61 on May 3, 2011;[29] and (6) P106,672,761.90 on July 7, 2011;[30]

(b) On August 11, 2011, Binay, Jr. issued the Notice of Award[31] for Phase IV of the
Makati Parking Building project to Hilmarc's, and consequently, executed the
corresponding contract[32] on August 18, 2011,[33] without the required publication and
the lack of architectural design,[34] and approved the release of funds therefor in the
following amounts as follows: (1) P182,325,538.97 on October 4, 2O11; [35] (2)
P173,132,606.91 on October 28,2011;[36] (3) P80,408,735.20 on December 12, 2011;
[37]
 (4) P62,878,291.81 on February 10, 2012; [38] and (5) P59,639,167.90 on October 1,
2012;[39]

(c) On September 6, 2012, Binay, Jr. issued the Notice of Award [40] for Phase V of the
Makati Parking Building project to Hilmarc's, and consequently, executed the
corresponding contract[41] on September 13, 2012,[42] without the required publication
and the lack of architectural design,[43] and approved the release of the funds therefor in
the amounts of P32,398,220.05[44] and P30,582,629.30[45] on December 20, 2012;  and

Binay, Jr.'s Second Term (2013 to 2016)[46]

(d) On July 3, 2013 and July 4, 2013, Binay, Jr. approved the release of funds for the
remaining balance of the September 13, 2012 contract with Hilmarc's for Phase V of the
Makati Parking Building project in the amount of P27,443,629.97; [47] and

(e) On July 24, 2013, Binay, Jr. approved the release of funds for the remaining
balance of the contract[48] with MANA Architecture & Interior Design Co. (MANA) for the
design and architectural services covering the Makati Parking Building project in the
amount of P429,011.48.[49]

On March 6, 2015, the Ombudsman created another Special Panel of Investigators to

conduct a preliminary investigation and administrative adjudication on the OMB Cases
(2nd Special Panel).[50] Thereafter, on March 9, 2015, the 2nd Special Panel issued
separate orders[51] for each of the OMB Cases, requiring Binay, Jr., et al. to file their
respective counter-affidavits.[52]

Before Binay, Jr., et al.'s filing of their counter-affidavits, the Ombudsman, upon the
recommendation of the 2nd Special Panel, issued on March 10, 2015, the subject
preventive suspension order, placing Binay, Jr., et al. under preventive suspension for
not more than six (6) months without pay, during the pendency of the OMB Cases.
[53]
 The Ombudsman ruled that the requisites for the preventive suspension of a public
officer are present,[54] finding that: (a) the evidence of Binay, Jr., et al.'s guilt was strong
given that (1) the losing bidders and members of the Bids and Awards Committee of
Makati City had attested to the irregularities attending the Makati Parking Building
project; (2) the documents on record negated the publication of bids; and (3) the
disbursement vouchers, checks, and official receipts showed the release of funds; and
(b) (1) Binay, Jr., et al. were administratively charged with Grave Misconduct, Serious
Dishonesty, and Conduct Prejudicial to the Best Interest of the Service; (2) said
charges, if proven to be true, warrant removal from public service under the Revised
Rules on Administrative Cases in the Civil Service (RRACCS), and (3) Binay, Jr., et al.'s
respective positions give them access to public records and allow them to influence
possible witnesses; hence, their continued stay in office may prejudice the investigation
relative to the OMB Cases filed against them.[55] Consequently, the Ombudsman
directed the Department of Interior and Local Government (DILG), through Secretary
Manuel A. Roxas II (Secretary Roxas), to immediately implement the preventive
suspension order against Binay, Jr., et al., upon receipt of the same.[56]

On March 11, 2015, a copy of the preventive suspension order was sent to the Office of
the City Mayor, and received by Maricon Ausan, a member of Binay, Jr.'s staff. [57]

The Proceedings Before the CA

On even date,[58] Binay, Jr. filed a petition for certiorari[59] before the CA, docketed

as CA-G.R. SP No. 139453, seeking the nullification of the preventive suspension
order, and praying for the issuance of a TRO and/or WPI to enjoin its implementation.
[60]
 Primarily, Binay, Jr. argued that he could not be held administratively liable for
any anomalous activity attending any of the five (5) phases of the Makati Parking
Building project since: (a) Phases I and II were undertaken before he was elected
Mayor of Makati in 2010; and (b) Phases III to V transpired during his first term and
that his re-election as City Mayor of Makati for a second term effectively
condoned his administrative liability therefor, if any, thus rendering the
administrative cases against him moot and academic. [61] In any event, Binay, Jr.
claimed that the Ombudsman's preventive suspension order failed to show that
the evidence of guilt presented against him is strong, maintaining that he did not
participate in any of the purported irregularities. [62] In support of his prayer for injunctive
relief, Binay, Jr. argued that he has a clear and unmistakable right to hold public office,
having won by landslide vote in the 2010 and 2013 elections, and that, in view of the
condonation doctrine, as well as the lack of evidence to sustain the charges against
him, his suspension from office would undeservedly deprive the electorate of the
services of the person they have conscientiously chosen and voted into office. [63]

On March 16, 2015, at around 8:24 a.m., Secretary Roxas caused the implementation
of the preventive suspension order through the DILG National Capital Region - Regional
Director, Renato L. Brion, CESO III (Director Brion), who posted a copy thereof on the
wall of the Makati City Hall after failing to personally serve the same on Binay, Jr. as the
points of entry to the Makati City Hall were closed. At around 9:47 a.m., Assistant City
Prosecutor of Makati Billy C. Evangelista administered the oath of office on Makati City
Vice Mayor Romulo V. Peña, Jr. (Peña, Jr.) who thereupon assumed office as Acting
Mayor.[64]

At noon of the same day, the CA issued a Resolution [65] (dated March 16, 2015),
granting Binay, Jr.'s prayer for a TRO,[66] notwithstanding Pena, Jr.'s assumption of
duties as Acting Mayor earlier that day.[67] Citing the case of Governor Garcia, Jr. v. CA,
[68]
 the CA found that it was more prudent on its part to issue a TRO in view of the
extreme urgency of the matter and seriousness of the issues raised, considering that if it
were established that the acts subject of the administrative cases against Binay, Jr.
were all committed during his prior term, then, applying the condonation doctrine, Binay,
Jr.'s re-election meant that he can no longer be administratively charged. [69] The CA
then directed the Ombudsman to comment on Binay, Jr.'s petition for certiorari. [70]

On March 17, 2015, the Ombudsman manifested [71] that the TRO did not state what act
was being restrained and that since the preventive suspension order had already been
served and implemented, there was no longer any act to restrain. [72]

On the same day, Binay, Jr. filed a petition for contempt, [73]  docketed as CA-G.R. SP
No. 139504, accusing Secretary Roxas, Director Brion, the officials of the Philippine
National Police, and Pena, Jr. of deliberately refusing to obey the CA, thereby allegedly
impeding, obstructing, or degrading the administration of justice. [74] The Ombudsman
and Department of Justice Secretary Leila M. De Lima were subsequently impleaded as
additional respondents upon Binay, Jr.'s filing of the amended and supplemental petition
for contempt[75] (petition for contempt) on March 19, 2015. [76] Among others, Binay, Jr.
accused the Ombudsman and other respondents therein for willfully and maliciously
ignoring the TRO issued by the CA against the preventive suspension order. [77]

In a Resolution[78] dated March 20, 2015, the CA ordered the consolidation of CA-G.R.

SP No. 139453 and CA-G.R. SP No. 139504, and, without necessarily giving due
course to Binay, Jr.'s petition for contempt, directed the Ombudsman to file her
comment thereto.[79] The cases were set for hearing of oral arguments on March 30 and
31, 2015.[80]

The Proceedings Before the Court

Prior to the hearing of the oral arguments before the CA, or on March 25, 2015, the
Ombudsman filed the present petition before this Court, assailing the CA's March 16,
2015 Resolution, which granted Binay, Jr.'s prayer for TRO in CA-G.R. SP No. 139453,
and the March 20, 2015 Resolution directing her to file a comment on Binay, Jr.'s
petition for contempt in CA-G.R. SP No. 139504. [81] The Ombudsman claims that: (a) the
CA had no jurisdiction to grant Binay, Jr.'s prayer for a TRO, citing Section 14 of RA
6770,[82] or "The Ombudsman Act of 1989," which states that no injunctive writ could be
issued to delay the Ombudsman's investigation unless there is prima facie evidence that
the subject matter thereof is outside the latter's jurisdiction; [83] and (b) the CA's directive
for the Ombudsman to comment on Binay, Jr.'s petition for contempt is illegal and
improper, considering that the Ombudsman is an impeachable officer, and therefore,
cannot be subjected to contempt proceedings. [84]

In his comment[85] filed on April 6, 2015, Binay, Jr. argues that Section 1, Article VIII of
the 1987 Constitution specifically grants the CA judicial power to review acts of any
branch or instrumentality of government, including the Office of the Ombudsman, in
case of grave abuse of discretion amounting to lack or excess of jurisdiction, which he
asserts was committed in this case when said office issued the preventive suspension
order against him.[86] Binay, Jr. posits that it was incumbent upon the Ombudsman to1
have been apprised of the condonation doctrine as this would have weighed heavily in
determining whether there was strong evidence to warrant the issuance of the
preventive suspension order.[87] In this relation, Binay, Jr. maintains that the CA correctly
enjoined the implementation of the preventive suspension order given his clear and
unmistakable right to public office, and that it is clear that he could not be held
administratively liable for any of the charges against him since his subsequent re-
election in 2013 operated as a condonation of any administrative offenses he may have
committed during his previous term.[88] As regards the CA's order for the Ombudsman to
comment on his petition for contempt, Binay, Jr. submits that while the Ombudsman is
indeed an impeachable officer and, hence, cannot be removed from office except by
way of impeachment, an action for contempt imposes the penalty of fine and
imprisonment, without necessarily resulting in removal from office. Thus, the fact that
the Ombudsman is an impeachable officer should not deprive the CA of its inherent
power to punish contempt.[89]

Meanwhile, the CA issued a Resolution[90] dated April 6, 2015, after the oral

arguments before it were held,[91] granting Binay, Jr.'s prayer for a WPI, which further
enjoined the implementation of the preventive suspension order. In so ruling, the CA
found that Binay, Jr. has an ostensible right to the final relief prayed for, namely, the
nullification of the preventive suspension order, in view of the condonation doctrine,
citing Aguinaldo v. Santos.[92] Particularly, it found that the Ombudsman can hardly
impose preventive suspension against Binay, Jr. given that his re-election in 2013 as
City Mayor of Makati condoned any administrative liability arising from anomalous
activities relative to the Makati Parking Building project from 2007 to 2013. [93] In this
regard, the CA added that, although there were acts which were apparently committed
by Binay, Jr. beyond his first term — namely, the alleged payments on July 3, July 4,
and July 24, 2013,[94] corresponding to the services of Hillmarc's and MANA - still, Binay,
Jr. cannot be held administratively liable therefor based on the cases of Salalima v.
Guingona, Jr.,[95] and Mayor Garcia v. Mojica[96] wherein the condonation doctrine was
still applied by the Court although the payments were made after the official's re-
election, reasoning that the payments were merely effected pursuant to contracts
executed before said re-election.[97] To this, the CA added that there was no concrete
evidence of Binay, Jr.'s participation for the alleged payments made on July 3, 4, and
24, 2013.[98]

In view of the CA's supervening issuance of a WPI pursuant to its April 6, 2015
Resolution, the Ombudsman filed a supplemental petition [99] before this Court, arguing
that the condonation doctrine is irrelevant to the determination of whether the evidence
of guilt is strong for purposes of issuing preventive suspension orders. The Ombudsman
also maintained that a reliance on the condonation doctrine is a matter of defense,
which should have been raised by Binay, Jr. before it during the administrative
proceedings, and that, at any rate, there is no condonation because Binay, Jr.
committed acts subject of the OMB Complaint after his re-election in 2013. [100]

On April 14 and 21, 2015,[101] the Court conducted hearings for the oral arguments of the
parties. Thereafter, they were required to file their respective memoranda. [102] In
compliance thereto, the Ombudsman filed her Memorandum [103] on May 20, 2015, while
Binay, Jr. submitted his Memorandum the following day. [104]

Pursuant to a Resolution[105] dated June 16, 2015, the Court directed the parties to
comment on each other's memoranda, and the OSG to comment on the Ombudsman's
 Memorandum, all within ten (10) days from receipt of the notice.

On July 15, 2015, both parties filed their respective comments to each other's
memoranda.[106] Meanwhile, on July 16, 2015, the OSG filed its Manifestation In Lieu of
Comment,[107] simply stating that it was mutually agreed upon that the Office of the
Ombudsman would file its Memorandum, consistent with its desire to state its
"institutional position."[108] In her Memorandum and Comment to Binay, Jr.'s
Memorandum, the Ombudsman pleaded, among others, that this Court abandon the
condonation doctrine.[109] In view of the foregoing, the case was deemed submitted for
resolution.

The Issues Before the Court

Based on the parties' respective pleadings, and as raised during the oral arguments
conducted before this Court, the main issues to be resolved in seriatim are as follows:

I. Whether or not the present petition, and not motions for reconsideration of the
assailed CA issuances in CA-G.R. SP No. 139453 and CA-G.R. SP No. 139504, is
the Ombudsman's plain, speedy, and adequate remedy;

II. Whether or not the CA has subject matter jurisdiction over the main petition for
certiorari in CA-G.R. SP No. 139453;
III. Whether or not the CA has subject matter jurisdiction to issue a TRO and/or WPI
enjoining the implementation of a preventive suspension order issued by the
Ombudsman;
IV. Whether or not the CA gravely abused its discretion in issuing the TRO and
eventually, the WPI in CA-G.R. SP No. 139453 enjoining the implementation of the
preventive suspension order against Binay, Jr. based on the condonation doctrine;
and
V. Whether or not the CA's directive for the Ombudsman to ' comment on Binay,
Jr.'s petition for contempt in CA- G.R. SP No. 139504 is improper and illegal.

The Ruling of the Court

The petition is partly meritorious.

I.

A common requirement to both a petition for certiorari and a petition for prohibition

taken under Rule 65 of the 1997 Rules of Civil Procedure is that the petitioner has no
other plain, speedy, and adequate remedy in the ordinary course of law. Sections 1 and
2 thereof provide:
Section 1. Petition for certiorari. - When any tribunal, board or officer exercising judicial
or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with
grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no
appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law,
a person aggrieved thereby may file a verified petition in the proper court, alleging the
facts with certainty and praying that judgment be rendered annulling or modifying the
proceedings of such tribunal, board or officer, and granting such incidental reliefs as law
and justice may require.

xxxx

Section 2. Petition for prohibition. - When the proceedings of any tribunal, corporation,
board, officer or person, whether exercising judicial, quasi-judicial or ministerial
functions, are 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
other 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 r with
certainty and praying that judgment be rendered commanding the respondent to desist
from further proceedings in the action or matter specified therein, or otherwise granting
such incidental reliefs as law and justice may require.

x x x x (Emphases supplied)

Hence, as a general rule, a motion for reconsideration must first be filed with the lower
court prior to resorting to the extraordinary remedy of certiorari or prohibition since a
motion for reconsideration may still be considered as a plain, speedy, and adequate
remedy in the ordinary course of law. The rationale for the pre-requisite is to grant an
opportunity for the lower court or agency to correct any actual or perceived error
attributed to it by the re-examination of the legal and factual circumstances of the case.
[110]

Jurisprudence states that "[i]t is [the] inadequacy, [and] not the mere absence of all
other legal remedies and the danger of failure of justice without the writ, that must
usually determine the propriety of certiorari [or prohibition]. A remedy is plain, speedy[,]
and adequate if it will promptly relieve the petitioner from the injurious effects of the
judgment, order, or resolution of the lower court or agency, x x x." [111]

In this light, certain exceptions were crafted to the general rule requiring a prior motion
for reconsideration before the filing of a petition for certiorari, which exceptions also
apply to a petition for prohibition.[112] These are: (a) where the order is a patent nullity, as
where the court a quo has no jurisdiction; (b) where the questions raised in
the certiorari proceedings have been duly raised and passed upon by the lower court, or
are the same as those raised and passed upon in the lower court; (c) where there is an
urgent necessity for the resolution of the question and any further delay would prejudice
the interests of the Government or of the petitioner or the subject matter of the action is
perishable; (d) where, under the circumstances, a motion for reconsideration would be
useless; (e) where petitioner was deprived of due process and there is extreme urgency
for relief; (f) where, in a criminal case, relief from an order of arrest is urgent and the
granting of such relief by the trial court is improbable; (g) where the proceedings in the
lower court are a nullity for lack of due process; (h) where the proceedings were ex
parte or in which the petitioner had no opportunity to object; and (i) where the issue
raised is one purely of law or where public interest is involved.[113]

In this case, it is ineluctably clear that the above-highlighted exceptions attend since, for
the first time, the question on the authority of the CA - and of this Court, for that matter -
to enjoin the implementation of a preventive suspension order issued by the Office of
the Ombudsman is put to the fore. This case tests the constitutional and statutory limits
of the fundamental powers of key government institutions - namely, the Office of the
Ombudsman, the Legislature, and the Judiciary - and hence, involves an issue of
transcendental public importance that demands no less than a careful but expeditious
resolution. Also raised is the equally important issue on the propriety of the continuous
application of the condonation doctrine as invoked by a public officer who desires
exculpation from administrative liability. As such, the Ombudsman's direct resort
to certiorari and prohibition before this Court, notwithstanding her failure to move for the
prior reconsideration of the assailed issuances in CA-G.R. SP No. 139453 and CA-G.R.
SP No. 139504 before the CA, is justified.

II.

Albeit raised for the first time by the Ombudsman in her Memorandum, [114] it is
nonetheless proper to resolve the issue on the CA's lack of subject matter jurisdiction
over the main petition for certiorari in CA-G.R. SP No. 139453, in view of the well-
established rule that a court's jurisdiction over the subject matter may be raised at any
stage of the proceedings. The rationale is that subject matter jurisdiction is conferred by
law, and the lack of it affects the very authority of the court to take cognizance of and to
render judgment on the action.[115] Hence, it should be preliminarily determined if the CA
indeed had subject matter jurisdiction over the main CA-G.R. SP No. 139453 petition,
as the same determines the validity of all subsequent proceedings relative thereto. It is
noteworthy to point out that Binay, Jr. was given the opportunity by this Court to be
heard on this issue,[116] as he, in fact, duly submitted his opposition through his comment
to the Ombudsman's Memorandum.[117] That being said, the Court perceives no
reasonable objection against ruling on this issue.

The Ombudsman's argument against the CA's lack of subject matter jurisdiction over
the main petition, and her corollary prayer for its dismissal, is based on her
interpretation of Section 14, RA 6770, or the Ombudsman Act, [118] which reads in full:
Section 14. Restrictions. - No writ of injunction shall be issued by any court to delay an
investigation being conducted by the Ombudsman under this Act, unless there is
a prima facie evidence that the subject matter of the investigation is outside the
jurisdiction of the Office of the Ombudsman.

No court shall hear any appeal or application for remedy against the decision or findings
of the Ombudsman, except the Supreme Court, on pure question of law.

The subject provision may be dissected into two (2) parts.

The first paragraph of Section 14, RA 6770 is a prohibition against any court (except
the Supreme Court[119]) from issuing a writ of injunction to delay an investigation being
conducted by the Office of the Ombudsman. Generally speaking, "[injunction is a judicial
writ, process or proceeding whereby a party is ordered to do or refrain from doing a
certain act. It may be the main action or merely a provisional remedy for and as an
incident in the main action."[120] Considering the textual qualifier "to delay," which
connotes a suspension of an action while the main case remains pending, the "writ of
injunction" mentioned in this paragraph could only refer to injunctions of the provisional
kind, consistent with the nature of a provisional injunctive relief.

The exception to the no injunction policy is when there is prima facie evidence that the
subject matter of the investigation is outside the office's jurisdiction. The Office of the
Ombudsman has disciplinary authority over all elective and appointive officials of the
government and its subdivisions, instrumentalities, and agencies, with the exception
only of impeachable officers, Members of Congress, and the Judiciary. [121] Nonetheless,
the Ombudsman retains the power to investigate any serious misconduct in office
allegedly committed by officials removable by impeachment, for the purpose of filing a
verified complaint for impeachment, if warranted. [122] Note that the Ombudsman has
concurrent jurisdiction over certain administrative cases which are within the jurisdiction
of the regular courts or administrative agencies, but has primary jurisdiction to
investigate any act or omission of a public officer or employee who is under the
jurisdiction of the Sandiganbayan. [123]

On the other hand, the second paragraph of Section 14, RA 6770 provides that no

appeal or application for remedy may be heard against the decision or findings of the
Ombudsman, with the exception of the Supreme Court on pure questions of law. This
paragraph, which the Ombudsman particularly relies on in arguing that the CA had no
jurisdiction over the main CA-G.R. SP No. 139453 petition, as it is supposedly this Court
which has the sole jurisdiction to conduct a judicial review of its decisions or findings, is
vague for two (2) reasons: (1) it is unclear what the phrase "application for remedy" or
the word "findings" refers to; and (2) it does not specify what procedural remedy is
solely allowable to this Court, save that the same be taken only against a pure question
of law. The task then, is to apply the relevant principles of statutory construction to
resolve the ambiguity.

"The underlying principle of all construction is that the intent of the legislature should be
sought in the words employed to express it, and that when found[,] it should be made to
govern, x x x. If the words of the law seem to be of doubtful import, it may then perhaps
become necessary to look beyond them in order to ascertain what was in the legislative
mind at the time the law was enacted; what the circumstances were, under which the
action was taken; what evil, if any, was meant to be redressed; x x x [a]nd where the
law has contemporaneously been put into operation, and in doing so a construction has
necessarily been put upon it, this construction, especially if followed for some
considerable period, is entitled to great respect, as being very probably a true
expression of the legislative purpose, and is not lightly to be overruled, although it is not
conclusive."[124]

As an aid to construction, courts may avail themselves of the actual proceedings of the
legislative body in interpreting a statute of doubtful meaning. In case of doubt as to what
a provision of a statute means, the meaning put to the provision during the legislative
deliberations may be adopted,[125] albeit not controlling in the interpretation of the law. [126]

A. The Senate deliberations cited by the

Ombudsman do not pertain to the second
paragraph of Section 14, RA 6770.

The Ombudsman submits that the legislative intent behind Section 14, RA 6770,
particularly on the matter of judicial review of her office's decisions or findings, is
supposedly clear from the following Senate deliberations: [127]

Senator [Edgardo J.] Angara, x x x. On page 15, Mr. President, line 14, after the
phrase "petition for" delete the word "review" and in lieu thereof, insert the
word CERTIORARI. So that, review or appeal from the decision of the Ombudsman
would only be taken not on a petition for review, but on certiorari.

The President [Jovito R. Salonga]. What is the practical effect of that? Will it be

more difficult to reverse the decision under review?

Senator Angara. It has two practical effect ways, Mr. President. First is that the
findings of facts of the Ombudsman would be almost conclusive if supported by
substantial evidence. Second, we would not unnecessarily clog the docket of the
Supreme Court. So, it in effect will be a very strict appeal procedure.

xxxx

Senator [Teofisto T.] Guingona, [Jr.]. Does this mean that, for example, if there are
exhaustive remedies available to a respondent, the respondent himself has the right to
exhaust the administrative remedies available to him?

Senator Angara. Yes, Mr. President, that is correct.

Senator Guingona. And he himself may cut the proceeding short by appealing to the
Supreme Court only on certiorari?

Senator Angara. On question of law, yes.

Senator Guingona. And no other remedy is available to him?

Senator Angara. Going to the Supreme Court, Mr. President?

Senator Guingona. Yes. What I mean to say is, at what stage, for example, if he is a
presidential appointee who is the respondent, if there is f no certiorari available, is the
respondent given the right to exhaust his administrative remedies first before the
Ombudsman can take the appropriate action?

Senator Angara. Yes, Mr. President, because we do not intend to change the
administrative law principle that before one can go to court, he must exhaust all
administrative remedies xxx available to him before he goes and seeks judicial review.

xxxx

Senator [Neptali A.] Gonzales. What is the purpose of the Committee in changing

the method of appeal from one of a petition for review to a petition for certiorari?

Senator Angara. To make it consistent, Mr. President, with the provision here in
the bill to the effect that the finding of facts of the Ombudsman is conclusive if
supported by substantial evidence.

Senator Gonzales. A statement has been made by the Honorable Presiding Officer to
which I concur, that in an appeal by certiorari, the appeal is more difficult. Because
in certiorari it is a matter of discretion on the part of the court, whether to give
due course to the petition or dismiss it outright. Is that not correct, Mr. President?

Senator Angara. That is absolutely correct, Mr. President

Senator Gonzales. And in a petition for certiorari, the issue is limited to whether

or not the Ombudsman here has acted without jurisdiction and has committed a
grave abuse of discretion amounting to lack of jurisdiction. Is that not the
consequence, Mr. President.
Senator Angara. That is correct, Mr. President.

Senator Gonzales. And it is, therefore, in this sense that the intention of the
Committee is to make it harder to have a judicial review, but should be limited only
to cases that I have enumerated.

Senator Angara. Yes, Mr. President.

Senator Gonzales. I think, Mr. President, our Supreme Court has made a distinction
between a petition for review and a petition for certiorari; because before, under the
1935 Constitution appeal from any order, ruling or decision of the COMELEC shall be
by means of review. But under the Constitution it is now by certiorari and the Supreme
Court said that by this change, the court exercising judicial review will not inquire into
the facts, into the evidence, because we will not go deeply by way of review into the
evidence on record but its authority will be limited to a determination of whether the
administrative agency acted without, or in excess of, jurisdiction, or committed a grave
abuse of discretion. So, I assume that that is the purpose of this amendment, Mr.
President.

Senator Angara. The distinguished Gentleman has stated it so well.

Senator Gonzales. I just want to put that in the Record. Senator Angara. It is very well
stated, Mr. President.

xxxx

The President. It is evident that there must be some final authority to render
decisions. Should it be the Ombudsman or should it be the Supreme Court?

Senator Angara. As I understand it, under our scheme of government, Mr. President, it
is and has to be the Supreme Court to make the final determination.

The President. Then if that is so, we have to modify Section 17.

Senator Angara. That is why, Mr. President, some of our Colleagues have made a
reservation to introduce an appropriate change during the period of Individual
Amendments.

xxxx

The President. All right. Is there any objection to the amendment inserting the
word CERTIORARI instead of "review"? [Silence] Hearing none, the same is approved.
[128]

Upon an assiduous scrutiny of these deliberations, the Court is, however, unconvinced
that the provision debated on was Section 14, RA 6770, as the Ombudsman invokes.
Note that the exchange begins with the suggestion of Senator Angara to delete the
word "review" that comes after the phrase "petition for review" and, in its stead, insert
the word "certiorari" so that the "review or appeal from the decision of the Ombudsman
would not only be taken on a petition for review, but on certiorari" The ensuing
exchange between Senators Gonzales and Angara then dwells on the purpose of
changing the method of review from one of a petition for review to a petition
for certiorari - that is, to make "the appeal x x x more difficult." Ultimately, the
amendment to the change in wording, from "petition for review" to "petition for certiorari"
was approved.

Noticeably, these references to a "petition for review" and the proposed "petition
for certiorari" are nowhere to be found in the text of Section 14, RA 6770. In fact, it was
earlier mentioned that this provision, particularly its second paragraph, does not indicate
what specific procedural remedy one should take in assailing a decision or finding of the
Ombudsman; it only reveals that the remedy be taken to this Court based on pure
questions of law. More so, it was even commented upon during the oral arguments of
this case[129] that there was no debate or clarification made on the current formulation of
the second paragraph of Section 14, RA 6770 per the available excerpts of the Senate
deliberations. In any case, at least for the above-cited deliberations, the Court finds no
adequate support to sustain the Ombudsman's entreaty that the CA had no subject
matter jurisdiction over the main CA-G.R. SP No. 139453 petition.

On the contrary, it actually makes greater sense to posit that these deliberations refer to
another Ombudsman Act provision, namely Section 27, RA 6770. This is because the
latter textually reflects the approval of Senator Angara's suggested amendment, i.e.,
that the Ombudsman's decision or finding may be assailed in a petition for certiorari to
this Court (fourth paragraph), and further, his comment on the conclusive nature of the
factual findings of the Ombudsman, if supported by substantial evidence (third
paragraph):

Section 27. Effectivity and Finality of Decisions.— (1) All provisionary orders of the

Office of the Ombudsman are immediately effective and executory.

A motion for reconsideration of any order, directive or decision of the Office of the
Ombudsman must be filed within five (5) days after receipt of written notice and shall be
entertained only on any of the following grounds:
(1) New evidence has been discovered which materially affects the order, directive or
decision;
(2) Errors of law or irregularities have been committed prejudicial to the interest of the
movant. The motion for reconsideration shall be resolved within three (3) days from
filing: Provided, That only one motion for reconsideration shall be entertained.
Findings of fact by the Office of the Ombudsman when supported by substantial
evidence are conclusive. Any order, directive or decision imposing the penalty of public
censure or reprimand, suspension of not more than one (1) month's salary shall be final
and unappealable.

In all administrative disciplinary cases, orders, directives, or decisions of the

Office of the Ombudsman may be appealed to the Supreme Court by filing
a petition for certiorari within ten (10) days from receipt of the written notice of
the order, directive or decision or denial of the motion for reconsideration in
accordance with Rule 45 of the Rules of Court.

The above rules may be amended or modified by the Office of the ' Ombudsman as the
interest of justice may require. (Emphasis and underscoring supplied)

At first blush, it appears that Section 27, RA 6770 is equally ambiguous in stating that a
"petition for certiorari" should be taken in accordance with Rule 45 of the Rules of Court,
as it is well-known that under the present 1997 Rules of Civil Procedure, petitions
for certiorari are governed by Rule 65 of the said Rules. However, it should be
discerned that the Ombudsman Act was passed way back in 1989 [130] and, hence,
before the advent of the 1997 Rules of Civil Procedure. [131] At that time, the
governing 1964 Rules of Court,[132] consistent with Section 27, RA 6770, referred to the
appeal taken thereunder as a petition for certiorari, thus possibly explaining the
remedy's textual denomination, at least in the provision's final approved version:

RULE 45
Appeal from Court of Appeals to Supreme Court

SECTION 1. Filing of Petition with Supreme Court. - A party may appeal by certiorari,
from a judgment of the Court of Appeals, by filing with the Supreme Court a petition
for certiorari, within fifteen (15) days from notice of judgment or of the denial of his
motion for reconsideration filed in due time, and paying at the same time, to the clerk of
said court the corresponding docketing fee. The petition shall not be acted upon without
proof of service of a copy thereof to the Court of Appeals. (Emphasis supplied)

B. Construing the second paragraph of

Section 14, RA 6770.

The Senate deliberations' lack of discussion on the second paragraph of Section 14, RA
6770 notwithstanding, the other principles of statutory construction can apply to
ascertain the meaning of the provision.

To recount, the second paragraph of Section 14, RA 6770 states that "[n]o court shall
hear any appeal or application for remedy against the decision or findings of the
Ombudsman, except the Supreme Court, on pure question of law."    ;

As a general rule, the second paragraph of Section 14, RA 6770 bans the whole
range of remedies against issuances of the Ombudsman, by prohibiting: (a) an
appeal against any decision or finding of the Ombudsman, and (b) "any application of
remedy" (subject to the exception below) against the same. To clarify, the phrase
"application for remedy," being a generally worded provision, and being separated from
the term "appeal" by the disjunctive "or",[133] refers to any remedy (whether taken mainly
or provisionally), except an appeal, following the maxim generalia verba sunt generaliter
intelligenda: general words are to be understood in a general sense. [134] By the same
principle, the word "findings," which is also separated from the word "decision" by the
disjunctive "or", would therefore refer to any finding made by the Ombudsman (whether
final or provisional), except a decision.

The subject provision, however, crafts an exception to the foregoing general rule. While
the specific procedural vehicle is not explicit from its text, it is fairly deducible that the
second paragraph of Section 14, RA 6770 excepts, as the only allowable remedy
against "the decision or findings of the Ombudsman," a Rule 45 appeal, for the reason
that it is the only remedy taken to the Supreme Court on "pure questions of law,"
whether under the 1964 Rules of Court or the 1997 Rules of Civil Procedure:

Rule 45, 1964 Rules of Court

RULE 45
Appeal from Court of Appeals to Supreme Court

xxxx

Section 2. Contents of Petition. — The petition shall contain a concise statement of the
matters involved, the assignment of errors made in the court below, and the reasons
relied on for the allowance of the petition, and it should be accompanied with a true
copy of the judgment sought to be reviewed, together with twelve (12) copies of the
record on appeal, if any, and of the petitioner's brief as filed in the Court of Appeals. A
verified statement of the date when notice of judgment and denial of the motion for
reconsideration, if any, were received shall accompany the petition.

Only questions of law may be raised in the petition and must be distinctly set forth.
If no record on appeal has been filed in the Court of Appeals, the clerk of the Supreme
Court, upon admission of the petition, shall demand from the Court of Appeals the
elevation of the whole record of the case. (Emphasis and underscoring supplied)

Rule 45, 1997 Rules of Civil Procedure

RULE 45
Appeal by Certiorari to the Supreme Court

Section 1. Filing of petition with Supreme Court. - A party desiring to appeal

by certiorari from a judgment, final order or resolution of the Court of Appeals, the
Sandiganbayan, the Court of Tax Appeals, the Regional Trial Court or other courts,
whenever authorized by law, may file with the Supreme Court a verified petition for
review on certiorari. The petition may include an application for a writ of preliminary
injunction or other provisional remedies and shall raise only questions of law, which
must be distinctly set forth. The petitioner may seek the same provisional remedies
by verified motion filed in the same action or proceeding at any time during its
pendency. (Emphasis and underscoring supplied)

That the remedy excepted in the second paragraph of Section 14, RA 6770 could be a
petition for certiorari under Rule 65 of the 1964 Rules of Court or the 1997 Rules of
Procedure is a suggestion that defies traditional norms of procedure. It is basic
procedural law that a Rule 65 petition is based on errors of jurisdiction, and not errors of
judgment to which the classifications of (a) questions of fact, (b) questions of law, or (c)
questions of mixed fact and law, relate to. In fact, there is no procedural rule, whether in
the old or new Rules, which grounds a Rule 65 petition on pure questions of law.
Indeed, it is also a statutory construction principle that the lawmaking body cannot be
said to have intended the establishment of conflicting and hostile systems on the same
subject. Such a result would render legislation a useless and idle ceremony, and subject
the laws to uncertainty and unintelligibility. [135] There should then be no confusion that
the second paragraph of Section 14, RA 6770 refers to a Rule 45 appeal to this Court,
and no other. In sum, the appropriate construction of this Ombudsman Act provision is
that all remedies against issuances of the Office of the Ombudsman are prohibited,
except the above-stated Rule 45 remedy to the Court on pure questions of law.

C. Validity of the second paragraph of

Section 14, RA 6770.

Of course, the second paragraph of Section 14, RA 6770's extremely limited restriction
on remedies is inappropriate since a Rule 45 appeal -which is within the sphere of the
rules of procedure promulgated by this Court - can only be taken against final decisions
or orders of lower courts,[136] and not against "findings" of quasi-judicial agencies. As will
be later elaborated upon, Congress cannot interfere with matters of procedure; hence, it
cannot alter the scope of a Rule 45 appeal so as to apply to interlocutory "findings"
issued by the Ombudsman. More significantly, by confining the remedy to a Rule 45
appeal, the provision takes away the remedy of certiorari, grounded on errors of
jurisdiction, in denigration of the judicial power constitutionally vested in courts. In this
light, the second paragraph of Section 14, RA 6770 also increased this Court's appellate
jurisdiction, without a showing, however, that it gave its consent to the same. The
provision is, in fact, very similar to the fourth paragraph of Section 27, RA 6770 (as
above-cited), which was invalidated in the case of Fabian v. Desiertoni[137] (Fabian).[138]

In Fabian, the Court struck down the fourth paragraph of Section 27, RA 6770 as
unconstitutional since it had the effect of increasing the appellate jurisdiction of the
Court without its advice and concurrence in violation of Section 30, Article VI of the
1987 Constitution.[139] Moreover, this provision was found to be inconsistent with Section
1, Rule 45 of the present 1997 Rules of Procedure which, as above-intimated, applies
only to a review of "judgments or final orders of the Court of Appeals, the
Sandiganbayan, the Court of Tax Appeals, the Regional Trial Court, or other courts
authorized by law;" and not of quasi-judicial agencies, such as the Office of the
Ombudsman, the remedy now being a Rule 43 appeal to the Court of Appeals.
In Ruivivar v. Office of the Ombudsman,[140] the Court's ratiocinations and ruling
in Fabian were recounted:

The case of Fabian v. Desierto arose from the doubt created in the application of
Section 27 of R.A. No. 6770 (The Ombudsman's Act) and Section 7, Rule III of A.O. No.
7 (Rules of Procedure of the Office of the Ombudsman) on the availability of appeal
before the Supreme Court to assail a decision or order of the Ombudsman in
administrative cases. In Fabian, we invalidated Section 27 of R.A. No. 6770 (and
Section 7, Rule III of A.O. No. 7 and the other rules implementing the Act) insofar
as it provided for appeal by certiorari under Rule 45 from the decisions or orders
of the Ombudsman in administrative cases. We held that Section 27 of R.A. No.
6770 had the effect, not only of increasing the appellate jurisdiction of this Court
without its advice and concurrence in violation of Section 30, Article VI of the
Constitution; it was also inconsistent with Section 1, Rule 45 of the Rules of
Court which provides that a petition for review on certiorari shall apply only to a
review of "judgments or final orders of the Court of Appeals, the Sandiganbayan,
the Court of Tax Appeals, the Regional Trial Court, or other courts authorized by
law." We pointedly said:
As a consequence of our ratiocination that Section 27 of Republic Act No. 6770 should
be struck down as unconstitutional, and in line with the regulatory philosophy adopted in
appeals from quasi-judicial agencies in the 1997 Revised Rules of Civil Procedure,
appeals from decisions of the Office of the Ombudsman in administrative disciplinary
cases should be taken to the CA under the provisions of Rule 43. [141] (Emphasis
supplied)
Since the second paragraph of Section 14, RA 6770 limits the remedy against "decision
or findings" of the Ombudsman to a Rule 45 appeal and thus - similar to the fourth
paragraph of Section 27, RA 6770[142] - attempts to effectively increase the Supreme
Court's appellate jurisdiction without its advice and concurrence, [143] it is therefore
concluded that the former provision is also unconstitutional and perforce, invalid.
Contrary to the Ombudsman's posturing,[144] Fabian should squarely apply since the
above-stated Ombudsman Act provisions are in part materia in that they "cover the
same specific or particular subject matter,"[145] that is, the manner of judicial review over
issuances of the Ombudsman.

Note that since the second paragraph of Section 14, RA 6770 is clearly determinative of
the existence of the CA's subject matter jurisdiction over the main CA-G.R. SP No.
139453 petition, including all subsequent proceedings relative thereto, as the
Ombudsman herself has developed, the Court deems it proper to resolve this issue ex
mero motu (on its own motion[146]). This procedure, as was similarly adopted
in Fabian, finds its bearings in settled case law:

The conventional rule, however, is that a challenge on constitutional grounds must be

raised by a party to the case, neither of whom did so in this case, but that is not an
inflexible rule, as we shall explain.

Since the constitution is intended for the observance of the judiciary and other
departments of the government and the judges are sworn to support its provisions, the
courts are not at liberty to overlook or disregard its commands or countenance evasions
thereof. When it is clear , that a statute transgresses the authority vested in a legislative
body, it is the duty of the courts to declare that the constitution, and not the statute,
governs in a case before them for judgment.

Thus, while courts will not ordinarily pass upon constitutional questions which are not
raised in the pleadings, the rule has been recognized to admit of certain exceptions. It
does not preclude a court from inquiring into its own jurisdiction or compel it to enter a
judgment that it lacks jurisdiction to enter. If a statute on which a court's jurisdiction in a
proceeding depends is unconstitutional, the court has no jurisdiction in the proceeding,
and since it may determine whether or not it has jurisdiction, it necessarily follows that it
may inquire into the constitutionality of the statute.

Constitutional questions, not raised in the regular and orderly procedure in the
trial are ordinarily rejected unless the jurisdiction of the court below or that of the
appellate court is involved in which case it may be raised at any time or on the
court's own motion. The Court ex mero motu may take cognizance of lack of
jurisdiction at any point in the case where that fact is developed. The court has a clearly
recognized right to determine its own jurisdiction in any proceeding. [147] (Emphasis
supplied)

D. Consequence of invalidity.

In this case, the Rule 65 petition for certiorari in CA-G.R. SP No. 139453 was filed by
Binay, Jr. before the CA in order to nullify the preventive suspension order issued by the
Ombudsman, an interlocutory order,[148] hence, unappealable.[149]

In several cases decided after Fabian, the Court has ruled that Rule 65 petitions
for certiorari against unappelable issuances[150] of the Ombudsman should be filed
before the CA, and not directly before this Court:

In Office of the Ombudsman v. Capulong[151] (March 12, 2014), wherein a preventive

suspension order issued by the Office of the Ombudsman was - similar to this case -
assailed through a Rule 65 petition for certiorari filed by the public officer before the CA,
the Court held that "[t]here being a finding of grave abuse of discretion on the part of the
Ombudsman, it was certainly imperative for the CA to grant incidental reliefs, as
sanctioned by Section 1 of Rule 65."[152]

In Dagan v. Office of the Ombudsman[153] (November 19, 2013), involving a Rule 65

petition for certiorari assailing a final and unappealable order of the Office of the
Ombudsman in an administrative case, the Court remarked that "petitioner employed
the correct mode of review in this case, i.e., a special civil action for certiorari before the
Court of Appeals."[154] In this relation, it stated that while "a special civil action
for Certiorari is within the concurrent original jurisdiction of the Supreme Court and the
Court of Appeals, such petition should be initially filed with the Court of Appeals in
observance of the doctrine of hierarchy of courts." Further, the Court upheld Barata v.
Abalos, Jr.[155] (June 6, 2001), wherein it was ruled that the remedy against final and
unappealable orders of the Office of the Ombudsman in an administrative case was a
Rule 65 petition to the CA. The same verdict was reached in Ruivivar[156] (September 16,
2008).

Thus, with the unconstitutionality of the second paragraph of Section 14, RA 6770, the
Court, consistent with existing jurisprudence, concludes that the CA has subject matter
jurisdiction over the main CA-G.R. SP No. 139453 petition. That being said, the Court
now examines the objections of the Ombudsman, this time against the CA's authority to
issue the assailed TRO and WPI against the implementation of the preventive
suspension order, incidental to that main case.

III.

From the inception of these proceedings, the Ombudsman has been adamant that the
CA has no jurisdiction to issue any provisional injunctive writ against her office to enjoin
its preventive suspension orders. As basis, she invokes the first paragraph of Section
14, RA 6770 in conjunction with her office's independence under the 1987 Constitution.
She advances the idea that "[i]n order to further ensure [her office's] independence, [RA
6770] likewise insulated it from judicial intervention," [157] particularly, "from injunctive
reliefs traditionally obtainable from the courts," [158] claiming that said writs may work "just
as effectively as direct harassment or political pressure would." [159]

A. The concept of Ombudsman independence.

Section 5, Article XI of the 1987 Constitution guarantees the independence of the Office
of the Ombudsman:

Section 5. There is hereby created the independent Office of the Ombudsman,

composed of the Ombudsman to be known as Tanodbayan, one overall Deputy and at
least one Deputy each for Luzon, Visayas[,] and Mindanao. A separate Deputy for the
military establishment may likewise be appointed. (Emphasis supplied)

In Gonzales III v. Office of the President[160] (Gonzales III), the Court traced the historical
underpinnings of the Office of the Ombudsman:

Prior to the 1973 Constitution, past presidents established several Ombudsman-like

agencies to serve as the people's medium for airing grievances and for direct redress
against abuses and misconduct in the government. Ultimately, however, these agencies
failed to fully realize their objective for lack of the political independence necessary for
the effective performance of their function as government critic.

It was under the 1973 Constitution that the Office of the Ombudsman became a
constitutionally-mandated office to give it political independence and adequate powers
to enforce its mandate. Pursuant to the ( 1973 Constitution, President Ferdinand
Marcos enacted Presidential Decree (PD) No. 1487, as amended by PD No. 1607 and
PD No. 1630, creating the Office of the Ombudsman to be known as Tanodbayan. It
was tasked principally to investigate, on complaint or motu proprio, any administrative
act of any administrative agency, including any government-owned or controlled
corporation. When the Office of the Tanodbayan was reorganized in 1979, the powers
previously vested in the Special Prosecutor were transferred to the Tanodbayan
himself. He was given the exclusive authority to conduct preliminary investigation of all
cases cognizable by the Sandiganbayan, file the corresponding information, and control
the prosecution of these cases.

With the advent of the 1987 Constitution, a new Office of the Ombudsman was created
by constitutional fiat. Unlike in the 1973 Constitution, its independence was
expressly and constitutionally guaranteed. Its objectives are to enforce the state
policy in Section 27, Article II and the standard of accountability in public service under
Section 1, Article XI of the 1987 Constitution. These provisions read:
Section 27. The State shall maintain honesty and integrity in the public service and take
positive and effective measures against graft and corruption.

Section 1. Public office is a public trust. Public officers and employees must, at all times,
be accountable to the people, serve them with utmost responsibility, integrity, loyalty,
and efficiency; act with patriotism and justice, and lead modest lives. [161] (Emphasis
supplied)

More significantly, Gonzales III explained the broad scope of the office's mandate, and
in correlation, the impetus behind its independence:

Under Section 12, Article XI of the 1987 Constitution, the Office of the Ombudsman is
envisioned to be the "protector of the people" against the inept, abusive, and corrupt in
the Government, to function essentially as a complaints and action bureau. This
constitutional vision of a Philippine Ombudsman practically intends to make the
Ombudsman an authority to directly check and guard against the ills, abuses and
excesses , of the bureaucracy. Pursuant to Section 13 (8), Article XI of the 1987
Constitution, Congress enacted RA No. 6770 to enable it to further realize the vision of
the Constitution. Section 21 of RA No. 6770 provides:
Section 21. Official Subject to Disciplinary Authority; Exceptions. - The Office of the
Ombudsman shall have disciplinary authority over all elective and appointive officials of
the Government and its subdivisions, instrumentalities, and agencies, including
Members of the Cabinet, local government, government-owned or controlled
corporations and their subsidiaries, except over officials who may be removed only by
impeachment or over Members of Congress, and the Judiciary.
As the Ombudsman is expected to be an "activist watchman," the < Court has upheld its
actions, although not squarely falling under the broad powers granted [to] it by the
Constitution and by RA No. 6770, if these actions are reasonably in line with its official
function and consistent with the law and the Constitution.

The Ombudsman's broad investigative and disciplinary powers include all acts of
malfeasance, misfeasance, and nonfeasance of all public officials, including Members
of the Cabinet and key Executive officers, during their tenure. To support these broad
powers, the Constitution saw it fit to insulate the Office of the Ombudsman from
the pressures and influence of officialdom and partisan politics and from fear of
external reprisal by making it an "independent" office, x x x.

xxxx

Given the scope of its disciplinary authority, the Office of the Ombudsman is a very
powerful government constitutional agency that is considered "a notch above other
grievance-handling investigative bodies." It has powers, both constitutional and
statutory, that are commensurate , with its daunting task of enforcing accountability of
public officers.[162] (Emphasis and underscoring supplied)

Gonzales III is the first case which grappled with the meaning of the Ombudsman's
independence vis-a-vis the independence of the other constitutional bodies. Pertinently,
the Court observed:

(1) "[T]he independence enjoyed by the Office of the Ombudsman and by the

Constitutional Commissions shares certain characteristics - they do not owe their
existence to any act of Congress, but are created by the Constitution itself;
additionally, they all enjoy fiscal autonomy. In general terms, the framers of the
Constitution intended that these 'independent' bodies be insulated from political
pressure to the extent that the absence of 'independence' would result in the
impairment of their core functions"[163];

(2) "[T]he Judiciary, the Constitutional Commissions, and the Ombudsman must have
the independence and flexibility needed in the discharge of their constitutional duties.
The imposition of restrictions and constraints on the manner the independent
constitutional offices allocate and utilize the funds appropriated for their
operations is anathema to fiscal autonomy and violative not only [of] the express
mandate of the Constitution, but especially as regards the Supreme Court, of the
independence and separation of powers upon which the entire fabric of our
constitutional system is based";[164] and

(3) "[T]he constitutional deliberations explain the Constitutional Commissions' need for

independence. In the deliberations of the 1973 Constitution, the delegates amended the
1935 Constitution by providing for a constitutionally-created Civil Service Commission,
instead of one created by law, on the premise that the effectivity of this body is
dependent on its freedom from the tentacles of politics. In a similar manner, the
deliberations of the 1987 Constitution on the Commission on Audit highlighted the
developments in the past Constitutions geared towards insulating the Commission on
Audit from political pressure."[165]

At bottom, the decisive ruling in Gonzales III, however, was that the independence of
the Office of the Ombudsman, as well as that of the foregoing independent
bodies, meant freedom from control or supervision of the Executive Department:

[T]he independent constitutional commissions have been consistently intended by the

framers to be independent from executive control or supervision or any form of
political influence. At least insofar as these bodies are concerned, jurisprudence is not
scarce on how the "independence" granted to these bodies prevents presidential
interference.

In Brillantes, Jr. v. Yorac (G.R. No. 93867, December 18, 1990, 192 SCRA 358), we
emphasized that the Constitutional Commissions, which have been characterized under
the Constitution as "independent," are not under the control of the President, even if
they discharge functions that are executive in nature. The Court declared as
unconstitutional the President's act of temporarily appointing the respondent in that case
as Acting Chairman of the [Commission on Elections] "however well-meaning" it might
have been.

In Bautista v. Senator Salonga (254 Phil. 156, 179 [1989]), the Court categorically
stated that the tenure of the commissioners of the independent Commission on Human
Rights could not be placed under the discretionary power of the President.

xxxx

The kind of independence enjoyed by the Office of the Ombudsman certainly cannot be
inferior - but is similar in degree and kind - to the independence similarly guaranteed by
the Constitution to the Constitutional Commissions since all these offices fill the political
interstices of a republican democracy that are crucial to its existence and proper
functioning.[166] (Emphases and underscoring supplied)

Thus, in Gonzales III, the Court declared Section 8 (2), RA 6770, which provides that
"[a] Deputy or the Special Prosecutor, may be removed from office by the President for
any of the grounds provided for the removal of the Ombudsman, and after due process,"
partially unconstitutional insofar as it subjected the Deputy Ombudsman to the
disciplinary authority of the President for violating the principle of independence.
Meanwhile, the validity of Section 8 (2), RA 6770 was maintained insofar as the Office
of the Special Prosecutor was concerned since said office was not considered to be
constitutionally within the Office of the Ombudsman and is, hence, not entitled to the
independence the latter enjoys under the Constitution. [167]

As may be deduced from the various discourses in Gonzales III, the concept of
Ombudsman's independence covers three (3) things:

First: creation by the Constitution, which means that the office cannot be abolished,
nor its constitutionally specified functions and privileges, be removed, altered, or
modified by law, unless the Constitution itself allows, or an amendment thereto is made;

Second: fiscal autonomy, which means that the office "may not be obstructed from
[its] freedom to use or dispose of [its] funds for purposes germane to [its] functions;
[168] 
hence, its budget cannot be strategically decreased by officials of the political
branches of government so as to impair said functions; and
Third: insulation from executive supervision and control, which means that those
within the ranks of the office can only be disciplined by an internal authority.

Evidently, all three aspects of independence intend to protect the Office of the
Ombudsman from political harassment and pressure, so as to free it from the
"insidious tentacles of politics."[169]

That being the case, the concept of Ombudsman independence cannot be invoked as
basis to insulate the Ombudsman from judicial power constitutionally vested unto the
courts. Courts are apolitical bodies, which are ordained to act as impartial tribunals and
apply even justice to all. Hence, the Ombudsman's notion that it can be exempt from an
incident of judicial power - that is, a provisional writ of injunction against a preventive
suspension order - clearly strays from the concept's rationale of insulating the office
from political harassment or pressure.

B. The first paragraph of Section 14, RA

6770 in light of the powers of Congress and the
Court under the 1987 Constitution.

The Ombudsman's erroneous abstraction of her office's independence notwithstanding,

it remains that the first paragraph of Section 14, RA 6770 textually prohibits courts from
extending provisional injunctive relief to delay any investigation conducted by her office.
Despite the usage of the general phrase "[n]o writ of injunction shall be issued by any
court," the Ombudsman herself concedes that the prohibition does not cover the
Supreme Court.[170] As support, she cites the following Senate deliberations:

Senator [Ernesto M.] Maceda. Mr. President, I do not know if an amendment is

necessary. I would just like to inquire for the record whether below the Supreme
Court, it is understood that there is no injunction policy against the Ombudsman
by lower courts. Or, is it necessary to have a special paragraph for that?

Senator Angara. Well, there is no provision here, Mr. President, that will prevent an
injunction against the Ombudsman being issued.

Senator Maceda. In which case, I think that the intention, this being one of the
highest constitutional bodies, is to subject this only to certiorari to the Supreme
Court. I think an injunction from the Supreme Court is, of course, in order but no
lower courts should be allowed to interfere. We had a very bad experience with
even, let us say, the Forestry Code where no injunction is supposed to be issued
against the Department of Natural Resources. Injunctions are issued right and left
by RTC judges all over the country.
The President. Why do we not make an express provision to that effect?

Senator Angara. We would welcome that, Mr. President.

The President. No [writs of injunction] from the trial courts other than the
Supreme Court.

Senator Maceda. I so move, Mr. President, for that amendment.

The President. Is there any objection? [Silence] Hearing none, the same is approved.
[171]

Further, she acknowledges that by virtue of Sections 1 and 5 (1), Article VIII of the 1987
Constitution, acts of the Ombudsman, including interlocutory orders, are subject to the
Supreme Court's power of judicial review As a corollary, the Supreme Court may issue
ancillary mjunctive writs or provisional remedies in the exercise of its power of judicial
review over matters pertaining to ongoing investigations by the Office of the
Ombudsman. Respecting the CA, however, the Ombudsman begs to differ. [172]

With these submissions, it is therefore apt to examine the validity of the first paragraph
of Section 14, RA 6770 insofar as it prohibits all courts, except this Court, from issuing
provisional writs of injunction to enjoin an Ombudsman investigation. That the
constitutionality of this provision is the lis mota of this case has not been seriously
disputed. In fact, the issue anent its constitutionality was properly raised and presented
during the course of these proceedings. [173] More importantly, its resolution is clearly
necessary to the complete disposition of this case.[174]

In the enduring words of Justice Laurel in Angara v. The Electoral

Commission (Angara),[175] the "Constitution has blocked out with deft strokes and in bold
lines, allotment of power to the executive, the legislative[,] and the judicial departments
of the government."[176] The constitutional demarcation of the three fundamental powers
of government is more commonly known as the principle of separation of powers. In the
landmark case of Belgica v. Ochoa, Jr. (Belgica),[177] the Court held that "there is a
violation of the separation of powers principle when one branch of government unduly
encroaches on the domain of another." [178] In particular, "there is a violation of the
principle when there is impermissible (a) interference with and/or (b) assumption of
another department's functions."[179]

Under Section 1, Article VIII of the 1987 Constitution, judicial power is allocated to

the Supreme Court and all such lower courts:

Section 1. The judicial power shall be vested in one Supreme Court and in such lower
courts as may be established by law.
Judicial power includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to determine
whether or not there has been a grave abuse of discretion amounting to lack or excess
of jurisdiction on the part of any branch or instrumentality of the Government.

This Court is the only court established by the Constitution, while all other lower
courts may be established by laws passed by Congress.  Thus, through the
passage of Batas Pambansa Bilang (BP) 129,[180] known as "The Judiciary
Reorganization Act of 1980," the Court of Appeals, [181] the Regional Trial Courts,[182] and
the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial
Courts[183] were established. Later, through the passage of RA 1125, [184] and Presidential
Decree No. (PD) 1486,[185] the Court of Tax Appeals, and the Sandiganbayan were
respectively established.

In addition to the authority to establish lower courts, Section 2, Article VIII of the
1987 Constitution empowers Congress to define, prescribe, and apportion the
jurisdiction of all courts, except that it may not deprive the Supreme Court of its
jurisdiction over cases enumerated in Section 5 [186] of the same Article:

Section 2. The Congress shall have the power to define, prescribe, ' and apportion the
jurisdiction of the various courts but may not deprive the Supreme Court of its
jurisdiction over cases enumerated in Section 5 hereof.

xxxx

Jurisdiction, as hereinabove used, more accurately pertains to jurisdiction over the

subject matter of an action. In The Diocese of Bacolod v. Commission on Elections,
[187]
 subject matter jurisdiction was defined as "the authority 'to hear and determine
cases of the general class to which the proceedings in question belong and is
conferred by the sovereign authority which organizes the court and defines its
powers.'"

Among others, Congress defined, prescribed, and apportioned the subject matter
jurisdiction of this Court (subject to the aforementioned constitutional limitations), the
Court of Appeals, and the trial courts, through the passage of BP 129, as amended.

In this case, the basis for the CA's subject matter jurisdiction over Binay, Jr.'s main
petition for certiorari in CA-G.R. SP No. 139453 is Section 9(1), Chapter I of BP 129,
as amended:

Section 9. Jurisdiction. - The Court of Appeals shall exercise:

1. Original jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas
corpus, and quo warranto, and auxiliary writs or processes, whether or not in aid of
its appellate jurisdiction[.]

Note that the CA's certiorari jurisdiction, as above-stated, is not only original but

also concurrent with the Regional Trial Courts (under Section 21 (1), Chapter II of BP
129), and the Supreme Court (under Section 5, Article VIII of the 1987 Philippine
Constitution). In view of the concurrence of these courts' jurisdiction over petitions
for certiorari, the doctrine of hierarchy of courts should be followed. In People v.
Cuaresma,[188] the doctrine was explained as follows:

[T]his concurrence of jurisdiction is not x x x to be taken as according to parties

seeking any of the writs an absolute, unrestrained freedom of choice of the court to
which application therefor will be directed. There is after all a hierarchy of courts. That
hierarchy is determinative of the venue of appeals, and should also serve as a general
determinant of the appropriate forum for petitions for the extraordinary writs. A
becoming regard for 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. [189]

When a court has subject matter jurisdiction over a particular case, as conferred unto

it by law, said court may then exercise its jurisdiction acquired over that case, which
is called judicial power.

Judicial power, as vested in the Supreme Court and all other courts established by
law, has been defined as the "totality of powers a court exercises when it assumes
jurisdiction and hears and decides a case."[190] Under Section 1, Article VIII of the
1987 Constitution, it includes "the duty of the courts of justice to settle actual
controversies involving rights which are legally demandable and
enforceable, and to determine whether or not there has been a grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government."

In Oposa v. Factoran, Jr.[191] the Court explained the expanded scope of judicial power
under the 1987 Constitution:

The first part of the authority represents the traditional concept of judicial power,
involving the settlement of conflicting rights as conferred by law. The second part of the
authority represents a broadening of f judicial power to enable the courts of justice to
review what was before forbidden territory, to wit, the discretion of the political
departments of the government.

As worded, the new provision vests in the judiciary, and particularly the Supreme Court,
the power to rule upon even the wisdom of the decisions of the executive and the
legislature and to declare their acts invalid for lack or excess of jurisdiction because
they are tainted with grave abuse of discretion. The catch, of course, is the meaning of
"grave abuse of discretion," which is a very elastic phrase that can expand or contract
according to the disposition of the judiciary.[192]

Judicial power is never exercised in a vacuum. A court's exercise of the

jurisdiction it has acquired over a particular case conforms to the limits and
parameters of the rules of procedure duly promulgated by this Court. In other
words, procedure is the framework within which judicial power is exercised. In Manila
Railroad Co. v. Attorney-General,[193] the Court elucidated that "[t]he power or authority
of the court over the subject matter existed and was fixed before procedure in a given
cause began. Procedure does not alter or change that power or authority; it simply
directs the manner in which it shall be fully and justly exercised.  To be sure, in
certain cases, if that power is not exercised in conformity with the provisions of the
procedural law, purely, the court attempting to exercise it loses the power to exercise it
legally. This does not mean that it loses jurisdiction of the subject matter." [194]

While the power to define, prescribe, and apportion the jurisdiction of the various courts
is, by constitutional design, vested unto Congress, the power to promulgate rules
concerning the protection and enforcement of constitutional rights, pleading,
practice, and procedure in all courts belongs exclusively to this Court. Section 5
(5), Article VIII of the 1987 Constitution reads:

Section 5. The Supreme Court shall have the following powers:

xxxx

(5) Promulgate rules concerning the protection and enforcement of constitutional

rights, pleading, practice, and procedure in all courts, the admission to the practice
of law, the Integrated Bar, and legal assistance to the underprivileged. Such rules shall
provide a simplified and inexpensive procedure for the speedy disposition of cases,
shall be uniform for all courts of the same grade, and shall not diminish, increase, or
modify substantive rights. Rules of procedure of special courts and quasi-judicial bodies
shall remain effective unless disapproved by the Supreme Court. (Emphases and
underscoring supplied)

In Echegaray v. Secretary of Justice[195] (Echegaray), the Court traced the evolution of

its rule-making authority, which, under the 1935 [196] and 1973 Constitutions,[197] had been
priorly subjected to a power-sharing scheme with Congress. [198] As it now stands, the
1987 Constitution textually altered the old provisions by deleting the concurrent
power of Congress to amend the rules, thus solidifying in one body the Court's
rule-making powers, in line with the Framers' vision of institutionalizing a "[s]tronger
and more independent judiciary."[199]
The records of the deliberations of the Constitutional Commission would show [200] that
the Framers debated on whether or not the Court's rule-making powers should be
shared with Congress. There was an initial suggestion to insert the sentence "The
National Assembly may repeal, alter, or supplement the said rules with the advice and
concurrence of the Supreme Court", right after the phrase "Promulgate rules concerning
the protection and enforcement of constitutional rights, pleading, practice, and
procedure in all courts, the admission to the practice of law, the integrated bar, and
legal assistance to the underprivileged" in the enumeration of powers of the Supreme
Court. Later, Commissioner Felicitas S. Aquino proposed to delete the former sentence
and, instead, after the word "[underprivileged," place a comma (,) to be followed by "the
phrase with the concurrence of the National Assembly." Eventually, a compromise
formulation was reached wherein (a) the Committee members agreed to Commissioner
Aquino's proposal to delete the phrase "the National Assembly may repeal, alter, or
supplement the said rules with the advice and concurrence of the Supreme Court" and
(b) in turn, Commissioner Aquino agreed to withdraw his proposal to add "the phrase
with the concurrence of the National Assembly." The changes were approved,
thereby leading to the present lack of textual reference to any form of
Congressional participation in Section 5 (5), Article VIII, supra. The prevailing
consideration was that "both bodies, the Supreme Court and the Legislature,
have their inherent powers."[201]

Thus, as it now stands, Congress has no authority to repeal, alter, or supplement rules
concerning pleading, practice, and procedure. As pronounced in Echegaray:

The rule making power of this Court was expanded. This Court for the first time was
given the power to promulgate rules concerning the protection and enforcement of
constitutional rights. The Court was also r granted for the first time the power to
disapprove rules of procedure of special courts and quasi-judicial bodies. But most
importantly, the 1987 Constitution took away the power of Congress to repeal,
alter, or supplement rules concerning pleading, practice and procedure. In fine,
the power to promulgate rules of pleading, practice and procedure is no longer
shared by this Court with Congress, more so with the Executive.[202] (Emphasis and
underscoring supplied)

Under its rule-making authority, the Court has periodically passed various rules of
procedure, among others, the current 1997 Rules of Civil Procedure. Identifying the
appropriate procedural remedies needed for the reasonable exercise of every
court's judicial power, the provisional remedies of temporary restraining orders
and writs of preliminary injunction were thus provided.

A temporary restraining order and a writ of preliminary injunction both constitute

temporary measures availed of during the pendency of the action. They are, by nature,
ancillary because they are mere incidents in and are dependent upon the result of the
main action. It is well-settled that the sole object of a temporary restraining order or
a writ of preliminary injunction, whether prohibitory or mandatory, is to preserve
the status quo[203] until the merits of the case can be heard. They are usually granted
when it is made to appear that there is a substantial controversy between the parties
and one of them is committing an act or threatening the immediate commission of an
act that will cause irreparable injury or destroy the status quo of the controversy before
a full hearing can be had on the merits of the case. In other words, they are preservative
remedies for the protection of substantive rights or interests, and, hence, not a cause of
action in itself, but merely adjunct to a main suit. [204] In a sense, they are regulatory
processes meant to prevent a case from being mooted by the interim acts of the parties.

Rule 58 of the 1997 Rules of Civil Procedure generally governs the provisional
remedies of a TRO and a WPI. A preliminary injunction is defined under Section 1,
[205]
 Rule 58, while Section 3[206] of the same Rule enumerates the grounds for its
issuance. Meanwhile, under Section 5[207] thereof, a TRO may be issued as a precursor
to the issuance of a writ of preliminary injunction under certain procedural parameters.

The power of a court to issue these provisional injunctive reliefs coincides with
its inherent power to issue all auxiliary writs, processes, and other means
necessary to carry its acquired jurisdiction into effect under Section 6, Rule 135
of the Rules of Court which reads:

Section 6. Means to carry jurisdiction into effect. - When by law jurisdiction is conferred
on a court or judicial officer, all auxiliary writs, f processes and other means necessary
to carry it into effect may be employed by such court or officer; and if the procedure to
be followed in the exercise of such jurisdiction is not specifically pointed out by law [208] or
by these rules, any suitable process or mode of proceeding may be adopted which
appears comfortable to the spirit of the said law or rules.

In City of Manila v. Grecia-Cuerdo,[209] which is a case involving "[t]he supervisory power

or jurisdiction of the [Court of Tax Appeals] to issue a writ of certiorari in aid of its
appellate jurisdiction"[210] over "decisions, orders or resolutions of the RTCs in local tax
cases originally decided or resolved by them in the exercise of their original or appellate
jurisdiction,"[211] the Court ruled that said power "should coexist with, and be a
complement to, its appellate jurisdiction to review, by appeal, the final orders and
decisions of the RTC, in order to have complete supervision over the acts of the
latter:"[212]

A grant of appellate jurisdiction implies that there is included in it the power necessary

to exercise it effectively, to make all orders that ; will preserve the subject of the
action, and to give effect to the final determination of the appeal. It carries with it the
power to protect that jurisdiction and to make the decisions of the court thereunder
effective. The court, in aid of its appellate jurisdiction, has authority to control all
auxiliary and incidental matters necessary to the efficient and proper exercise of that
jurisdiction. For this purpose, it may, when necessary, prohibit or restrain the
performance of any act which might interfere with the proper exercise of its rightful
jurisdiction in cases pending before it. [213] (Emphasis supplied)

In this light, the Court expounded on the inherent powers of a court endowed with
subject matter jurisdiction:

[A] court which is endowed with a particular jurisdiction should have powers which are
necessary to enable it to act effectively within such jurisdiction. These should be
regarded as powers which are inherent in its jurisdiction and the court must
possess them in order to enforce its rules of practice and to suppress any abuses
of its process and to t defeat any attempted thwarting of such process.

x x x x 

Indeed, courts possess certain inherent powers which may be said to be implied from

a general grant of jurisdiction, in addition to those expressly conferred on them. These
inherent powers are such powers as are necessary for the ordinary and efficient
exercise of jurisdiction; or are essential to the existence, dignity and functions of
the courts, as well as to the due administration of justice; or are directly
appropriate, convenient and suitable to the execution of their granted powers;
and include the power to maintain the court's jurisdiction and render it effective
in behalf of the litigants.[214] (Emphases and underscoring supplied)

Broadly speaking, the inherent powers of the courts resonates the long-entrenched
constitutional principle, articulated way back in the 1936 case of Angara, that "where a
general power is conferred or duty enjoined, every particular power necessary for the
exercise of the one or the performance of the other is also conferred." [215]

In the United States, the "inherent powers doctrine refers to the principle, by which
the courts deal with diverse matters over which they are thought to have intrinsic
authority like procedural [rule-making] and general judicial housekeeping. To justify the
invocation or exercise of inherent powers, a court must show that the powers are
reasonably necessary to achieve the specific purpose for which the exercise is
sought. Inherent powers enable the judiciary to accomplish its constitutionally
mandated functions."[216]

In Smothers v. Lewis[217] (Smothers), a case involving the constitutionality of a statute

which prohibited courts from enjoining the enforcement of a revocation order of an
alcohol beverage license pending appeal, [218] the Supreme Court of Kentucky held:
[T]he Court is x x x vested with certain "inherent" powers to do that which is
reasonably necessary for the administration of justice within the scope of their
jurisdiction. x x x [W]e said while considering the rule making power and the judicial
power to be one and the same that ". . . the grant of judicial power [rule making
power] to the courts by the constitution carries with it, as a necessary incident,
the right to make that power effective in the administration of justice." (Emphases
supplied)

Significantly, Smothers characterized a court's issuance of provisional injunctive relief

as an exercise of the court's inherent power, and to this end, stated that any attempt on
the part of Congress to interfere with the same was constitutionally impermissible:

It is a result of this foregoing line of thinking that we now adopt the language framework
of 28 Am.Jur.2d, Injunctions, Section 15, and once and for all make clear that a court,
once having obtained jurisdiction of a cause of action, has, as an incidental to its
constitutional grant of power, inherent power to do all things reasonably necessary to
the administration of justice in the case before it. In the exercise of this power, a
court, when necessary in order to protect or preserve the subject matter of the
litigation, to protect its jurisdiction and to make its judgment effective, may grant
or issue a temporary injunction in aid of or ancillary to the principal action.

The control over this inherent judicial power, in this particular instance the
injunction, is exclusively within the constitutional realm of the courts. As such, it
is not within the purview of the legislature to grant or deny the power nor is it
within the purview of the legislature to shape or fashion circumstances under
which this inherently judicial power may be or may not be granted or denied.

This Court has historically recognized constitutional limitations upon the power of the
legislature to interfere with or to inhibit the performance of constitutionally granted and
inherently provided judicial functions, x x x

xxxx

We reiterate our previously adopted language, ". . . a court, once having obtained
jurisdiction of a cause of action, has, as incidental to its general jurisdiction, inherent
power to do all things reasonably necessary f to the administration of justice in the case
before it. . ." This includes the inherent power to issue injunctions. (Emphases
supplied)

Smothers also pointed out that the legislature's authority to provide a right to appeal in
the statute does not necessarily mean that it could control the appellate judicial
proceeding:
However, the fact that the legislature statutorily provided for this appeal does not give it
the right to encroach upon the constitutionally granted powers of the judiciary. Once the
administrative action has ended and the right to appeal arises the legislature is
void of any right to control a subsequent appellate judicial proceeding. The
judicial rules have come into play and have preempted the field. [219] (Emphasis
supplied)

With these considerations in mind, the Court rules that when Congress passed the first
paragraph of Section 14, RA 6770 and, in so doing, took away from the courts their
power to issue a TRO and/or WPI to enjoin an investigation conducted by the
Ombudsman, it encroached upon this Court's constitutional rule-making authority.
Clearly, these issuances, which are, by nature, provisional reliefs and auxiliary writs
created under the provisions of the Rules of Court, are matters of procedure which
belong exclusively within the province of this Court. Rule 58 of the Rules of Court did
not create, define, and regulate a right but merely prescribed the means of
implementing an existing right[220] since it only provided for temporary reliefs to preserve
the applicant's right in esse which is threatened to be violated during the course of a
pending litigation. In the case of Fabian,[221] it was stated that:

If the rule takes away a vested right, it is not procedural. If the rule creates a right such
as the right to appeal, it may be classified as a substantive matter; but if it operates as a
means of implementing an existing right then the rule deals merely with procedure.

Notably, there have been similar attempts on the part of Congress, in the exercise of its
legislative power, to amend the Rules of Court, as in the cases of: (a) In Re: Exemption
of The National Power Corporation from Payment of Filing/ Docket Fees;[222] (b) Re:
Petition for Recognition of the Exemption of the Government Service Insurance System
(GSIS) from Payment of Legal Fees;[223] and (c) Baguio Market Vendors Multi-Purpose
Cooperative (BAMARVEMPCO) v. Cabato-Cortes[224] While these cases involved
legislative enactments exempting government owned and controlled corporations and
cooperatives from paying filing fees, thus, effectively modifying Rule 141 of the Rules of
Court (Rule on Legal Fees), it was, nonetheless, ruled that the prerogative to amend,
repeal or even establish new rules of procedure [225] solely belongs to the Court, to
the exclusion of the legislative and executive branches of government. On this
score, the Court described its authority to promulgate rules on pleading, practice, and
procedure as exclusive and "[o]ne of the safeguards of [its] institutional
independence."[226]

That Congress has been vested with the authority to define, prescribe, and apportion
the jurisdiction of the various courts under Section 2, Article VIII supra, as well as to
create statutory courts under Section 1, Article VIII supra, does not result in an
abnegation of the Court's own power to promulgate rules of pleading, practice, and
procedure under Section 5 (5), Article VIII supra. Albeit operatively interrelated, these
powers are nonetheless institutionally separate and distinct, each to be preserved under
its own sphere of authority. When Congress creates a court and delimits its
jurisdiction, the procedure for which its jurisdiction is exercised is fixed by the
Court through the rules it promulgates. The first paragraph of Section 14, RA 6770
is not a jurisdiction-vesting provision, as the Ombudsman misconceives, [227] because it
does not define, prescribe, and apportion the subject matter jurisdiction of courts to act
on certiorari cases; the certiorari jurisdiction of courts, particularly the CA, stands under
the relevant sections of BP 129 which were not shown to have been repealed. Instead,
through this provision, Congress interfered with a provisional remedy that was
created by this Court under its duly promulgated rules of procedure, which utility
is both integral and inherent to every court's exercise of judicial power. Without
the Court's consent to the proscription, as may be manifested by an adoption of
the same as part of the rules of procedure through an administrative circular
issued therefor, there thus, stands to be a violation of the separation of powers
principle.

In addition, it should be pointed out that the breach of Congress in prohibiting

provisional injunctions, such as in the first paragraph of Section 14, RA 6770, does not
only undermine the constitutional allocation of powers; it also practically dilutes a
court's ability to carry out its functions. This is so since a particular case can
easily be mooted by supervening events if no provisional injunctive relief is
extended while the court is hearing the same. Accordingly, the court's acquired
jurisdiction, through which it exercises its judicial power, is rendered nugatory. Indeed,
the force of judicial power, especially under the present Constitution, cannot be
enervated due to a court's inability to regulate what occurs during a proceeding's
course. As earlier intimated, when jurisdiction over the subject matter is accorded by
law and has been acquired by a court, its exercise thereof should be undipped. To give
true meaning to the judicial power contemplated by the Framers of our Constitution, the
Court's duly promulgated rules of procedure should therefore remain unabridged, this,
even by statute. Truth be told, the policy against provisional injunctive writs in whatever
variant should only subsist under rules of procedure duly promulgated by the Court
given its sole prerogative over the same.

The following exchange between Associate Justice Marvic Mario Victor F. Leonen
(Justice Leonen) and the Acting Solicitor General Florin T. Hilbay (Acting Solicitor
General Hilbay) mirrors the foregoing observations:

JUSTICE LEONEN:
Okay. Now, would you know what rule covers injunction in the Rules of Court?

ACTING SOLICITOR GENERAL HILBAY:

Rule 58, Your Honor.
JUSTICE LEONEN:
58, that is under the general rubric if Justice Bersamin will correct me if I will be
mistaken under the rubric of what is called provisional remedies, our resident expert
because Justice Peralta is not here so Justice Bersamin for a while. So provisional
remedy you have injunction, x x x.

xxxx

JUSTICE LEONEN:
Okay, Now, we go to the Constitution. Section 5, subparagraph 5 of Article VIII of the
Constitution, if you have a copy of the Constitution, can you please read that provision?
Section 5, Article VIII the Judiciary subparagraph 5, would you kindly read that
provision?

ACTING SOLICTOR GENERAL HILBAY.

"Promulgate rules concerning the protection and enforcement of constitutional rights,
pleading, practice and procedure in all courts..."

JUSTICE LEONEN:
Okay, we can stop with that, promulgate rules concerning pleading, practice and
procedure in all courts. This is the power, the competence, the jurisdiction of what
constitutional organ?

ACTING SOLICITOR GENERAL HILBAY:

The Supreme Court, Your Honor.

JUSTICE LEONEN:
The Supreme Court. This is different from Article VIII Sections 1 and 2 which we've
already been discussed with you by my other colleagues, is that not correct?

ACTING SOLICITOR GENERAL HILBAY:

Correct, Your Honor.

JUSTICE LEONEN:
Okay, so in Section 2, [apportion] jurisdiction that is the power of Congress, is that not
correct?

ACTING SOLICITOR GENERAL HILBAY:

Correct, Your Honor.

JUSTICE LEONEN:
On the other hand, the power to promulgate rules is with the Court, is that not correct?
ACTING SOLICITOR GENERAL HILBAY:
Correct, Your Honor.

JUSTICE LEONEN:
A TRO and a writ of preliminary injunction, would it be a separate case or is it part of
litigation in an ordinary case?

ACTING SOLICITOR GENERAL HILBAY:

It is an ancillary remedy, Your Honor.

JUSTICE LEONEN:
In fact, it originated as an equitable remedy, is that not correct?

ACTING SOLICITOR GENERAL HILBAY:

Correct, Your Honor.

JUSTICE LEONEN:
In order to preserve the power of a court so that at the end of litigation, it will not
be rendered moot and academic, is that not correct?

ACTING SOLICITOR GENERAL HILBAY:

Correct, Your Honor.

JUSTICE LEONEN:
In that view, isn't Section 14, first paragraph, unconstitutional?

ACTING SOLICITOR GENERAL HILBAY:

No, Your Honor.

xxxx

JUSTICE LEONEN.
Can Congress say that a Court cannot prescribe Motions to Dismiss under Rule 16?

ACTING SOLICITOR GENERAL HILBAY:

Your Honor, Congress cannot impair the power of the Court to create remedies, x x x.

JUSTICE LEONEN.
What about bill [of] particulars, can Congress say, no Court shall have the power to
issue the supplemental pleading called the bill of t particular [s]? It cannot, because
that's part of procedure...

ACTING SOLICITOR GENERAL HILBAY:

That is true.

JUSTICE LEONEN
...or for that matter, no Court shall act on a Motion to Quash, is that not correct?

ACTING SOLICITOR GENERAL HILBAY:

Correct.

JUSTICE LEONEN:
So what's different with the writ of injunction?

ACTING SOLICITOR GENERAL HILBAY:

Writ of injunction, Your Honor, requires the existence of jurisdiction on the part of a
court that was created by Congress. In the absence of jurisdiction... (interrupted)

JUSTICE LEONEN:
No, writ of injunction does not attach to a court. In other words, when they create a
special agrarian court it has all procedures with it but it does not attach particularly to
that particular court, is that not correct?

ACTING SOLICTOR GENERAL HILBAY:

When Congress, Your Honor, creates a special court...

JUSTICE LEONEN:
Again, Counsel, what statute provides for a TRO, created the concept of a TRO? It was
a Rule. A rule of procedure and the Rules of Court, is that not correct?

ACTING SOLICITOR GENERAL HILBAY:

Yes, Your Honor.

JUSTICE LEONEN:
And a TRO and a writ of preliminary injunction does not exist unless it is [an] ancillary to
a particular injunction in a court, is that not correct?

ACTING SOLICITOR GENERAL HILBAY:

Correct, Your Honor.

xxxx[228] (Emphasis supplied)

In Biraogo v. The Philippine Truth Commission of 2010, [229] the Court instructed that "[i]t
is through the Constitution that the fundamental powers of government are established,
limited and defined, and by which these powers are distributed among the several
departments. The Constitution is the basic and paramount law to which all other laws
must conform and to which all persons, including the highest officials of the land, must
defer." It would then follow that laws that do not conform to the Constitution shall be
stricken down for being unconstitutional.[230]

However, despite the ostensible breach of the separation of powers principle, the Court
is not oblivious to the policy considerations behind the first paragraph of Section 14, RA
6770, as well as other statutory provisions of similar import. Thus, pending deliberation
on whether or not to adopt the same, the Court, under its sole prerogative and authority
over all matters of procedure, deems it proper to declare as ineffective the prohibition
against courts other than the Supreme Court from issuing provisional injunctive writs to
enjoin investigations conducted by the Office of the Ombudsman, until it is adopted as
part of the rules of procedure through an administrative circular duly issued therefor.

Hence, with Congress interfering with matters of procedure (through passing the first
paragraph of Section 14, RA 6770) without the Court's consent thereto, it remains that
the CA had the authority to issue the questioned injunctive writs enjoining the
implementation of the preventive suspension order against Binay, Jr. At the risk of
belaboring the point, these issuances were merely ancillary to the exercise of the
CA's certiorari jurisdiction conferred to it under Section 9 (1), Chapter I of BP 129, as
amended, and which it had already acquired over the main CA-G.R. SP No. 139453
case.

IV.

The foregoing notwithstanding, the issue of whether or not the CA gravely abused its
jurisdiction in issuing the TRO and WPI in CA-G.R. SP No. 139453 against the
preventive suspension order is a persisting objection to the validity of said injunctive
writs. For its proper analysis, the Court first provides the context of the assailed
injunctive writs.

A. Subject matter of the CA's iniunctive writs is the preventive suspension order.

By nature, a preventive suspension order is not a penalty but only a preventive

measure. In Quimbo v. Acting Ombudsman Gervacio,[231] the Court explained the
distinction, stating that its purpose is to prevent the official to be suspended from
using his position and the powers and prerogatives of his office to influence
potential witnesses or tamper with records which may be vital in the prosecution
of the case against him:

Jurisprudential law establishes a clear-cut distinction between suspension as preventive

measure and suspension as penalty. The distinction, by considering the purpose aspect
of the suspensions, is readily cognizable as they have different ends sought to be
achieved.
Preventive suspension is merely a preventive measure, a preliminary step in an
administrative investigation. The purpose of the suspension order is to prevent
the accused from using his position and the powers and prerogatives of his office
to influence potential witnesses or tamper with records which may be vital in the
prosecution of the case against him. If after such investigation, the charge is
established and the person investigated is found guilty of acts warranting his
suspension or removal, then he is suspended, removed or dismissed. This is the
penalty.

That preventive suspension is not a penalty is in fact explicitly provided by Section 24 of

Rule XIV of the Omnibus Rules Implementing Book V of the Administrative Code of
1987 (Executive Order No. 292) and other Pertinent Civil Service Laws.
Section. 24. Preventive suspension is not a punishment or penalty for misconduct in
office but is considered to be a preventive measure. (Emphasis supplied)
Not being a penalty, the period within which one is under preventive suspension is not
considered part of the actual penalty of suspension. So Section 25 of the same Rule
XIV provides:
Section 25. The period within which a public officer or employee charged is placed
under preventive suspension shall not be considered part of the actual penalty of
suspension imposed upon the employee found guilty.[232] (Emphases supplied)

The requisites for issuing a preventive suspension order are explicitly stated in Section
24, RA 6770:

Section 24. Preventive Suspension. - The Ombudsman or his Deputy may preventively
suspend any officer or employee under his authority pending an investigation, if in his
judgment the evidence of guilt is strong, and (a) the charge against such officer
or employee involves dishonesty, oppression or grave misconduct or neglect in
the performance of duty; (b) the charges would warrant removal from the
service; or (c) the respondent's continued stay in office may prejudice the case
filed against him.

The preventive suspension shall continue until the case is terminated by the Office of
the Ombudsman but not more than six (6) months, without pay, except when the delay
in the disposition of the case by the Office of the Ombudsman is due to the fault,
negligence or petition of the respondent, in which case the period of such delay shall
not be counted in computing the period of suspension herein provided. (Emphasis and
underscoring supplied)

In other words, the law sets forth two (2) conditions that must be satisfied to justify the
issuance of an order of preventive suspension pending an investigation, namely:
(1) The evidence of guilt is strong; and

(2) Either of the following circumstances co-exist with the first requirement:
(a) The charge involves dishonesty, oppression or grave misconduct or neglect in the
performance of duty;

(b) The charge would warrant removal from the service; or

(c) The respondent's continued stay in office may prejudice the case filed against him.
[233]

B. The basis of the CA's injunctive writs is the condonation doctrine.

Examining the CA's Resolutions in CA-G.R. SP No. 139453 would, however, show that
the Ombudsman's non-compliance with the requisites provided in Section 24, RA 6770
was not the basis for the issuance of the assailed injunctive writs.

The CA's March 16, 2015 Resolution which directed the issuance of the assailed TRO
was based on the case of Governor Garcia, Jr. v. CA[234] (Governor Garcia, Jr.),
wherein the Court emphasized that "if it were established in the CA that the acts subject
of the administrative complaint were indeed committed during petitioner [Garcia's] prior
term, then, following settled jurisprudence, he can no longer be administratively
charged."[235] Thus, the Court, contemplating the application of the condonation doctrine,
among others, cautioned, in the said case, that "it would have been more prudent for
[the appellate court] to have, at the very least, on account of the extreme urgency of the
matter and the seriousness of the issues raised in the certiorari petition, issued a
TRO x x x"[236] during the pendency of the proceedings.

Similarly, the CA's April 6, 2015 Resolution which directed the issuance of the assailed
WPI was based on the condonation doctrine, citing the case of Aguinaldo v.
Santos[237] The CA held that Binay, Jr. has an ostensible right to the final relief prayed
for, i.e., the nullification of the preventive suspension order, finding that the Ombudsman
can hardly impose preventive suspension against Binay, Jr. given that his re-election in
2013 as City Mayor of Makati condoned any administrative liability arising from
anomalous activities relative to the Makati Parking Building project from 2007 to 2013.
[238]
 Moreover, the CA observed that although there were acts which were apparently
committed by Binay, Jr. beyond his first term , i.e., the alleged payments on July 3, 4,
and 24, 2013,[239] corresponding to the services of Hillmarc's and MANA - still, Binay, Jr.
cannot be held administratively liable therefor based on the cases of Salalima v.
Guingona, Jr.,[240] and Mayor Garcia v. Mojica,[241] wherein the condonation dobtrine
was applied by the Court although the payments were made after the official's election,
reasoning that the payments were merely effected pursuant to contracts executed
before said re-election.[242]
The Ombudsman contends that it was inappropriate for the CA to have considered the
condonation doctrine since it was a matter of defense which should have been raised
and passed upon by her office during the administrative disciplinary proceedings.
[243]
 However, the Court agrees with the CA that it was not precluded from considering
the same given that it was material to the propriety of according provisional injunctive
relief in conformity with the ruling in Governor Garcia, Jr., which was the subsisting
jurisprudence at that time. Thus, since condonation was duly raised by Binay, Jr. in his
petition in CA-G.R. SP No. 139453,[244] the CA did not err in passing upon the same.
Note that although Binay, Jr. secondarily argued that the evidence of guilt against him
was not strong in his petition in CA-G.R. SP No. 139453, [245] it appears that the CA
found that the application of the condonation doctrine was already sufficient to enjoin
the implementation of the preventive suspension order. Again, there is nothing aberrant
with this since, as remarked in the same case of Governor Garcia, Jr., if it was
established that the acts subject of the administrative complaint were indeed committed
during Binay, Jr.'s prior term, then, following the condonation doctrine, he can no longer
be administratively charged. In other words, with condonation having been invoked by
Binay, Jr. as an exculpatory affirmative defense at the onset, the CA deemed it
unnecessary to determine if the evidence of guilt against him was strong, at least for the
purpose of issuing the subject injunctive writs.

With the preliminary objection resolved and the basis of the assailed writs herein laid
down, the Court now proceeds to determine if the CA gravely abused its discretion in
applying the condonation doctrine.

C. The origin of the condonation doctrine.

Generally speaking, condonation has been defined as "[a] victim's express or implied
forgiveness of an offense, [especially] by treating the offender as if there had been
no offense."[246]

The condonation doctrine - which connotes this same sense of complete

extinguishment of liability as will be herein elaborated upon - is not based on statutory
law. It is a jurisprudential creation that originated from the 1959 case of Pascual v.
Hon. Provincial Board of Nueva Ecija,[247] (Pascual),  which was therefore decided
under the 1935 Constitution.

In Pascual, therein petitioner, Arturo Pascual, was elected Mayor of San Jose, Nueva
Ecija, sometime in November 1951, and was later re-elected to the same position in
1955. During his second term, or on October 6, 1956, the Acting Provincial Governor
filed administrative charges before the Provincial Board of Nueva Ecija against him for
grave abuse of authority and usurpation of judicial functions for acting on a criminal
complaint in Criminal Case No. 3556 on December 18 and 20, 1954. In defense, Arturo
Pascual argued that he cannot be made liable for the acts charged against him since
they were committed during his previous term of office, and therefore, invalid grounds
for disciplining him during his second term. The Provincial Board, as well as the Court of
First Instance of Nueva Ecija, later decided against Arturo Pascual, and when the case
reached this Court on appeal, it recognized that the controversy posed a novel issue -
that is, whether or not an elective official may be disciplined for a wrongful act
committed by him during his immediately preceding term of office.

As there was no legal precedent on the issue at that time, the Court,
in Pascual, resorted to American authorities and "found that cases on the matter are
conflicting due in part, probably, to differences in statutes and constitutional provisions,
and also, in part, to a divergence of views with respect to the question of whether the
subsequent election or appointment condones the prior misconduct." [248] Without going
into the variables of these conflicting views and cases, it proceeded to state that:

The weight of authorities x x x seems to incline toward the rule denying the right
to remove one from office because of misconduct during a prior term, to which we
fully subscribe.[249] (Emphasis and underscoring supplied)

The conclusion is at once problematic since this Court has now uncovered that there is
really no established weight of authority in the United States (US) favoring the doctrine
of condonation, which, in the words of Pascual, theorizes that an official's re-election
denies the right to remove him from office due to a misconduct during a prior term. In
fact, as pointed out during the oral arguments of this case, at least seventeen (17)
states in the US have abandoned the condonation doctrine. [250] The Ombudsman aptly
cites several rulings of various US State courts, as well as literature published on the
matter, to demonstrate the fact that the doctrine is not uniformly applied across all state
jurisdictions. Indeed, the treatment is nuanced:

(1) For one, it has been widely recognized that the propriety of removing a public officer
from his current term or office for misconduct which he allegedly committed in a prior
term of office is governed by the language of the statute or constitutional provision
applicable to the facts of a particular case (see In Re Removal of Member of Council
Coppola).[251] As an example, a Texas statute, on the one hand, expressly allows
removal only for an act committed during a present term: "no officer shall be prosecuted
or removed from office for any act he may have committed prior to his election to office"
(see State ex rel. Rowlings v. Loomis).[252] On the other hand, the Supreme Court of
Oklahoma allows removal from office for "acts of commission, omission, or neglect
committed, done or omitted during a previous or preceding term of office" (see State v.
Bailey)[253] Meanwhile, in some states where the removal statute is silent or unclear, the
case's resolution was contingent upon the interpretation of the phrase "in office." On
one end, the Supreme Court of Ohio strictly construed a removal statute containing the
phrase "misfeasance of malfeasance in office" and thereby declared that, in the
absence of clear legislative language making, the word "office" must be limited to the
single term during which the offense charged against the public officer occurred
(see State ex rel. Stokes v. Probate Court of Cuyahoga County)[254] Similarly, the
Common Pleas Court of Allegheny County, Pennsylvania decided that the phrase "in
office" in its state constitution was a time limitation with regard to the grounds of
removal, so that an officer could not be removed for misbehaviour which occurred; prior
to the taking of the office (see Commonwealth v. Rudman)[255] The opposite was
construed in the Supreme Court of Louisiana which took the view that an officer's
inability to hold an office resulted from the commission of certain offenses, and at once
rendered him unfit to continue in office, adding the fact that the officer had been re-
elected did not condone or purge the offense (see State ex rel. Billon v. Bourgeois).
[256]
 Also, in the Supreme Court of New York, Apellate Division, Fourth Department, the
court construed the words "in office" to refer not to a particular term of office but to an
entire tenure; it stated that the whole purpose of the legislature in enacting the statute in
question could easily be lost sight of, and the intent of the law-making body be thwarted,
if an unworthy official could not be removed during one term for misconduct for a
previous one (Newman v. Strobel).[257]

(2) For another, condonation depended on whether or not the public officer was a
successor in the same office for which he has been administratively charged. The "own-
successor theory," which is recognized in numerous States as an exception to
condonation doctrine, is premised on the idea that each term of a re-elected incumbent
is not taken as separate and distinct, but rather, regarded as one continuous term of
office. Thus, infractions committed in a previous term are grounds for removal because
a re-elected incumbent has no prior term to speak of [258] (see Attorney-General v. Tufts;
[259]
 State v. Welsh;[260] Hawkins v. Common Council of Grand Rapids;[261] Territory v.
Sanches;[262] and Tibbs v. City of Atlanta).[263]

(3) Furthermore, some State courts took into consideration the continuing nature of an
offense in cases where the condonation doctrine was invoked. In State ex rel. Douglas
v. Megaarden,[264] the public officer charged with malversation of public funds was
denied the defense of condonation by the Supreme Court of Minnesota, observing that
"the large sums of money illegally collected during the previous years are still retained
by him." In State ex rel. Beck v. Harvey[265] the Supreme Court of Kansas ruled that
"there is no necessity" of applying the condonation doctrine since "the misconduct
continued in the present term of office[;] [thus] there was a duty upon defendant to
restore this money on demand of the county commissioners." Moreover, in State ex rel.
Londerholm v. Schroeder,[266] the Supreme Court of Kansas held that "insofar as
nondelivery and excessive prices are concerned, x x x there remains a continuing duty
on the part of the defendant to make restitution to the country x x x, this duty extends
into the present term, and neglect to discharge it constitutes misconduct."

Overall, the foregoing data clearly contravenes the preliminary conclusion

in Pascual that there is a "weight of authority" in the US on the condonation doctrine. In
fact, without any cogent exegesis to show that Pascual had accounted for the numerous
factors relevant to the debate on condonation, an outright adoption of the doctrine in this
jurisdiction would not have been proper.

At any rate, these US cases are only of persuasive value in the process of this Court's
decision-making. "[They] are not relied upon as precedents, but as guides of
interpretation."[267] Therefore, the ultimate analysis is on whether or not the condonation
doctrine, as espoused in Pascual, and carried over in numerous cases after, can be
held up against prevailing legal norms. Note that the doctrine of stare decisis does not
preclude this Court from revisiting existing doctrine. As adjudged in the case of Belgica,
the stare decisis rule should not operate when there are powerful countervailing
considerations against its application.[268] In other words, stare decisis becomes an
intractable rule only when circumstances exist to preclude reversal of standing
precedent.[269] As the Ombudsman correctly points out, jurisprudence, after all, is not a
rigid, atemporal abstraction; it is an organic creature that develops and devolves along
with the society within which it thrives. [270] In the words of a recent US Supreme Court
Decision, "[w]hat we can decide, we can undecide." [271]

In this case, the Court agrees with the Ombudsman that since the time Pascual was
decided, the legal landscape has radically shifted. Again, Pascual was a 1959 case
decided under the 1935 Constitution, which dated provisions do not reflect the
experience of the Filipino People under the 1973 and 1987 Constitutions. Therefore, the
plain difference in setting, including, of course, the sheer impact of the condonation
doctrine on public accountability, calls for Pascual's judicious re-examination.

D. Testing the Condonation Doctrine.

Pascual's ratio decidendi may be dissected into three (3) parts:

First, the penalty of removal may not be extended beyond the term in which the public
officer was elected for each term is separate and distinct:

Offenses committed, or acts done, during previous term are generally held not to
furnish cause for removal and this is especially true where the constitution provides
that the penalty in proceedings for removal shall not extend beyond the removal from
office, and disqualification from holding office for the term for which the officer
was elected or appointed. (67 C.J.S. p. 248, citing Rice vs. State, 161 S.W. 2d. 401;
Montgomery vs. Nowell, 40 S.W. 2d. 418; People ex rel. Bagshaw vs. Thompson, 130
P. 2d. 237; Board of Com'rs of Kingfisher County vs. Shutter, 281 P. 222; State vs.
Blake, 280 P. 388; In re Fudula, 147 A. 67; State vs. Ward, 43 S.W. 2d. 217).
The underlying theory is that each term is separate from other terms x x x.[272]
Second, an elective official's re-election serves as a condonation of previous
misconduct, thereby cutting the right to remove him therefor; and

[T]hat the reelection to office operates as a condonation of the officer's previous

misconduct to the extent of cutting off the right to remove him therefor. (43 Am. Jur. p.
45, citing Atty. Gen. vs. Hasty, 184 Ala. 121, 63 So. 559, 50 L.R.A. (NS) 553.
[273]
 (emphasis supplied)

Third, courts may not deprive the electorate, who are assumed to have known the life
and character of candidates, of their right to elect officers:

As held in Conant vs. Grogan (1887) 6 N.Y.S.R. 322, cited in 17 A.I.R. 281, 63 So. 559,
50 LRA (NS) 553 —
The Court should never remove a public officer for acts done prior to his present term of
office. To do otherwise would be to deprive the people of their right to elect their
officers. When the people have elected a man to office, it must be assumed that
they did this with knowledge of his life and character, and that they disregarded
or forgave his faults or misconduct, if he had been guilty of any. It is not for the
court, by reason of such faults or misconduct to practically overrule the will of the
people.[274] (Emphases supplied)

The notable cases on condonation following Pascual are as follows:

(1) Lizares v. Hechanova[275] (May 17, 1966) - wherein the Court first applied the
condonation doctrine, thereby quoting the above-stated passages from Pascual in
verbatim.

(2) Insco v. Sanchez, et al.[276] (December 18, 1967) - wherein the Court clarified that
the condonation doctrine does not apply to a criminal case. It was explained that a
criminal case is different from an administrative case in that the former involves the
People of the Philippines as a community, and is a public wrong to the State at large;
whereas, in the latter, only the populace of the constituency he serves is affected. In
addition, the Court noted that it is only the President who may pardon a criminal
offense.

(3) Aguinaldo v. Santos[277] (Aguinaldo; August 21, 1992) - a case decided under the

1987 Constitution wherein the condonation doctrine was applied in favor of then
Cagayan Governor Rodolfo E. Aguinaldo although his re-election merely supervened
the pendency of, the proceedings.

(4) Salalima v. Guinsona, Jr.[278] (Salalima; May 22, 1996) -wherein the

Court reinforced the condonation doctrine by stating that the same is justified by
"sound public policy." According to the Court, condonation prevented the elective
official from being "hounded" by administrative cases filed by his "political enemies"
during a new term, for which he has to defend himself "to the detriment of public
service." Also, the Court mentioned that the administrative liability condoned by re-
election covered the execution of the contract and the incidents related therewith. [279]

(5) Mayor Garcia v. Mojica[280] (Mayor Garcia; September 10, 1999) - wherein the

benefit of the doctrine was extended to then Cebu City Mayor Alvin B. Garcia who was
administratively charged for his involvement in an anomalous contract for the supply of
asphalt for Cebu City, executed only four (4) days before the upcoming elections. The
Court ruled that notwithstanding the timing of the contract's execution, the electorate is
presumed to have known the petitioner's background and character, including his past
misconduct; hence, his subsequent re-election was deemed a condonation of his prior
transgressions. More importantly, the Court held that the determinative time element in
applying the condonation doctrine should be the time when the contract was
perfected; this meant that as long as the contract was entered into during a prior
term, acts which were done to implement the same, even if done during a
succeeding term, do not negate the application of the condonation doctrine in
favor of the elective official.

(6) Salumbides, Jr. v. Office of the Ombudsman [281] (Salumbides, Jr.; April 23, 2010) -
wherein the Court explained the doctrinal innovations in the Salalima and Mayor
Garcia rulings, to wit:

Salalima v. Guingona, Jr. and Mayor Garcia v. Hon. Mojica reinforced the doctrine. The

condonation rule was applied even if the administrative complaint was not filed
before the reelection of the public official, and even if the alleged misconduct
occurred four days before the elections, respectively. Salalima did not distinguish
as to the date of filing of the administrative complaint, as long as the alleged misconduct
was committed during the prior term, the precise timing or period of which Garcia did
not further distinguish, as long as the wrongdoing that gave rise to the public official's
culpability was committed prior to the date of reelection. [282] (Emphasis supplied)

The Court, citing Civil Service Commission v. Sojor,[283] also clarified that the

condonation doctrine would not apply to appointive officials since, as to them,
there is no sovereign will to disenfranchise.

(7) And finally, the above discussed case of Governor Garcia, Jr. -wherein the Court
remarked that it would have been prudent for the appellate court therein to have issued
a temporary restraining order against the implementation of a preventive suspension
order issued by the Ombudsman in view of the condonation doctrine.

A thorough review of the cases post-1987, among others, Aguinaldo, Salalima, Mayor

Garcia, and Governor Garcia, Jr. - all cited by the CA to justify its March 16, 2015 and
April 6, 2015 Resolutions directing the issuance of the assailed injunctive writs - would
show that the basis for condonation under the prevailing constitutional and statutory
framework was never accounted for. What remains apparent from the text of these
cases is that the basis for condonation, as jurisprudential doctrine, was - and still
remains - the above-cited postulates of Pascual, which was lifted from rulings of US
courts where condonation was amply supported by their own state laws. With respect to
its applicability to administrative cases, the core premise of condonation - that is, an
elective official's re-election cuts qff the right to remove him for an administrative offense
committed during a prior term - was adopted hook, line, and sinker in our jurisprudence
largely because the legality of that doctrine was never tested against existing legal
norms. As in the US, the propriety of condonation is - as it should be -dependent on the
legal foundation of the adjudicating jurisdiction. Hence, the Court undertakes an
examination of our current laws in order to determine if there is legal basis for the
continued application of the doctrine of condonation.

The foundation of our entire legal system is the Constitution. It is the supreme law of the
land;[284] thus, the unbending rule is that every statute should be read in light of the
Constitution.[285] Likewise, the Constitution is a framework of a workable government;
hence, its interpretation must take into account the complexities, realities, and politics
attendant to the operation of the political branches of government. [286]

As earlier intimated, Pascual was a decision promulgated in 1959. Therefore, it was

decided within the context of the 1935 Constitution which was silent with respect to
public accountability, or of the nature of public office being a public trust. The provision
in the 1935 Constitution that comes closest in dealing with public office is Section 2,
Article II which states that "[t]he defense of the State is a prime duty of government, and
in the fulfillment of this duty all citizens may be required by law to render personal
military or civil service."[287] Perhaps owing to the 1935 Constitution's silence on public
accountability, and considering the dearth of jurisprudential rulings on the matter, as
well as the variance in the policy considerations, there was no glaring objection
confronting the Pascual Court in adopting the condonation doctrine that originated from
select US cases existing at that time.

With the advent of the 1973 Constitution, the approach in dealing with public officers
underwent a significant change. The new charter introduced an entire article on
accountability of public officers, found in Article XIII. Section 1 thereof positively
recognized, acknowledged, and declared that "[p]ublic office is a public trust."
Accordingly, "[p]ublic officers and employees shall serve with the highest degree
of responsibility, integrity, loyalty and efficiency, and shall remain accountable to
the people."

After the turbulent decades of Martial Law rule, the Filipino People have framed and
adopted the 1987 Constitution, which sets forth in the Declaration of Principles and
State Policies in Article II that "[t]he State shall maintain honesty and integrity in the
public service and take positive and effective measures against graft and
corruption."[288] Learning how unbridled power could corrupt public servants under the
regime of a dictator, the Framers put primacy on the integrity of the public service by
declaring it as a constitutional principle and a State policy. More significantly, the 1987
Constitution strengthened and solidified what has been first proclaimed in the 1973
Constitution by commanding public officers to be accountable to the people at all times:

Section 1. Public office is a public trust. Public officers and employees must at all
times be accountable to the people, serve them with utmost responsibility,
integrity, loyalty, and efficiency and act with patriotism and justice, and lead
modest lives.

In Belgica, it was explained that:

[t]he aphorism forged under Section 1, Article XI of the 1987 Constitution, which states
that "public office is a public trust," is an overarching reminder that every instrumentality
of government should exercise their official functions only in accordance with the
principles of the Constitution which embodies the parameters of the people's trust. The
notion of a public trust connotes accountability x x x.[289] (Emphasis supplied)

The same mandate is found in the Revised Administrative Code under the section of the
Civil Service Commission,[290] and also, in the Code of Conduct and Ethical Standards
for Public Officials and Employees.[291]

For local elective officials like Binay, Jr., the grounds to discipline, suspend or
remove an elective local official from office are stated in Section 60 of Republic
Act No. 7160,[292] otherwise known as the "Local Government Code of 1991" (LGC),
which was approved on October 10 1991, and took effect on January 1, 1992:

Section 60. Grounds for Disciplinary Action. - An elective local official may be

disciplined, suspended, or removed from office on any of the r following grounds:
(a) Disloyalty to the Republic of the Philippines;
(b) Culpable violation of the Constitution;
(c) Dishonesty, oppression, misconduct in office, gross negligence, or dereliction of
duty;
(d) Commission of any offense involving moral turpitude or an offense punishable by at
least prision mayor;
(e) Abuse of authority;
(f) Unauthorized absence for fifteen (15) consecutive working days, except in the case
of members of the sangguniang panlalawigan, sangguniang panlunsod, sanggunian
bayan, and sangguniang barangay;
(g) Application for, or acquisition of, foreign citizenship or residence or the status of an
immigrant of another country; and
(h) Such other grounds as may be provided in this Code and other laws.
An elective local official may be removed from office on the grounds enumerated above
by order of the proper court.

Related to this provision is Section 40 (b) of the LGC which states that those

removed from office as a result of an administrative case shall be disqualified
from running for any elective local position:

Section 40. Disqualifications. - The following persons are disqualified from running for
any elective local position:

xxxx

(b) Those removed from office as a result of an administrative case;

x x x x (Emphasis supplied)

In the same sense, Section 52 (a) of the RRACCS provides that the penalty of
dismissal from service carries the accessory penalty of perpetual disqualification
from holding public office:

Section 52. - Administrative Disabilities Inherent in Certain Penalties. -

a. The penalty of dismissal shall carry with it cancellation of eligibility, forfeiture of
retirement benefits, perpetual disqualification from holding public office, and bar from
taking the civil service examinations.

In contrast, Section 66 (b) of the LGC states that the penalty of suspension shall not
exceed the unexpired term of the elective local official nor constitute a bar to his
candidacy for as long as he meets the qualifications required for the office. Note,
however, that the provision only pertains to the duration of the penalty and its effect on
the official's candidacy. Nothing therein states that the administrative liability
therefor is extinguished by the fact of re-election:

Section 66. Form and Notice of Decision. - x x x.

xxxx

(b) The penalty of suspension shall not exceed the unexpired term of the respondent or
a period of six (6) months for every administrative offense, nor shall said penalty be a
bar to the candidacy of the respondent so suspended as long as he meets the
qualifications required for the office.
Reading the 1987 Constitution together with the above-cited legal provisions now leads
this Court to the conclusion that the doctrine of condonation is actually bereft of legal
bases.

To begin with, the concept of public office is a public trust and the corollary
requirement of accountability to the people at all times, as mandated under the
1987 Constitution, is plainly inconsistent with the idea that an elective local official's
administrative liability for a misconduct committed during a prior term can be wiped off
by the fact that he was elected to a second term of office, or even another elective
post. Election is not a mode of condoning an administrative offense, and there is
simply no constitutional or statutory basis in our jurisdiction to support the notion that an
official elected for a different term is fully absolved of any administrative liability arising
from an offense done during a prior term. In this jurisdiction, liability arising from
administrative offenses may be condoned bv the President in light of Section 19,
Article VII of the 1987 Constitution which was interpreted in Llamas v. Orbos[293] to apply
to administrative offenses:

The Constitution does not distinguish between which cases executive clemency may be
exercised by the President, with the sole exclusion of impeachment cases. By the same
token, if executive clemency may be exercised only in criminal cases, it would indeed
be unnecessary to provide for the exclusion of impeachment cases from the coverage
of Article VII, Section 19 of the Constitution. Following petitioner's proposed
interpretation, cases of impeachment are automatically excluded inasmuch as the same
do not necessarily involve criminal offenses.

In the same vein, We do not clearly see any valid and convincing , reason why the
President cannot grant executive clemency in administrative cases. It is Our considered
view that if the President can grant reprieves, commutations and pardons, and remit
fines and forfeitures in criminal cases, with much more reason can she grant executive
clemency in administrative cases, which are clearly less serious than criminal offenses.

Also, it cannot be inferred from Section 60 of the LGC that the grounds for discipline
enumerated therein cannot anymore be invoked against an elective local official to hold
him administratively liable once he is re-elected to office. In fact, Section 40 (b) of the
LGC precludes condonation since in the first place, an elective local official who is
meted with the penalty of removal could not be re-elected to an elective local position
due to a direct disqualification from running for such post. In similar regard, Section 52
(a) of the RRACCS imposes a penalty of perpetual disqualification from holding public
office as an accessory to the penalty of dismissal from service.

To compare, some of the cases adopted in Pascual were decided by US State

jurisdictions wherein the doctrine of condonation of administrative liability was supported
by either a constitutional or statutory provision stating, in effect, that an officer cannot
be removed by a misconduct committed during a previous term,[294] or that
the disqualification to hold the office does not extend beyond the term in which
the official's delinquency occurred.[295] In one case,[296] the absence of a provision
against the re-election of an officer removed - unlike Section 40 (b) of the LGC-was the
justification behind condonation. In another case, [297] it was deemed that condonation
through re-election was a policy under their constitution - which adoption in this
jurisdiction runs counter to our present Constitution's requirements on public
accountability. There was even one case where the doctrine of condonation was not
adjudicated upon but only invoked by a party as a ground; [298] while in another case,
which was not reported in full in the official series, the crux of the disposition was that
the evidence of a prior irregularity in no way pertained to the charge at issue and
therefore, was deemed to be incompetent. [299] Hence, owing to either their variance or
inapplicability, none of these cases can be used as basis for the continued adoption of
the condonation doctrine under our existing laws.

At best, Section 66 (b) of the LGC prohibits the enforcement of the penalty of

suspension beyond the unexpired portion of the elective local official's prior term, and
likewise allows said official to still run for re-election This treatment is similar to People
ex rel Bagshaw v. Thompson[300] and Montgomery v. Novell[301] both cited
in Pascual, wherein it was ruled that an officer cannot be suspended for a misconduct
committed during a prior term. However, as previously stated, nothing in Section 66 (b)
states that the elective local official's administrative liability is extinguished by the fact of
re-election. Thus, at all events, no legal provision actually supports the theory that the
liability is condoned.

Relatedly it should be clarified that there is no truth in Pascual's postulation that the

courts would be depriving the electorate of their right to elect their officers if condonation
were not to be sanctioned. In political law, election pertains to the process by which a
particular constituency chooses an individual to hold a public office. In this jurisdiction,
there is, again, no legal basis to conclude that election automatically implies
condonation. Neither is there any legal basis to say that every democratic and
republican state has an inherent regime of condonation. If condonation of an elective
official's administrative liability would perhaps, be allowed in this jurisdiction, then the
same should have been provided by law under our governing legal mechanisms. May it
be at the time of Pascual or at present, by no means has it been shown that such a law,
whether in a constitutional or statutory provision, exists. Therefore, inferring from this
manifest absence, it cannot be said that the electorate's will has been abdicated.

Equally infirm is Pascual's proposition that the electorate, when re-electing a local

official, are assumed to have done so with knowledge of his life and character, and that
they disregarded or forgave his faults or misconduct, if he had been guilty of any.
Suffice it to state that no such presumption exists in any statute or procedural rule.
[302]
 Besides, it is contrary to human experience that the electorate would have full
knowledge of a public official's misdeeds. The Ombudsman correctly points out the
reality that most corrupt acts by public officers are shrouded in secrecy, and concealed
from the public. Misconduct committed by an elective official is easily covered up,
and is almost always unknown to the electorate when they cast their votes.[303] At
a conceptual level, condonation presupposes that the condoner has actual knowledge
of what is to be condoned. Thus, there could be no condonation of an act that is
unknown. As observed in Walsh v. City Council of Trenton[304] decided by the New
Jersey Supreme Court:

Many of the cases holding that re-election of a public official prevents his removal for
acts done in a preceding term of office are reasoned out on the theory of condonation.
We cannot subscribe to that theory because condonation, implying as it does
forgiveness, connotes knowledge and in the absence of knowledge there can be no
condonation. One cannot forgive something of which one has no knowledge.

That being said, this Court simply finds no legal authority to sustain the condonation
doctrine in this jurisdiction. As can be seen from this discourse, it was a doctrine
adopted from one class of US rulings way back in 1959 and thus, out of touch from -
and now rendered obsolete by - the current legal regime. In consequence, it is high time
for this Court to abandon the condonation doctrine that originated from Pascual, and
affirmed in the cases following the same, such as Aguinaldo, Salalima, Mayor
Garcia, and Governor Garcia, Jr. which were all relied upon by the CA.

It should, however, be clarified that this Court's abandonment of the condonation

doctrine should be prospective in application for the reason that judicial decisions
applying or interpreting the laws or the Constitution, until reversed, shall form part of the
legal system of the Philippines.[305] Unto this Court devolves the sole authority to
interpret what the Constitution means, and all persons are bound to follow its
interpretation. As explained in De Castro v. Judicial Bar Council.[306]

Judicial decisions assume the same authority as a statute itself and, until authoritatively
abandoned, necessarily become, to the extent that they are applicable, the criteria that
must control the actuations, not only of those called upon to abide by them, but also of
those duty-bound to enforce obedience to them.[307]

Hence, while the future may ultimately uncover a doctrine's error, it should be, as a
general rule, recognized as "good law" prior to its abandonment. Consequently, the
people's reliance thereupon should be respected. The landmark case on this matter
is People v. Jabinal,[308] wherein it was ruled:

[W]hen a doctrine of this Court is overruled and a different view is adopted, the new
doctrine should be applied prospectively, and should not apply to parties who had relied
on the old doctrine and acted on the faith thereof.
Later, in Spouses Benzonan v. CA,[309] it was further elaborated:

[Pursuant to Article 8 of the Civil Code "judicial decisions applying or interpreting the
laws or the Constitution shall form a part of the legal system of the Philippines." But
while our decisions form part of the law of the land, they are also subject to Article 4 of
the Civil Code which provides that "laws shall have no retroactive effect unless the
contrary is provided." This is expressed in the familiar legal maxim lex prospicit, non
respicit, the law looks forward not backward. The rationale against retroactivity is easy
to perceive. The retroactive application of a law usually divests rights that have already
become vested or impairs the obligations of contract and hence, is unconstitutional. [310]

Indeed, the lessons of history teach us that institutions can greatly benefit from
hindsight and rectify its ensuing course. Thus, while it is truly perplexing to think that a
doctrine which is barren of legal anchorage was able to endure in our jurisprudence for
a considerable length of time, this Court, under a new membership, takes up the
cudgels and now abandons the condonation doctrine.

E. Consequence of ruling.

As for this section of the Decision, the issue to be resolved is whether or not
the CA committed grave abuse of discretion amounting to lack or excess of
jurisdiction in issuing the assailed injunctive writs.

It is well-settled that an act of a court or tribunal can only be considered as with grave
abuse of discretion when such act is done in a capricious or whimsical exercise of
judgment as is equivalent to lack of jurisdiction. The abuse of discretion must be so
patent and gross as to amount to an evasion of a positive duty or to 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 and
hostility.[311] It has also been held that "grave abuse of discretion arises when a lower
court or tribunal patently violates the Constitution, the law or existing
jurisprudence."[312]

As earlier established, records disclose that the CA's resolutions directing the issuance
of the assailed injunctive writs were all hinged on cases enunciating the condonation
doctrine. To recount, the March 16, 2015 Resolution directing the issuance of the
subject TRO was based on the case of Governor Garcia, Jr., while the April 6, 2015
Resolution directing the issuance of the subject WPI was based on the cases
of Aguinaldo, Salalima, Mayor Garcia, and again, Governor Garcia, Jr. Thus, by merely
following settled precedents on the condonation doctrine, which at that time, unwittingly
remained "good law," it cannot be concluded that the CA committed a grave abuse of
discretion based on its legal attribution above. Accordingly, the WPI against the
Ombudsman's preventive suspension order was correctly issued.

With this, the ensuing course of action should have been for the CA to resolve the main
petition for certiorari in CA-G.R. SP No. 139453 on the merits. However, considering
that the Ombudsman, on October 9, 2015, had already found Binay, Jr. administratively
liable and imposed upon him the penalty of dismissal, which carries the accessory
penalty of perpetual disqualification from holding public office, for the present
administrative charges against him, the said CA petition appears to have been mooted.
[313]
 As initially intimated, the preventive suspension order is only an ancillary issuance
that, at its core, serves the purpose of assisting the Office of the Ombudsman in its
investigation. It therefore has no more purpose - and perforce, dissolves - upon the
termination of the office's process of investigation in the instant administrative case.

F. Exceptions to the mootness principle.

This notwithstanding, this Court deems it apt to clarify that the mootness of the issue
regarding the validity of the preventive suspension order subject of this case does not
preclude any of its foregoing determinations, particularly, its abandonment of the
condonation doctrine. As explained in Belgica, '"the moot and academic principle' is not
a magical formula that can automatically dissuade the Court in resolving a case. The
Court will decide cases, otherwise moot, if: first, there is a grave violation of the
Constitution; second, the exceptional character of the situation and the paramount
public interest is involved; third, when the constitutional issue raised requires
formulation of controlling principles to guide the bench, the bar, and the public;
and fourth, the case is capable of repetition yet evading review." [314] All of these
scenarios obtain in this case:

First, it would be a violation of the Court's own duty to uphold and defend the
Constitution if it were not to abandon the condonation doctrine now that its infirmities
have become apparent. As extensively discussed, the continued application of the
condonation doctrine is simply impermissible under the auspices of the present
Constitution which explicitly mandates that public office is a public trust and that public
officials shall be accountable to the people at all times.

Second, the condonation doctrine is a peculiar jurisprudential creation that has

persisted as a defense of elective officials to escape administrative liability. It is the first
time that the legal intricacies of this doctrine have been brought to light; thus, this is a
situation of exceptional character which this Court must ultimately resolve. Further,
since the doctrine has served as a perennial obstacle against exacting public
accountability from the multitude of elective local officials throughout the years, it is
indubitable that paramount public interest is involved.

Third, the issue on the validity of the condonation doctrine clearly requires the
formulation of controlling principles to guide the bench, the bar, and the public. The
issue does not only involve an in-depth exegesis of administrative law principles, but
also puts to the forefront of legal discourse the potency of the accountability provisions
of the 1987 Constitution. The Court owes it to the bench, the bar, and the public to
explain how this controversial doctrine came about, and now, its reasons for
abandoning the same in view of its relevance on the parameters of public office.

And fourth, the defense of condonation has been consistently invoked by elective local
officials against the administrative charges filed against them. To provide a sample size,
the Ombudsman has informed the Court that "for the period of July 2013 to December
2014 alone, 85 cases from the Luzon Office and 24 cases from the Central Office were
dismissed on the ground of condonation. Thus, in just one and a half years, over a
hundred cases of alleged misconduct - involving infractions such as dishonesty,
oppression, gross neglect of duty and grave misconduct - were placed beyond the
reach of the Ombudsman's investigatory and prosecutorial powers." [315] Evidently, this
fortifies the finding that the case is capable of repetition and must therefore, not evade
review.

In any event, the abandonment of a doctrine is wholly within the prerogative of the
Court. As mentioned, it is its own jurisprudential creation and may therefore, pursuant to
its mandate to uphold and defend the Constitution, revoke it notwithstanding
supervening events that render the subject of discussion moot.

V.

With all matters pertaining to CA-G.R. SP No. 139453 passed upon, the Court now
rules on the final issue on whether or not the CA's Resolution [316] dated March 20, 2015
directing the Ombudsman to comment on Binay, Jr.'s petition for contempt in CA-G.R.
SP No. 139504 is improper and illegal.

The sole premise of the Ombudsman's contention is that, as an impeachable officer,

she cannot be the subject of a charge for indirect contempt [317] because this action is
criminal in nature and the penalty therefor would result in her effective removal from
office.[318] However, a reading of the aforesaid March 20, 2015 Resolution does not
show that she has already been subjected to contempt proceedings. This issuance, in?
fact, makes it clear that notwithstanding the directive for the Ombudsman to
comment, the CA has not necessarily given due course to Binay, Jr.'s contempt
petition:

Without necessarily giving due course to the Petition for Contempt respondents

[Hon. Conchita Carpio Morales, in her capacity as the Ombudsman, and the
Department of Interior and Local Government] are hereby DIRECTED to file Comment
on the Petition/Amended and Supplemental Petition for Contempt (CA-G.R. SP No.
139504) within an inextendible period of three (3) days from receipt hereof. (Emphasis
and underscoring supplied)

Thus, even if the Ombudsman accedes to the CA's directive by filing a comment,
wherein she may properly raise her objections to the contempt proceedings by virtue of
her being an impeachable officer, the CA, in the exercise of its sound judicial discretion,
may still opt not to give due course to Binay, Jr.'s contempt petition and accordingly,
dismiss the same. Sjmply put, absent any indication that the contempt petition has been
given due course by the CA, it would then be premature for this Court to rule on the
issue. The submission of the Ombudsman on this score is perforce denied.

WHEREFORE, the petition is PARTLY GRANTED. Under the premises of this

Decision, the Court resolves as follows:

(a) the second paragraph of Section 14 of Republic Act No. 6770 is

declared UNCONSTITUTIONAL, while the policy against the issuance of provisional
injunctive writs by courts other than the Supreme Court to enjoin an investigation
conducted by the Office of the Ombudsman under the first paragraph of the said
provision is DECLARED ineffective until the Court adopts the same as part of the rules
of procedure through an administrative circular duly issued therefor;

(b) The condonation doctrine is ABANDONED, but the abandonment

is PROSPECTIVE in effect;

(c) The Court of Appeals (CA) is DIRECTED to act on respondent Jejomar Erwin S.
Binay, Jr.'s (Binay, Jr.) petition for certiorari in CA-G.R. SP No. 139453 in light of the
Office of the Ombudsman's supervening issuance of its Joint Decision dated October 9,
2015 finding Binay, Jr. administratively liable in the six (6) administrative complamts,
docketed as OMB-C-A-15-0058, OMB-C-A-15-0059, OMB-C-A-15-0060, OMB-C-A-15-
0061, OMB-C-A-15-0062, and OMB-C-A-15-0063; and

(d) After the filing of petitioner Ombudsman Conchita Carpio Morales's comment, the
CA is DIRECTED to resolve Binay, Jr.'s petition for contempt in CA-G.R. SP No.
139504 with utmost dispatch.

SO ORDERED.
Osmena III vs. Abaya, G.R. No. 214756, January 13, 2016

G.R. No. 211737, January 13, 2016

SERGIO R. OSMEÑA III, Petitioner, v. DEPARTMENT OF TRANSPORTATION AND

COMMUNICATIONS SECRETARY JOSEPH EMILIOI A. ABAYA, MACTAN-CEBU
INTERNATIONAL AIRPORT AUTHORITY (MCIAA), THE PRE-QUALIFICATION,
BIDS AND AWARDS COMMITTEE (PBAC) FOR THE MACTAN-CEBU
INTERNATIONAL AIRPORT PROJECT THROUGH ITS CHAIRMAN,
UNDERSECRETARY JOSE PERPETUO M. LOTILLA, GMR INFRASTRUCTURE,
LTD. AND MEGAWIDE CONSTRUCTION CORPORATION, Respondents.

G.R. NO. 214756

BUSINESS FOR PROGRESS MOVEMENT AS REPRESENTED BY MEDARDO C.

DEACOSTA, JR., Petitioner, v. DEPARTMENT OF TRANSPORTATION AND
COMMUNICATIONS, GMR-MEGAWIDE CEBU AIRPORT
CORPORATION, Respondents.

DECISION

VILLARAMA, JR., J.:

Before us are the consolidated petitions for certiorari and injunction to restrain public
respondents from awarding the Mactan-Cebu International Airport (MCIA) Project to
private respondents GMR Infrastructure Limited (GMR) and Megawide Construction
Corporation (MCC). Petitioners subsequently prayed for invalidation of the award after
private respondents won the public bidding.

The Facts

The MCI A Project consists of the construction of a new passenger terminal with all
associated infrastructure facilities; construction of apron for the new passenger terminal;
rehabilitation and expansion of the existing terminal along with all associated
infrastructure and facilities; installation of all the required equipment and other
associated facilities; installation of the required information technology and other
equipment commensurate with the operations; and operation and maintenance of both
passenger terminals during the concession period. 1 The project is being implemented
by the Department of Transportation and Communications (DOTC) under the provisions
of Republic Act (R.A.) No. 6957 as amended by R.A. No. 7718, otherwise known as the
"Build-Operate-and-Transfer (BOT) Law."

On December 21, 2012, the Pre-qualification, Bids and Awards Committee (PBAC)
caused the publication of the invitation to pre-qualify and bid for the MCIA
Project.2 PBAC sets as criteria the following: (1) legal qualification; (2) technical
qualification; and (3) financial capability requirements. 3 On December 27, 2012, the
DOTC and Mactan-Cebu International Airport Authority (MCIAA) issued the Instructions
to Prospective Bidders (ITPB).4chanroblesvirtuallawlibrary

On February 13, 2013, the PBAC conducted a Pre-Qualification Conference. In its

Resolution5 dated May 14, 2013, the PBAC recommended the pre-qualification of the
following prospective bidders:

1. AAA Airport Partners;

2. Filinvest-CAI Consortium;
3. First Philippine Airports;
4. GMR Infrastructure & Megawide Consortium;
5. MPIC-JGS Airport Consortium;
6. Premier Airport Group; and
7. San Miguel & Incheon Airport Consortium.

After the submission and approval of the technical proposals submitted by the pre-
qualified bidders, the PBAC proceeded with accepting their financial proposals. The
financial bids were ranked in terms of "premium" to the government such that "[a]ll bids
received by the DOTC were 'premium' offers, meaning the money would go directly to
the government and would come on top of the cost to develop the airport." 6 The seven
bids, from highest to lowest, are:

1 GMR-Megawide Consortium Php 14,404,570,002.00

2 Filinvest-Changi Airport Consortium Php 13,999,999,999.99
3 Premier Airport Group Php 12,500,088,888.88
4 MPIC-JGS Airport Holdings, Inc. Php 11,230,000.000.00
5 AAA Airport Partners Php 11,088,888,889.00
6 San Miguel & Incheon Airport Php 9,050,000,000.00
7 First Philippine Airports Php 4,700,000,000.007

On April 3, 2014, PBAC issued a Resolution 8 recommending GMR-Megawide

Consortium as the winning bidder for the MCIA Project. The resolution reads in part:

WHEREAS, the GMR Infrastructure & Megawide Consortium, formed by Megawide

Construction Corporation ("Megawide") and GMR Infrastructure Limited ("GMR")
qualified under the Technical and Financial Qualification requirements, through the
following entities:

Development Experience
* Delhi International Airport (P) Limited Affiliate of GMR Infrastructure Limited
(DIAL)
* GMR Hyderabad International Airport Affiliate of GMR Infrastructure Limited
Limited (GHIAL)
Operation and Maintenance
* Delhi International Airport (P) Limited Affiliate of GMR Infrastructure Limited
(DIAL)
* GMR Hyderabad International Airport Affiliate of GMR Infrastructure Limited
Limited (GHIAL)
Financial Qualification
* Megawide Construction Corp. Consortium Member

xxxx

WHEREAS, upon completion of verification of the information, representations and

statements made in its Qualification Documents, Bid Letter, Technical Proposal and
Financial Proposal and recommendation of the TWG [Technical Working Group] under
its report dated 2 April 2014, (i) the PBAC has not found any deficiency in the Financial
Proposal, (ii) nor has any misrepresentation been found in the information,
representations and statements made by the GMR Infrastructure & Megawide
Consortium in its Qualification Documents, Technical Proposal, Financial Proposal, and
(iii) nor has the Consortium been found to have engaged in any Corrupt Practice, Fraud,
Collusion, Coercion, Undesirable and Restrictive Practice, Conflict of Interest, or
violated the Lock-up Rules. A copy of the TWG Report dated 2 April 2014 is attached as
Annex "DD";

NOW THEREFORE, upon review and deliberation, pursuant to and in accordance with
the provisions, constraints and limitations under the BOX Law, BOT Law IRR, and the
rules under the ITPB and ITB, the PBAC hereby resolves to recommend to the
Honorable Secretary of the DOTC and the Board of the MCIAA: (i) to designate GMR
Infrastructure & Megawide Consortium as the Winning Bidder for the Project, and (ii) to
consequently issue the Notice of Award to GMR Infrastructure & Megawide
Consortium.9chanrobleslaw

On the same day, Senator Sergio R. Osmeña III (petitioner Osmeña III) filed in this
Court a petition for certiorari and prohibition with application for temporary restraining
order and/or writ of preliminary injunction (G.R. No. 211737) praying that this Court (a)
immediately issue an order restraining the public respondents from further acting on the
bid of private respondents; (b) issue an order enjoining public respondents, their agents,
representatives or assigns from issuing a Notice of Award and executing a Concession
Agreement for the MCIA Project for private respondents; and (c) give due course to his
petition, and after due proceedings to render judgment declaring private respondents as
unqualified bidder and making the injunction permanent.

On April 4, 2014, DOTC and MCIAA issued the Notice of Award 10 to GMR-Megawide
Consortium. Pursuant to Section 8.1 of the Instruction to Bidders (ITB), private
respondents were directed to submit the required documents and pay the Bid Amount to
MCIAA.

On April 7, 2014, petitioner Osmeña III filed a Supplemental Petition reiterating his
prayer for injunctive reliefs and for this Court to further restrain the implementation of
the Notice of Award and render judgment declaring the same as null and void.

Private respondents GMR and MCC, and public respondents DOTC, MCIAA and PBAC
filed their respective Comments.

Meanwhile, private respondents complied with the post-award requirements, including

the payment of the Php 14.4 Billion bid amount to MCIAA. On April 22, 2014, the
Concession Agreement was executed between DOTC and MCIAA, and GMR-
Megawide Consortium.

On October 31, 2014, a petition for injunction was filed by Business for Progress
Movement (BPM), represented by Medardo C. Deacosta, Jr. (G.R. No. 214756).
Petitioner BPM sought to restrain the turn-over of the operation and maintenance of the
MCIA to GMR-Megawide Consortium. With the simultaneous imposition of increased
terminal fees, BPM claims that it stands to suffer great and irreparable damage and
injury once GMR-Megawide Consortium takes over the operation and management of
the MCIA.

On November 1, 2014, DOTC turned over to GMR-Megawide Consortium the operation

and maintenance of the MCIA.

Petitioners' Arguments

G.R. No. 211737

The following grounds are set forth in the petition:

THE PBAC ILLEGALLY QUALIFIED THE GMR-MEGAWIDE CONSORTIUM DESPITE

ITS PATENT VIOLATION OF THE CONFLICT OF INTEREST
RULE.chanRoblesvirtualLawlibrary

II

THE PBAC ILLEGALLY REFUSED TO DISQUALIFY THE GMR-MEGAWIDE

CONSORTIUM IN THE FACE OF UNREFUTED EVIDENCE OF GMR'S POOR
FINANCIAL HEALTH AND TRACK RECORD IN ITS INTERNATIONAL AIRPORT
OPERATIONS.chanRoblesvirtualLawlibrary
 III

PUBLIC RESPONDENTS ILLEGALLY FAILED TO AND LATER REFUSED TO

DISQUALIFY PRIVATE RESPONDENTS FOR VIOLATING THE CONFLICT OF
INTEREST RULE AND THEIR OTHER INCAPACITIES EVEN IF IT WAS THEIR
MINISTERIAL DUTY TO DO SO.chanRoblesvirtualLawlibrary

IV

THE PUBLIC RESPONDENTS ILLEGALLY ACCORDED PRIVATE RESPONDENTS

AN UNDUE ADVANTAGE AND/OR ACTED WITH UNDUE BIAS IN FAVOR OF
PRIVATE RESPONDENTS.

Petitioner Osmeña III argues that PBAC should have disqualified GMR-Megawide
Consortium because it violated the conflict of interest rule when it failed to disclose that
Mr. Tan Shri Bashir Ahmad bin Abdul Majid was a director of two subsidiaries of the
GMR-Megawide Consortium, and is also the Managing Director of Malaysia Airport
Holdings Berhad (MAHB), which joined the bidding for MCIA Project as member of the
First Philippine Airports Consortium. He asserts that this rule is mala prohibita; hence, it
does not matter whether the violation was intentional or not, and the penalty of
disqualification should be imposed. GMR-Megawide's violation disadvantaged the other
bidders as they were restricted from entering into similar arrangements, and thus
deprived them of an even playing field or a fair and competitive bidding.

Another ground of disqualification raised by petitioner Osmeña III concerns the financial
and technical capabilities of GMR as his investigation and online research showed that
GMR was in dire financial health and has been offloading several assets and its stake in
various infrastructure projects to meet its financial obligations. He likewise discovered
GMR's unsavory record involving the Delhi International Airport Pvt. Ltd. (DIAL), which
is the concessionaire for GMR's Indira Gandhi International Airport at Delhi. According
to the Auditor General of India, (i) 27% of the project cost for Delhi Airport was not
funded by DIAL but charged to the travelling public; (ii) outsourcing of contracts to GMR
joint venture companies was not on arms-length basis in violation of contract; and (iii)
DIAL violated the master plan and incurred delay in the completion of the project. The
Male International Airport (MIA) case also proves GMR's lack of technical qualification
to undertake the MCIA Project. GMR Male International Airport Pvt. Ltd. (GMIAL), an
indirect subsidiary of GMR, through its direct subsidiary GMR Infrastructure (Mauritius)
Limited, entered into a Concession Agreement dated June 28, 2010 with the Maldives
Airport Company Ltd. (MACL) and the Maldives Government Ministry of Finance and
Treasury for the Rehabilitation, Expansion, Modernization, Operation and Maintenance
of Male International Airport for a period of 25 years. However, on November 27, 2012,
the Maldives Government and MACL declared the Concession Agreement void ab
initio and gave GMIAL seven days to vacate the MIA, which prompted GMIAL to initiate
arbitration proceedings. GMIAL sought a declaration that it was entitled to adjust the
fees payable to MACL by virtue of the invalidity of portions of the Concession
Agreement, while MACL sought the declaration of the Concession Agreement as
void ab initio. GMIAL had applied for an injunction before the courts of Singapore to
restrain the Maldives Government from interfering with the performance of the
Concession Agreement pending arbitration proceedings. On appeal, the Singapore
Court of Appeal set aside the preliminary injunction issued by a High Court judge of
Singapore. Thus, effective December 8, 2012, the Maldives Government and MACL
took control of the MIA.

Following a privilege speech he delivered at the Senate, petitioner Osmeña III said that
the Senate Committee on Public Services, in fact, conducted two hearings on the matter
where all the respondents were represented. It was alleged that during these hearings,
it was established that: (a) PB AC did not compare the submissions of the various
members of consortia or bidders in order to determine the existence of conflict of
interest; (b) public respondents did not look into cross-directorships or conflict of interest
violations of GMR even if the rules compel an inspection based on the submission of
private respondents, and even refused to impose the penalty of disqualification when
the violation was pointed out; (c) GMR admitted that MAHB is GMR's partner in several
of its airport operations and that the Managing Director of MAHB is indeed a member of
at least two subsidiaries of GMR; and (d) granting there was doubt in the existence of a
violation of the conflict of interest rule, public respondents did not take the precaution of
asking for the opinion of the Department of Justice (DOJ).

Citing the case of Agan v. PIATCO,11 petitioner Osrnena III claims the parallelisms
between said case and the present controversy are too uncanny to ignore, and as
in Agan, the Court should exercise its solemn constitutional duty to nullify the award of
the MCIA Project to private respondents and avert serious damage to a project that the
Province of Cebu looks forward to. GMR also confirmed its operating losses during the
Senate hearings, and its present financial situation indicates that GMR Infra may not be
earning enough money to meet its interest payments on time. As to the Airport
Development Fund being levied by DIAL, the Supreme Court of India found that the levy
made by DIAL during the period March 1, 2009 to April 23, 2010, prior to the notice from
Airport Economic Regulatory Authority (AERA) permitting DIAL to subsequently
continue the levy, was made contrary to law.

Petitioner Osmeña III further avers that during the hearing conducted by the House of
Representatives on the MCIA Project on March 12, 2014, it was revealed that MCC
failed to complete its school building project despite two extensions granted to it. This is
relevant because under the Procurement Law (R.A. No. 9184), if a bidder is more than
15% delayed in any of its infrastructure projects, it cannot be awarded a new contract.
While the MCIA Project is under the BOT Law, the underlying principle still holds for the
simple reason that what is involved is a public contract. The foregoing negative findings
affecting both partners in the GMR-Megawide Consortium should have compelled the
PBAC, at the very least, to disqualify said consortium during the post-qualification as
they were unable to demonstrate viable commercial operations.

G.R. No. 214756

Petitioner BPM also expressed doubts on the financial capacity of the winning bidder,
GMR-Megawide Consortium, to undertake the construction, development, operation
and maintenance of the MCIA in view of several news reports about GMR
Infrastructure's state of being "debt-ridden," as it had to raise funds through sale, equity
issue and divest a few road and power plants in order to pay its corporate loans. It was
also reported that GMR asked the US private equity firm KKR & Co. LP to provide about
$175 Million in a debt and equity deal. Apparently, the cancellation by the Maldives
Government of GMR's contract for modernizing the MIA had greatly affected GMR's
revenues coming from its airport business.

With GMR's lack of financial capacity, BPM contends that the GMR-Megawide
Consortium had come up with a scheme of imposing increased terminal fees to cover
the operating costs and expansion of the MCIA. From a news report published in
the Business Mirror on October 13, 2014, BPM learned that the MCIA board approved
on October 10, 2014 higher passenger service charge (PSC) rates, commonly known
as terminal fees, "to help fund the expansion and cover increasing operating costs as
well as comply with the 25-year concession agreement between MCIAA and private
airport operator GMR-Megawide Cebu Airport Corp. (GMCAC)," and that effective
November 1, a domestic passenger would have to pay Php220, Php20 more than the
current Php200 fee, while an international passenger would have to shell out Php750,
or Php200 more than the current Php550; the domestic PSC rate will increase further to
Php300 effective January 1, 2016.12chanroblesvirtuallawlibrary

Petitioner maintains that all the requisites for the issuance of a writ of preliminary
injunction are present in this case. Petitioner as taxpayer has a clear and unmistakable
right to be protected as the imposition of the terminal fees in the increased amount as
well as the turn-over of the MCIA to private respondents despite the fact that the latter
has no financial capacity will be prejudicial to petitioners. There is also an urgent and
paramount necessity for the issuance of the writ considering the scheduled turn-over on
November 1, 2014, and petitioner has no other plain, speedy and adequate remedy in
the course of law except this petition, for which purpose it is ready, able and willing to
post the necessary bond in the amount that this Court may determine. BMP claims that
there appears a clear and present danger that the instant petition will be rendered
nugatory and ineffectual, and that the highest interest of justice will not be served if the
act complained of — that is, the immediate turn-over of the operations of the MCIA to
private respondents, would not be enjoined.

In its Consolidated Reply, BPM argues that the petition has not been mooted by the
actual turnover of MCIA's operation to private respondents since the terminal fees will
continue to increase in 2016 to defray the cost of the project. GMR's financial
incapacity, as confirmed by online articles on GMR's moves to bring down its debt
burden and finance its projects, will thus continue to cause grave and irreparable
damage to BPM. Direct injury is being suffered by BPM members who are taxpayers
frequently travelling to Cebu and Mactan from the increased terminal fees.

Respondents' Arguments
G.R. No. 211737

Megawide Construction Corp.

On procedural grounds, MCC contends that the petition should be dismissed for fatal
defects or infirmities. First, the petition raises several factual questions which this Court
is not required to entertain, particularly in a petition for certiorari and prohibition.
Second, the petition for certiorari under Rule 65 of the Rules of Court is improper and
cannot be pursued against the public respondents, more so against GMR and MCC,
which do not exercise quasi-judicial or ministerial functions vis-a-vis the bidding process
for the MCI A Project. And third, petitioner has no locus standi to file the petition, and
neither has he shown any justification for this Court to disregard his lack of personality
to maintain this suit.

MCC argues that the petition lacks merit considering that: (a) the petition assails
matters which require to be left to the sole determination of the executive department,
particularly the PBAC and DOTC, and thus is beyond judicial cognizance; (b)
petitioner's prayer to enjoin the public respondents from issuing a Notice of Award or
executing a Concession Agreement - both of which have already occurred - is already
moot and thus is not a proper subject of controversy; (c) even assuming that this Court
can take cognizance of the petition, petitioner failed to allege, much less establish a
violation of law but rather, merely relies on DOTC and MCIAA issuances - the ITPB and
ITB - both of which the PBAC has faithfully applied in this instance, in accordance with
its intent and interpretation, thus negating any grave abuse of discretion; (d) contrary to
petitioner's own interpretation of PBACs ITPB and ITB, which interpretation finds no
basis therein and in law, there is no conflict of interest; and (e) contrary to petitioner's
allegations, GMR-Megawide Consortium is financially and technically capable of
undertaking the MCIA Project, and developing, maintaining, and operating the
renovated MCIA.

Opposing the application for a writ of preliminary injunction, MCC asserts that petitioner
failed to show (1) a clear, unmistakable legal right that demands protection nor a prima
facie entitlement to the relief demanded in the petition, and hence no injunctive relief
must issue; and (2) that he, or even the other bidders, the public and the State, will
suffer grave and irreparable injury from the continuation of the Award, the execution of
the Concession Agreement, and/or the MCIA Project. On the contrary, grave and
irreparable injury will result should the bidding process be enjoined and, consequently,
the project be delayed. MCC contends that under previous and existing laws, the policy
has been that a national government infrastructure project may not be enjoined save for
exceptional circumstances, in order to avoid unnecessary costs and, more importantly,
delay in the enjoyment of benefits from such project. In this case, the government
agencies have regularly performed their duty and the winning Consortium is eager to
comply with their orders. All the queries raised by the other bidders have been
addressed by private respondents and what remains to be done is the work that ought
to be the result from the bidding procedure. The MCIA Project, among the present
administration's Public-Private Partnership (PPP) projects should not be delayed any
further on the basis of unsubstantiated allegations.

GMR Infrastructure Ltd.

GMR points out similar defects in the petition such as the failure to attach certified true
copy of the assailed order, judgment or resolution since petitioner only attached the
transcripts of stenographic notes taken during the Senate hearings which are mere
recording of the proceedings therein; lack of requisite standing of petitioner who has not
raised any constitutional issue nor alleged any violation of application of a law, but
merely points to a supposed unequal enforcement of PBAC's instructions to the bidders;
non-submission of his income tax return, having sued as a taxpayer; no other Filipino,
local or foreign bidder, joined his petition despite his self-serving claim that the petition
involves issues of transcendental importance; and lack of any allegation whatsoever
that respondents usurped legislative powers.

On the merits of the case, GMR emphasizes that the assailed acts involve policy
decisions that are not subject to judicial review. The situation in Agan v. PIATCO is also
not the same herein because the public respondents did not disregard any legal
requirement when they determined that GMR-Megawide was the most qualified to
undertake the MCIA Project. Assuming that the assailed acts can be reviewed by this
Court, petitioner nevertheless chose an improper remedy as his petition raises several
questions of fact while relying merely on online/internet sources. This notwithstanding,
GMR addressed the concerns regarding its financial capability in its letter to PBAC
dated December 20, 2013 and also during the Senate hearings attended by its
representatives. Notably, GMR-Megawide already paid the upfront premium to the
government in the amount of Php14,404,570,002.99 which shows the consortium has
the financial strength and capacity to deliver the Project.

On the conflict of interest issue, GMR explains that this was already clarified by public
respondents during the Senate hearings. It points out that having a "common director" is
obviously not the same as a director of one Consortium member being "also directly
involved in any capacity related to the Bidding Process" for another Bidder. Citing the
verified petition of Osmefia III, GMR avers that petitioner could not truthfully allege
having information and personal knowledge that Mr. Bashir was also directly involved in
the Bidding Process for the GMR-Megawide Consortium, because he was not. To
remove all doubts and as required by PBAC, GMR submitted sworn certifications to that
effect. GMR maintains that the conflict of interest rule and the examples/instances cited
therein do not apply automatically, but are always subject to discretion and evaluation
by the PBAC, and more importantly, there has to be a finding by the DOTC/MC1AA that
a conflict of interest exists before any Bidder is disqualified.

On petitioner's claim that respondents violated the Equal Protection Clause, GMR
argues that concededly there is no statute or law here that infringed the constitutional
principle. What clearly emerges is petitioner's grievance that the Conflict of Interest
provision in the bidding rules was supposedly not followed, and on that premise private
respondents should be disqualified and the award in their favor set aside. These
consequences are not only harsh but unwarranted. For assuming the said rule may be
considered as "statute" that public respondents had breached, such breach is not a
violation of the Equal Protection Clause that will give rise to a constitutional issue. Citing
jurisprudence, GMR asserts that "an erroneous or mistaken performance of a statutory
duty, although a violation of the statute, is not without more a denial of the equal
protection of the laws." Public respondents' acts in this regard do not amount to violation
of the Equal Protection Clause, as the facts do not show there was "intentional or
purposeful discrimination" when they determined that no conflict of interest exists for
GMR-Megawide Consortium.

GMR further contends that petitioner is not entitled to a writ of preliminary injunction, as
petitioner Osmeña III has no clear and unmistakable right, not being a bidder himself
and having failed to establish any grave abuse of discretion committed by the public
respondents in the performance of their duty. The alleged grave and irreparable injury,
what petitioner feared as "bad precedent" in public bidding, is not irreparable but
imaginary. On the contrary, it is the government and the public who will suffer
irreparable injury if an injunction is issued that will further delay the project for the
expansion and development of an international airport in the Province of Cebu.

G.R. No. 214756

GMR and Megawide

(GMR-Megawide Cebu Airport Corp.)

The consortium now called the GMR-Megawide Cebu Airport Corp. (GMCAC),
reiterates its previous arguments, given the similar procedural infirmities of the present
petition, and those addressing the issue of its alleged lack of financial capacity. The
consortium's financial capability has already been evaluated by the PBAC -- including
the controversies or issues raised by the other bidders -- which finally determined that
GMR-Megawide Consortium is the most qualified to undertake the MCIA Project.

GMCAC asserts that BMP's prayer to enjoin the turn-over of MCIA's operation and
maintenance to GMCAC and the imposition of the increased PSC rates have already
occurred. Hence, this issue is already moot and academic, and not the proper subject of
this petition for injunction. More, there is no grave and irreparable injury that will be
inflicted upon the State and the general public should the turn-over of the MCIA and
increased PSC rates be implemented as these are part of the MCIA Project and in
pursuance of the Concession Agreement. Since the alleged financial incapacity of GMR
was unfounded, based merely on news reports and online materials, in contrast to
official documents submitted to and evaluated by the PBAC, petitioner's fear that it will
be prejudiced by GMR's financial incapacity is likewise baseless.

G.R. Nos. 211737 & 214756

DOTC, MCIAA and PBAC

Public respondents argue that a direct resort to this Court is premature and improper
under the doctrine of hierarchy of courts. Having failed to establish special and
important reasons to support petitioners' invocation of this Court's original jurisdiction,
the petitions should be dismissed. It is likewise asserted that the mere claim that the
case is of transcendental importance or that it has an economic impact would not
present a special and important ground that would justify the exercise of this Court's
original jurisdiction and ignoring the hierarchy of courts.

There is also no showing that Medardo Deacosta, Jr. was authorized to file the petition
in behalf of petitioner BPM. The certification of non-forum shopping submitted by
Deacosta did not include proof of his authority to sign the said certificate for BPM.

Both petitioners have no legal standing to institute the present petitions. The petition in
G.R. No. 211737 does not identify any specific constitutional question or issue, the
principal requirement for legal standing in public suits. The invocation of violation of the
equal protection clause does not qualify as a constitutional question or issue. Neither
has petitioner Osmefia III sufficiently shown that the funds to be expended are derived
from taxation and that he will be directly injured by the award of the MCIA Project to
GMCAC, and eventually, by the implementation thereof. Further, there is no allegation
of disregard of specific constitutional or statutory prohibition, nor of direct injury to be
sustained by petitioner.

G.R. No. 214756 should also be dismissed on the same ground as BPM failed to show
how the increase in terminal fees will constitute an illegal disbursement of public funds.
Besides, the petition has become moot and academic with the turn-over of the MCIA to
GMCAC on November 1, 2014. Hence, there is nothing more to enjoin and there is no
more justiciable controversy to be resolved. Even assuming that this case has not
become moot, injunction is clearly not proper as the requisites for the issuance of the
writ have not been satisfied.

On the merits of the case, public respondents contend that petitioner Osmeña's reliance
on Agan v. PIATCO is improper as the ruling therein is not on all fours with the present
case. This Court ruled in Agan that "the crucial issues submitted for resolution are of
first impression and they entail the proper legal interpretation of key provisions of the
Constitution, the BOT Law and its Implementing Rules and Regulations" 13 and hence,
the specific provisions of law violated by PIATCO were identified. In stark contrast, the
present case does not present constitutional issues. Moreover, this Court in Agan ruled
that the PBAC erroneously evaluated PIATCO's financial ability to fund the subject
project when it speculated on PIATCO's future financial ability on the basis of the
documents it submitted. Here, however, the proper procedure was observed in
evaluating the qualifications of all the bidders.

Public respondents maintain that they exercised due diligence and strictly complied with
the rules in evaluating the submitted bids. In concluding that GMR-Megawide
Consortium did not violate Conflict of Interest Rule, they applied the clear words of the
ITPB, ITB and Special Bid Bulletins. The interpretation of the rule is lodged in the DOTC
being the government agency tasked to implement the MCI A Project. No advantage
was given to GMR-Megawide Consortium or to First Philippine Airports Consortium
which had in fact given the lowest bid in terms of premium.

As to GMR-Megawide Consortium's qualifications for the MCIA Project, public

respondents assert that they exercised due diligence and acted within jurisdiction when
the PBAC determined that GMR-Megawide Consortium is the most qualified in terms of
technical experience and financial capability. It was stressed that under the ITPB, the
detailed evaluation of the compliance by the Prospective Bidder with the Legal,
Technical and Financial Qualification Requirements shall be based solely upon the
qualification documents submitted.

As to the issues concerning GMR's dispute with the Maldives Government over the
Male International Airport, as well as the alleged violations of DIAL, the concessionaire
for the Indira Gandhi International Airport, these have already been threshed out and
addressed by GMR during the post-qualification stage. On the other hand, petitioner's
reference to online articles that pertain to MCC deserves no consideration. Said
materials are hearsay and unofficial and do not warrant the disqualification of a Bidder.
As between those online articles and the official submissions -certifications,
qualifications, documents and financial statements submitted by the bidders,
respondent PBAC is mandated by law to give preference and weight to the latter in
determining the track record or technical qualifications of a prospective bidder. Indeed,
PBAC would do injustice against a prospective bidder if, notwithstanding that it passed
all the qualifications provided by law and the applicable rules, it will be disqualified
merely on the basis of hearsay evidence. While PBAC has the right to seek
clarifications and make inquiries regarding information supplied by the prospective
bidders in the qualification documents, it cannot be expected to consider every possible
allegation as it would just delay the entire bidding process. Having exercised its function
within the parameters of the law, relevant rules and regulations and the ITPB, the PBAC
cannot be faulted if it finds that GMR passed all the qualifications requirements provided
by the rules and the ITPB. Hence, there is no merit in petitioner Osmeña's argument
that public respondents "illegally refused to disqualify" the GMR-Megawide
Consortium.chanRoblesvirtualLawlibrary

Issues

From the foregoing, the core issues to be resolved in the present controversy are: (1)
whether GMR-Megawide Consortium is a qualified bidder; (2) whether the increased
terminal fees imposed by the winning bidder, GMCAC, is legal; (3) whether petitioners
are entitled to injunctive relief.

Our Ruling

The petitions are without merit.

Preliminaries

A. Legal Standing

Legal standing or locus standi refers to a personal and substantial interest in a case

such that the party has sustained or will sustain direct injury because of the challenged
governmental act.14 The requirement of standing, which necessarily sharpens the
presentation of issues, relates to the constitutional mandate that this Court settle only
actual cases or controversies.15 Thus, generally, a party will be allowed to litigate only
when (1) he can show that he has personally suffered some actual or threatened injury
because of the allegedly illegal conduct of the government; (2) the injury is fairly
traceable to the challenged action; and (3) the injury is likely to be redressed by a
favorable action.16chanroblesvirtuallawlibrary

In David v. Macapagal-Arroyo,17 we explained the rules on locus standi, as follows:

Locus standi is defined as "a right of appearance in a court of justice on a given

question." In private suits, standing is governed by the "real-parties-in interest rule" as
contained in Section 2, Rule 3 of the 1997 Rules of Civil Procedure, as amended. It
provides that "every action must be prosecuted or defended in the name of the real
party in interest." Accordingly, the "real-party-in interest" is "the parly who stands to be
benefited or injured by the judgment in the suit or the party entitled to the avails of the
suit." Succinctly put, the plaintiffs standing is based on his own right to the relief sought.

The difficulty of determining locus standi arises in public suits. Here, the plaintiff who

asserts a "public right" in assailing an allegedly illegal official action, does so as
a representative of the general public.THE ACTING CHAIRMAN (SEN. OSMEÑA)He
may be a person who is affected no differently from any other person. He could be
suing as a "stranger," or in the category of a "citizen," or "taxpayer." In either case, he
has to adequately show that he is entitled to seek judicial protection. In other words, he
has to make out a sufficient interest in the vindication of the public order and the
securing of relief as a "citizen" or "taxpayer."

Case law in most jurisdictions now allows both "citizen" and "taxpayer" standing in
public actions. The distinction was first laid down in Beauchamp v. Silk, where it was
held that the plaintiff in a taxpayer's suit is in a different category from the plaintiff in a
citizen's suit. In the former, the plaintiff is affected by the expenditure of public funds,
while in the latter, he is but the mere instrument of the public concern. As held by the
New York Supreme Court in People ex rel Case v. Collins: "In matter of mere public
right, however ... the people are the real parties.... It is at least the right, if not the duty,
of every citizen to interfere and see that a public offence be properly pursued and
punished, and that a public grievance be remedied." With respect to taxpayer's
suits, Terr v. Jordan held that "the right of a citizen and a taxpayer to maintain an action
in courts to restrain the unlawful use of public funds to his injury cannot be denied."

However, to prevent just about any person from seeking judicial interference in any
official policy or act with which he disagreed with, and thus hinders the activities of
governmental agencies engaged in public service, the United State Supreme Court laid
down the more stringent "direct injury" test in Ex Parte Levitt, later reaffirmed in Tileston
v. Ullman. The same Court ruled that for a private individual to invoke the judicial
power to determine the validity of an executive or legislative action, he must
show that he has sustained a direct injury as a result of that action, and it is not
sufficient that he has a general interest common to all members of the public.

This Court adopted the "direct injury" test in our jurisdiction. In People v. Vera, it held
that the person who impugns the validity of a statute must have "a personal and
substantial interest in the case such that he has sustained, or will sustain direct
injury as a result." The Vera doctrine was upheld in a litany of cases, such
as, Custodio v. President of the Senate, Manila Race Horse Trainers' Association v. De
la Fuente, Pascual v. Secretary of Public Works and Anti-Chinese League of the
Philippines v. Felix.18 (Italics in the original; emphasis and underscoring supplied)

The nature of personal interest in public suits was summarized as follows:

For a party to have locus standi, one must allege "such a personal stake in the outcome
of the controversy as to assure that concrete adverseness which sharpens the
presentation of issues upon which the court so largely depends for illumination of
difficult constitutional questions."

Because constitutional cases are often public actions in which the relief sought is likely
to affect other persons, a preliminary question frequently arises as to this interest in the
constitutional question raised.

When suing as a citizen, the person complaining must allege that he has been or is
about to be denied some right or privilege to which he is lawfully entitled or that he is
about to be subjected to some burdens or penalties by reason of the statute or
act complained of. When the issue concerns a public right, it is sufficient that the
petitioner is a citizen and has an interest in the execution of the laws.

For a taxpayer, one is allowed to sue where there is an assertion that public funds are
illegally disbursed or deflected to an illegal purpose, or that there is a wastage of public
funds through the enforcement of an invalid or unconstitutional law. The Court retains
discretion whether or not to allow a taxpayer's suit.

In the case of a legislator or member of Congress, an act of the Executive that injures
the institution of Congress causes a derivative but nonetheless substantial injury that
can be questioned by legislators. A member of the House of Representatives has
standing to maintain inviolate the prerogatives, powers and privileges vested by the
Constitution in his office.

An organization may be granted standing to assert the rights of its members, but the
mere invocation by the Integrated Bar of the Philippines or any member of the legal
profession of the duty to preserve the rule of law does not suffice to clothe it with
standing.

As regards a local government unit (LGU), it can seek relief in order to protect or

vindicate an interest of its own, and of the other LGUs. 19 (Emphasis supplied; citations
omitted)

Here, BPM alleges a direct personal injury for its members who as frequent travelers to
Cebu and Mactan will be burdened by the increased terminal fees imposed by the
private respondents upon taking over the operation and management of MCIA. On the
other hand, petitioner Osmeña III claims to be suing as a legislator, taxpayer and citizen
asserting a public right in the stringent application of the bidding rules on the
qualifications of private respondents for the MCIA Project.

In any case, locus standi being a mere procedural technicality, 20 the Court has, in the
exercise of its discretion, relaxed the rules on standing when the issues involved as of
"transcendental importance" to the public. 21 The Court, through Associate Justice
Florentino P. Feliciano (retired and now deceased), provided the following instructive
guides as determinants in determining whether a matter is of transcendental
importance: (1) the character of the funds or other assets involved in the case; (2) the
presence of a clear case of disregard of a constitutional or statutory prohibition by the
public respondent agency or instrumentality of the government; and (3) the lack of any
other party with a more direct and specific interest in the questions being
raised.22chanroblesvirtuallawlibrary

In not a few cases, the Court, in keeping with its duty under the Constitution to
determine whether the other branches of government have kept themselves within the
limits of the Constitution and the laws and have not abused the discretion given them,
has brushed aside technical rules of procedure. 23chanroblesvirtuallawlibrary

In Agan v. PIATCO, also involving a controversy in the qualifications of the winning

bidder for the construction and operation of the country's premier international airport,
the Court resolved to grant standing to the petitioners in view of "the serious legal
questions involved and their impact on public interest." 24 Although the factual milieu in
this case is not similar and no constitutional issue was raised by petitioners, we hold
that the same rationale in Agan justifies the relaxation of the rules on standing.

B. Hierarchy of Courts

While this Court has original jurisdiction over petitions for certiorari,
prohibition, mandamus, quo warranto, and habeas corpus, such jurisdiction is shared
with the Court of Appeals and the Regional Trial Courts. It is judicial policy that —

x x x a direct invocation of the Supreme Court's jurisdiction is allowed only when
there are special and important reasons therefor, clearly and especially set out in
the petition. Reasons of practicality, dictated by an increasingly overcrowded docket
and the need to prioritize in favor of matters within our exclusive jurisdiction, justify the
existence of this rule otherwise known as the "principle of hierarchy of courts." More
generally stated, the principle requires that recourse must first be made to the lower-
ranked court exercising concurrent jurisdiction with a higher court. 25 (Italics
omitted; Emphasis supplied)

The Court thus declared in Heirs of Bertuldo Hinog v. Melicor,26 that it will not entertain
direct resort to it unless the redress desired cannot be obtained in the appropriate
courts, and exceptional and compelling circumstances, such as cases of national
interest and of serious implications, justify the availment of the extraordinary remedy of
writ of certiorari, calling for the exercise of its primary
jurisdiction.27chanroblesvirtuallawlibrary

After a thorough study and evaluation of the issues involved, the Court is of the view
that exceptional circumstances exist in this case to warrant the relaxation of the rule.
The Court can resolve the factual issues from the available evidence on record.

Mactan-Cebu International Airport is the second busiest airport in the country after the
Ninoy Aquino International Airport, handling millions of passengers and thousands of
aircraft movements every year. Opened in the mid-1960s, it is owned by the DOTC and
managed by the MCIAA.28 The multi-billion expansion and development project for MCI
A is being implemented through the PPP program. The Government's PPP program has
two objectives: (1) increase private investment in infrastructure through solicited mode;
and (2) follow good governance practices in preparing, bidding and implementing the
PPP projects.29 There is no dispute then that this case is of paramount national interest
for it raises serious questions on the evaluation of bids by the public respondents.

C. Mootness

Respondents' contention that the case was mooted by the Notice of Award and turnover
of operations of the MCIA to GMCAC likewise deserves scant consideration. For even
in cases where the supervening events had made the cases moot, the Court did not
hesitate to resolve the legal or constitutional issues raised to formulate controlling
principles to guide the bench and the bar, and the public. 30 Hence, the subsequent
issuance of Notice of Award, execution of the Concession Agreement and turn-over to
GMCAC of the operation and maintenance of MCIA, did not remove the issue of
GMCAC's qualifications from the ambit of judicial review.

Substantive Issues

No Grave Abuse of Discretion

in PBAC's Determination that GMR-Megawide Consortium
was a Qualified Bidder

For public biddings of PPP contracts under the BOT Law and Implementing Rules and
Regulations (IRR), the evaluation of bids is undertaken in two stages. The first-stage
evaluation involves the assessment of the technical, operational, environmental and
financing viability of the proposal as contained in the bidder's first envelopes vis-a-vis
the prescribed requirements and criteria/minimum standards and basic parameters
prescribed in the bidding documents. The second stage evaluation shall involve the
assessment and comparison of the financial proposals of the bidders. Within three days
from completion of the financial evaluation, the PB AC submits its recommendation to
the head of the Implementing Agency (IA) or Local Government Unit (LGU). Upon
approval of the recommendation, the head of the IA or LGU will issue a notice of award
to a winning proponent. Subject to compliance with the post-award requirements in the
notice of award, the PPP contract shall be executed and signed by the winning bidder
and the head of the IA or LGU.31chanroblesvirtuallawlibrary

During the post-qualification evaluation and prior to the final award to GMR-Megawide
Consortium as the Highest Bidder, the latter's disqualification was sought by the Second
Highest Bidder, Filinvest Development Corporation (FDC), on the following grounds: (a)
GMR's questionable record in airport construction and development; (2) GMR's financial
incapacity; and (3) violation of the Conflict of Interest Rule.

In its letters32 dated December 13, 2013 and December 16, 2013 addressed to PBAC
Chairman Undersecretary Jose Perpetuo M. Lotilla, FDC, citing published newspaper
reports, brought up the following issues: (1) cancellation by the Maldives Government of
the GMR Group's contract for modernizing the Male Ibrahim Nasir International Airport
(Male International Airport) and which cancellation was affirmed in a Singapore court;
(2) the rapid rise of GMR's debt level and MCC's equity of only roughly P8 Billion; (3)
GMR's exit from the management of Istanbul Gokcen International Airport in Istanbul,
Turkey, supposedly as part of the GMR Group's articulated strategy of "develop-build-
create value-divest," which does not augur well for the long-term commitment intended
for the 25-year concession period of the MCIA Project; (4) critical findings of the
Comptroller and Auditor General of India based on the performance audit of the
implementation of the public-private partnership for the Indira Gandhi International
Airport at Delhi, India, including the development fee imposed on travelers which was
used by DIAL (Delhi Airport concessionaire) to finance 27% of the project cost,
outsourcing of numerous contracts which are not arms-length transactions and in
violation of the Operation Management and Development Agreement (OMDA) because
these were given to joint venture companies in which DIAL had substantial equity
interest, violation of the Master Plan and delay in project completion, financial
documents showing GMR posting net loss from operations in the last three years and
debt levels increasing in relation to its equity; and (4) concern as to MCC's equity in
view of several PPP projects awarded to it which involve substantial amount in project
costs.

As part of the Technical Qualifications, the ITPB mandates compliance with certain
supporting documents from entities who fulfill the requirements for Development
Experience, and Operation and Maintenance Experience:
 3. The entity whose experience is being submitted in fulfillment of this
requirement - whether the Prospective Bidder or a Consortium Member
and any Affiliates of any of these entities, should submit a certificate from
an Auditor, as per the format provided at Annex QD-11 to satisfactorily
establish its claim.

4. The entity, whose experience is being submitted in fulfillment of this

requirement - whether the Prospective Bidder or a Consortium Member
and any Affiliates of any of these entities must certify that they have no
Unsatisfactory Performance Record as per the format provided at
Annex QD-4A or Annex QD-4B.33 (Emphasis supplied)

The certificate from an Auditor, as per the format provided in Annex QD-11, serves as
evidence of having the claimed Development Experience, and in Annex QD-13, a
certificate for details of eligible projects for Operation and Maintenance Experience,
such as the number of years in operation of the airport and the annual passenger
throughout registered by the airport.34 The more relevant document is the certificate
from the entities whose experience is being submitted in fulfillment of the Development
Experience, and Operation and Maintenance Experience, of "No Unsatisfactory
Performance Record."

As per the format prescribed in Annex QD-4A, the Notarized Certification of Absence of
Unsatisfactory Performance Record, the entity fulfilling the Development Experience,
and Operation and Maintenance Experience, certifies that it does not have any record of
unsatisfactory performance in any of its projects and contracts.

xxx "Unsatisfactory Performance" means any of the following:

1. within the last five (5) years prior to the Qualification Documents
Submission Date -

a. failure to satisfactorily perform any of its material obligations on any

contract, as evidenced by an imposition of a judicial
pronouncement or arbitration award;

b. expulsion from any project or contract;

c. termination or suspension of any of its projects or contracts due to

breach of its obligations; or

d. material violations of laws and/or regulations applicable to any of its

projects or contracts x x x.35chanroblesvirtuallawlibrary

Evaluating the information provided by FDC and the explanation given by private
respondents concerning the latter's performance record, PBAC in its Resolution dated
April 3, 2014, stated its findings and conclusion, viz. :

I. Existence of Unsatisfactory Performance in relation to GMR-Male

Pursuant to QD-4A of the ITPB, the relevant project or contract refers to any project or
contract of the entity or entities whose experience is being used to meet any of the
Technical Qualification Requirements which was commenced or in the process of
implementation within the last five (5) years before the Qualification Documents
Submission Date, and not just to the particular projects or contracts being submitted to
meet such Technical Qualification Requirements. Based on the clear reading of the
provisions under QD-4A, the performance record of GMR-Male is not relevant to the
Project, considering its credentials were not used to satisfy any qualification
requirement. The PBAC also appreciated that -

 the information pertaining to the Male Airport Contract was disclosed by

GMR during the Pre-qualification process, even if it was not a required
submission; and
 in a letter dated 23 December 2013 addressed to the DOTC, through
Undersecretary Rene K. Limcaoco, Isabel Chaterton of the International
Finance Corporation ("IFC") Public-Private Partnership Advisory Services
for South Asia said that "IFC has been consistently of the view that the
sanctity of the Male airport concession agreement should be upheld and
have noted publicly our strong belief that the process leading to the award
of the concession for that project was conducted in an open and
transparent manner and in accordance with international best practice. We
understand the matter is now under arbitration which is the appropriate
dispute resolution mechanism provided for in the concession agreement.
We should also point out, that in June 2013, the Anti-Corruption
Commission of the Maldives concluded that there was no corruption
involved in the award and concession of the Male airport to GMR-MAHB."
IFC is a member of the World Bank Group and the largest global
development institution focused exclusively on the private sector in
developing countries. A copy of IFC's letter dated 20 December 2013 is
attached hereto as Annex "AA."

II. Misrepresentation as to the Absence of Unsatisfactory Performance of

DIAL

Based on the definition of unsatisfactory performance under the ITPB and ITB, absence
of unsatisfactory performance must be evidenced by the imposition of a judicial
pronouncement or arbitration award. The CAG Report is neither a judicial
pronouncement nor an arbitration award. Therefore, based on the definition, the CAG
Report is not sufficient basis for an adverse finding. On further evaluation of the
documentary submissions and at the close of several discussions, it was determined
that the CAG Report is primarily addressed to the relevant government agencies of
India. The PBAC noted, among others, that the charging of development fee and
outsourcing to service providers through a procurement process is allowed under the
contract.

It has been reported as well that the Ministry of Civil Aviation has contested the findings
under the CAG Report. Briefly, the Ministry has said that: (i) the charging of the
development fee is authorized under the relevant law and known to all bidders prior to
bid submission, (ii) there was no deviation from the Master Plan, particularly as regards
the extent of permissible commercial development as follows:

"Ministry of Civil Aviation has gone through the report of the CAG on Indira Gandhi
International Airport, Delhi as tabled in Parliament today and strongly refutes the loss
figures and other allegations as made in the report.

"The calculation of presumptive gain from the commercial use of land at the Delhi
Airport is totally erroneous and misleading as it simply adds the nominal value of the
projected revenue, without taking the net present value. In fact the net present value of
the figure quoted by CAG is Rs 13795 crores only. CAG has further failed to appreciate
that 46% of this amount would be payable to AAI as revenue share.

"It is also pointed out that the levy of Development Fee is under Section 22 (A) of AAI
Act, 1994 and was in the knowledge of all the bidders prior to the bidding process.
Hence, contrary to what the CAG has said, the levy of Development Fee by DIAL was
not a post contractual benefit provided to DIAL at the cost of passengers. Further, the
levy of the Development Fee has been upheld by the Supreme Court, which has
already examined and rejected all the issues now being raised by CAG in its report.

"On the issue of lease of Airport land, it is clarified that the land has not been given to
DIAL on rental basis. RslOO is just a token amount for the purpose of the Conveyance
Deed. The determining factor for grant of concession to the bidder was the Gross
Revenue share quoted by the bidders. As a result, Airports Authority of India (AAI) now
receives 45.99% share of Gross Revenues of DIAL and 26% of all Dividends. Benefit to
AAI is likely to be more than Rs 3 lakh crores in this process during the entire
Concession period. AAI has already got its revenue share of Rs.2936 crores in the last
6 years and likely to get Rs. 1770 crores in the year 2012-13 and Rs. 2287 crores in the
year 2013-14. The AAI share of revenue from DIAL is further going to constantly rise
every year in the balance concession period.

"It may also be noted that the right to use 5% of Airport land for commercial purpose
was also defined in the bid and known to all bidders."

III. Misrepresentation as to financial capacity of GMR Infrastructure &

Megawide Consortium
Pursuant to the ITPB and ITB, to be financially qualified to bid for the Project, a bidder
must meet the following Financial Qualification requirements: (a) (i) Net Worth of at
least Php 2.0 billion, or its equivalent as of its latest audited financial statements, which
must be for financial year ending not earlier than 31 December 2011, or (ii) a Set-Aside
Deposit equivalent to the same amount, and (b) a letter testimonial from a domestic
universal/commercial bank or an international bank with a subsidiary/branch in the
Philippines or any international bank recognized by the BSP attesting that the
Prospective Bidder and/or members of the Consortium are banking with them, and that
they are in good financial standing and/or are qualified to obtain credit accommodations
from such banks to finance the Project. These parameters for the determination of
financial qualification requirements are consistent with Section 5.4(c) of the BOT Law
IRR.

On further evaluation, the PBAC determined that, for purposes of meeting the Financial
Qualification requirement, QD-8, with supporting information, was submitted by
Megawide for the GMR Infrastructure & Megawide Consortium. Megawide's submission
was previously determined to have fulfilled these requirements. Furthermore, in the
course of completing the financial evaluation, the PBAC examined the Financial
Proposal comprising the Bid Amount and the Final Draft Concession Agreement signed
and executed by the Authorized Representative of the GMR Infrastructure & Megawide
Consortium pursuant to the ITB, and the PBAC has not found any deficiency in the
financial proposal.

IV. Long term commitment to Project

Filinvest-CAI Consortium also shared its observation that it doubts the long term
commitment of GMR Infrastructure & Megawide Consortium to the Project in view of its
reported intention to withdraw from the ISGIA. The PBAC noted this observation and
resolved that the reported divestment from Istanbul Airport does not affect the
evaluation of GMR Infrastructure & Megawide Consortium's qualification to undertake
the Project under the terms of the Concession Agreement. Divestment or withdrawal by
a Consortium Member from the Project is permitted, subject to the applicable Lock-up
Rules under V-05 and V-06 of the ITPB, as well, as under the Concession Agreement.
This is an important provision in the ITB, ITPB and Concession Agreement, validated in
the course of the market sounding exercise undertaken for the Project and in keeping
with the declared policy under the BOT Law to provide the most appropriate incentives
to mobilize private resources for the purpose of financing the construction, operation
and maintenance of infrastructure and development projects. Further, under Annex BL-
1, GMR Infrastructure & Megawide Consortium has certified that it will undertake the
project in accordance with the Concession Agreement, including the applicable Lock-up
Rules, which undertaking was affirmed in a letter addressed to PBAC dated 20
December 2013.

There is no reason to doubt the commitment in view of the certificate of good standing
from the Ministry of Defence of Turkey, which states that the operating company
founded by Limak Holding, GMR Infrastructure Limited and MAHB has been operating
the Istanbul Sabiha Gocken International Airport Terminal satisfactorily per the
provisions of the Implementation Agreement executed in 2008 and that the transfer of
the forty percent (40%) shares held by GMR and its affiliates to Malaysia Airports MSC
Sdn Bhd has been duly approved by the Undersecretary for Defense Industries on 20
March 2014, consistent with the terms of the Implementation Agreement.

V. Violation of Conflict of Interest

The ITB, in Section 5.6(c) states in part:

Each Bidder may submit only one Bid Proposal. To ensure a level playing field and a
competitive Bidding Process, Bidders (in the case of Consortia, each Consortium
Members), including their Affiliates, must not have any Conflict of Interest. Without
limiting the generality of what would constitute a Conflict of Interest, any of the following
will be considered a Conflict of Interest:chanRoblesvirtualLawlibrary

xxx  xxx   xxx

a member of the board of directors, partner, officer, employee or agent of a Bidder, any
Consortium Member, or any of their Affiliates (of either the Didder or any of its
Consortium Members), is also directly involved in any capacity related to the Bidding
Process for the Project for another Bidder, any Consortium Member of any other
Bidder, or any of their Affiliates (of either the Bidder or any of its Consortium Members),
within a period of two (2) years prior to the publication of the Invitation to Pre-Qualify
and Bid and one (1) year after award of the Project.

The same conflict of interest arises in case of professional advisors except when prior
written disclosure was made to their client-Bidders, DOTC/MCIAA and the Public-
Private Partnership Center, including the submission of a Conflict Management Plan for
this purpose. A written consent or clearance to this effect shall likewise be secured from
DOTC.
xxx   xxx    xxx
(This is similar to the Conflict of Interest provision appearing in the ITPB, Section V04-
d.)

Consequently, in Annex BL-1 of the ITB, or the Form of Bid Letter, a bidder is required
to state under oath that it "including all of its Consortium Members, and all of the entities
it has proposed to comply with the Qualification Requirements under the ITPB, have not
at any time (i) engaged in any Corrupt Practice, Fraud, Collusion, Coercion, Undesirable
Practice, or Restrictive Practice, (ii) have a Conflict of Interest (iii) violated the Lock-Up
Rules or (iv) has Unsatisfactory Performance Record."

During the pre-qualification stage, a question was submitted seeking clarification on

Section V04-d of the ITPB on Conflict of Interest. In its answer to the query under SBB
No. 06-2013, the PBAC stated that "without limiting the discretion of the PBAC to
determine what constitutes Conflict of Interest, direct involvement shall mean actual
participation in the deliberations and decision-making for the bidding process of the
Prospective Bidder that would give the director knowledge / information regarding the
bid of such Prospective Bidder."

In June 2013, GMR Infrastructure & Megawide Consortium submitted the following
query:

PBAC to please confirm our understanding that a conflict of interest shall arise with
respect to a director, partner, officer, advisor, employee, or agent if:

1. such director, partner, officer, advisor, employee, or agent of a Bidder (Bidder "A ") is
directly involved in the Bidding Process for the Project; and

2. such director, partner, officer, advisor, employee, or agent is also directly involved in
any capacity related to the Bidding Process for the Project for another Bidder ("Bidder
B"), any Consortium Member of Bidder B, or any of their Affiliates.

Accordingly, a conflict of interest will arise only if such director, partner, officer, advisor,
employee, or agent is directly involved in the Bidding Process for the Project with
respect to both Bidders A and B.

PBAC to further confirm that for purposes of Section 5.6(c) of the Instructions to
Bidders, "direct involvement" shall mean actual participation in the deliberations and
decision-making for the bidding process of the Bidder that would give the director,
officer, advisor, employee or agent knowledge or information regarding the bid of the
Bidder, as previously clarified by the PBAC in SBB 6-2013, Query 4.

The Consortium, further suggested the following revision to the ITB:

A member of the board of directors, partner, officer, employee or agent of a Bidder, any
Consortium Member, or any of their Affiliates (of either the Bidder or any of Consortium
Members), who is directly involved in the Bidding Process for the Project with respect to
a Bidder, is also directly involved in any capacity related to the Bidding Process for the
Project for another Bidder, any Consortium Member of any other Bidder, or any of their
Affiliates (of either the Bidder or any of its Consortium Members), within a period of two
(2) years prior to the publication of the Invitation to Pre-Qualify and Bid and one (I) year
after award of the Project.

The same conflict of interest arises in case of professional advisors except when prior
written disclosure was made to their client-Bidders, DOTC/MCIAA, and the Public-
Private Partnership Centre, including the submission of a Conjlict Management Plan for
this purpose. A written consent or clearance to this effect shall likewise be secured from
DOTC.

For purposes of this provision, direct involvement shall mean actual participation in the
deliberations and decision-making for the bidding process of the Bidder that would give
the director, officer, advisor, employee, or agent knowledge or information regarding the
bid of the Bidder.

The PBAC, under SBB No. 11-2013 Query No. 5 released in August 2013, replied as
follows:

Please be guided that in cases of conflict of interest under ITB, Sec. 5.6(c), Bidders
who may be affected are advised to comply with SBB02-2013, Amendments to the
ITPB, No. 10, with respect to the compliance requirements for professional advisors.
Thus, Bidder, is advised, so that there will be no conflict of interest, to make a prior
written disclosure to the affected Bidders, DOTC, and the PPPC, and submit a Conjlict
Management Plan. A written consent or clearance must be likewise secured from
DOTC.
Based on the relevant rule, there must be direct involvement or participation in the
deliberations and decision-making as to the Bid Process of two or more bidders and that
mere partnership or common directorship, or direct involvement in one bidder is not
enough.

The rule under Section 5.6(c), as previously explained under SBB No. 06-2013 (Query
No. 4), is that the existence of common partners, directors or officers between two
Bidders is not of itself ground for a finding of Conflict of Interest. In SBB No. 07-2013
(Query No. 36), the PBAC reiterated that "[t]he position in the ITPB is reiterated.
However, please note that Section V-04(d) shall only apply if the common director is
directly involved in the bidding process for another Prospective Bidder. The PBAC
provided guidance as to what would constitute direct involvement in our response to
Query No. 4 in SBB No. 06-ANNEX A." There must be (1) common partner, director,
officer, or employee and (2) direct involvement by such partner, director, officer, or
employee, which consists of actual participation in the deliberations and decision-
making for the Bidding Process of both Bidders affected, that would give the director
knowledge or information regarding the bid of such Bidder.

The PBAC adopted and approved the Conflict of Interest provision in the ITPB(V04-d)
and later in the ITB (5.6c) pursuant to its authority and function under the BOT Law IRR,
Section 3.2, which states that the PBAC shall be responsible for all aspects of the pre-
bidding and bidding process, including among others, the interpretation of the rules
regarding the bidding. In adopting the ITPB and ITB provisions on conflict of interest,
the PBAC was aware that in its implementation it would require direct involvement or
actual participation in the deliberations and decision-making process as to the Bid for
both affected bidders, for the following reasons.

 The clear expression of this intention in the use of the adverb "also,"
indicating similarity and further action of the same nature, in the qualifying
phrase "is also directly involved," meaning that in requiring such action on
the part of one bidder, the same action should have been taken in behalf
of or in relation to another bidder.
  The PBAC also noted that this meaning has been carried in the language
of the provision as used in several other PPP projects implemented prior
to the Project and from which reference documents the provision was
drawn. Significant in this regard is SBB No. 3, Response No. 4 to Metro
Pacific Tollways Corporation (see attached), issued in September 2012 for
the NAIA Expressway Project, where it is clear that for conflict of interest
to arise there has to be actual participation for or in both bidders involved.
The meaning of the provision as explained in the SBB No. 3 has been
retained and carried in its use in the Project's ITB and ITPB. A copy of
SBB No. 3 issued in September 2012 for the NAIA Expressway Project is
attached hereto as Annex "BB."

That this is the proper interpretation is supported by the PBAC's application of the same
principle in the treatment of professional advisers. The ITPB and ITB in stating that "the
same conflict of interest arises in case of professional advisors" has been implemented
by the PBAC by requiring the disclosure and clearance where the professional adviser
is under "the same conflict of interest," meaning they are involved in that capacity for
two or more bidders. A written consent, clearance and compliance with conflict
management plan was required in the case of a professional adviser who was
understood to have taken such a role for two bidders in the Project. Otherwise, if at
least two bidders are not involved, the PBAC would not have required a conflict
management plan for the simple reason that a conflict of interest, in that case, would not
exist.

In relation to the history of the conflict of interest provision, the PBAC also discussed
that, due to the numerous interlocking directors prevalent among the Philippine
conglomerates, an interpretation not requiring direct participation in both companies
may possibly lead to the disqualification of a large number of bidders. The result would
be extremely detrimental for the government, and surely this cannot be the purpose of
the provision.

The purpose of specifying Section 5.6(c) as a form of Conflict of Interest is to prevent

collusion among the bidders that may arise from the specific conflict of interest
scenarios (as differentiated from Collusion as defined under the ITPB and ITB), which
may prejudice or defeat competition in the Bidding Process. Particularly, Section 5.6(c)
seeks to prevent a situation in which the common partner, director, or officer of two (or
more) Bidders will have information and involvement in the preparation of the bids of
both Bidders. By actual participation, the common partner, director, or officer can
influence the bids of both bidders, which will not be achieved if a common director does
not have direct involvement in both bids.

It is, therefore erroneous, to conclude that the PBAC has taken a different view solely
on the basis of the response given under SBB No. 11-2013, Query No. 5. The PBAC
responded only to the query with regard to professional advisers without taking action
on the rest considering the lack of concrete factual scenario to support the qviery, apart
from the fact that it is not necessary to adopt the proposed revision by the bidder under
Query No. 5. The provision as it appears in the ITPB and ITB sufficiently conveys the
meaning that for Conflict of Interest to arise under Section 5.6(c) of the ITB there must
be direct involvement or participation in the deliberations and decision-making as to the
Bid Process of two or more bidders. Mere partnership or common directorship, or direct
involvement in only one bidder is not enough. It is worth recalling Section 6.1 of the
BOT Law IRR, which states that the implementing agency concerned shall not assume
any responsibility regarding erroneous interpretations or conclusions by the prospective
bidder out of data furnished or indicated in the bidding documents.

Applying the foregoing interpretation, therefore, the sworn certifications submitted by

GMR Infrastructure & Megawide Consortium set out the required certification on facts
which indicate compliance with the rules on Conflict of Interest.

Upon further consideration of this issue, the PBAC noted that GMR Infrastructure &
Megawide Consortium, in its comment on Filinvest-CA Consortium's letters dated 2 and
3 January, confirmed that Mr. Tansri Bashir Ahmad bin Abdul Majid ("Mr. Tansri Bashir
Ahmad") is the Managing Director of MAHB, but not a member of the board of directors
of GMR. While Mr. Tansri Bashir Ahmad sits on the board of DIAL, GHIAL, and GMR-
Male, as well as ISGIA, GMR Infrastructure & Megawide Consortium, in its letter dated
6 January 2014, explained that "[a]side from using the Hyderabad and Delhi airports for
meeting the technical requirements for the bid, DIAL, GHIAL, [GMR-Male] or ISGIA
themselves were never involved in the bidding process and anything remotely
connected with the bid was never discussed in the boards of these companies."

It is also worth noting that at the time the GMR Infrastructure & Megawide Consortium
submitted its Qualification Documents on 22 April 2013, when it indicated that it is
fulfilling the Qualification Requirements through Affiliates of GMR, namely DIAL and
GHIAL, First Philippine Airport Consortium had as its members First Philippine Holdings
Corporation and Infratil (of New Zealand). The First Philippine Airports Consortium
requested the change in its consortium membership, with the replacement of Infratil by
MAHB was approved only in September 2013, following the evaluation of the pre-
qualification documents submitted by MAHB. In their respective Bid Letters (Annex BL-
1), each of the GMR Infrastructure & Megawide Consortium and First Philippine Airport
Consortium declared under oath the absence of Conflict of Interest. The PBAC further
noted that the respective boards of DIAL and GHIAL authorized their respective Chief
Financial Officers ("CFO") to sign and execute relevant documents on their behalf from
a board meeting back in 2011 and 2012, way before the bid for the MCIA was
published. The same CFOs signed on behalf of each of their boards for the use of their
O&M experience as an affiliate of GMR.

The PBAC, in its meeting on 6 January 2013, resolved to require GMR Infrastructure &
Megawide to submit within three (3) days a certification affirming under oath the
absence of conflict of interest, specifically that neither MAHB nor Mr. Tansri Bashir
Ahmad was directly involved in any capacity related to the Bidding Process for the
Project for both GMR-Megawide Consortium and the Consortium of First Philippine
Holdings Corporation and MAHB at the same time, or any of their respective
Consortium members, or any of their respective Affiliates, through actual participation in
the deliberations and decision-making for the Bidding Process of both GMR-Megawide
Consortium and First Philippine Airports Consortium that would give MAHB or Mr.
Tansri Bashir Ahmad knowledge / information regarding the bid of both GMR
Infrastructure & Megawide Consortium and First Philippine Airports Consortium, within a
period of two (2) years prior to the publication of the Invitation to Pre-Qualify and Bid.
Through its letter dated 8 January 2013, GMR Infrastructure & Megawide Consortium
submitted the requested certification.36chanrobleslaw

On the basis of the foregoing, the PBAC resolved to recommend to public respondents
to designate GMR-Megawide Consortium as the Winning Bidder for the MCIA Project,
and to issue the corresponding Notice of Award.

It is well-settled in our jurisprudence that the government is granted broad discretion in

choosing who among the bidders can offer the most advantageous terms and courts will
not interfere therewith or direct the committee on bids to do a particular act or to enjoin
such act within its prerogatives, except when in the exercise of its authority, it gravely
abuses or exceeds its jurisdiction,37 or otherwise commits injustice, unfairness,
arbitrariness or fraudulent acts.38 We have recognized that the exercise of that
discretion is a policy decision that necessitates prior inquiry, investigation, comparison,
evaluation, and deliberation. This task can best be discharged by the concerned
government agencies, not by the courts. 39chanroblesvirtuallawlibrary

The Court thus expounded at length in Bureau Veritas v. Office of the President40:

x x x It must be stressed, as held in the case of A.C. Esguerra & Sons v. Aytona, et al.,
(L-18751, 28 April 1962, 4 SCRA 1245), that in an "invitation to bid, there is a condition
imposed upon the bidders to the effect that the bidding shall be subject to the right of
the government to reject any and all bids subject to its discretion. In the case at bar, the
government has made its choice and unless an unfairness or injustice is shown, the
losing bidders have no cause to complain nor right to dispute that choice. This is a well-
settled doctrine in this jurisdiction and elsewhere."

The discretion to accept or reject a bid and award contracts is vested in the
Government agencies entrusted with that function. The discretion given to the
authorities on this matter is of such wide latitude that the Courts will not interfere
therewith, unless it is apparent that it is used as a shield to a fraudulent
award (Jalandoni v. NARRA, 108 Phil. 486 [I960]), x x x The choice of who among the
bidders is best qualified to perform this task should be left to the sound discretion of the
proper Government authorities in the executive branch since they are in a better
position than the Courts to make the determination owing to the experience and
knowledge that they have acquired by virtue of their functions. The exercise of this
discretion is a policy decision that necessitates prior inquiry, investigation, comparison,
evaluation, and deliberation. This task can best be discharged by the Government
agencies concerned, not by the Courts. The role of the Courts is to ascertain whether a
branch or instrumentality of the Government has transgressed its constitutional
boundaries. But the Courts will not interfere with executive or legislative discretion
exercised within those boundaries. Otherwise, it strays into the realm of policy decision-
making.

It is only upon a clear showing of grave abuse of discretion that the Courts will
set aside the award of a contract made by a government entity. Grave abuse of
discretion implies a capricious, arbitrary and whimsical exercise of power (Filinvest
Credit Corp. v. Intermediate Appellate Court, No. 65935, 30 September 1988, 166
SCRA 155). The abuse of discretion must be so patent and gross as to amount to an
evasion of positive duty or to a virtual refusal to perform a duty enjoined by law, as to
act at all in contemplation of law, where the power is exercised in an arbitrary and
despotic manner by reason of passion or hostility (Litton Mills, Inc. v. Galleon Trader,
Inc., et al., L-40867, 26 July 1988, 163 SCRA 489). 41 (Emphasis supplied)

Under the ITPB, the PBAC reserves the right to waive any minor defects in the
Qualification Documents, and accept the offer it deems most advantageous to the
government.42 Verily, a reservation of the government of its right to reject any bid,
generally vests in the authorities a wide discretion as to who is the best and most
advantageous bidder. The exercise of such discretion involves inquiry, investigation,
comparison, deliberation and decision, which are quasi-judicial functions, and when
honestly exercised, may not be reviewed by the court. 43chanroblesvirtuallawlibrary

We find no patent error or arbitrariness in the DOTC's decision to award the contract to
private respondents after the PBAC had carefully verified and evaluated FDC's
allegations regarding GMR's expulsion from the Male International Airport by the
Maldives Government, DIAL'S financing and operation of the Delhi Airport, GMR's poor
financial health and violation of the Conflict of Interest Rule.

On GMR's supposed fiasco from the cancellation of the concession agreement of its
subsidiary, GMR Male International Airport Private Ltd. (GMIAL), with the Maldives
Government in 2010, more recent online news reports showed that GMIAL had won the
arbitration case and is seeking compensation from the wrongful termination of its
contract. Two of such published articles/reports reads:

GMR wins maldives airport case, seeks compensation

Anirban Chowdhury, ET Bureau Jun 20, 2014, 04.26AM 1ST

MUMBAI: GMR Infra on Thursday said it has won a more than 18-month long legal
battle with the Maldives government which started after the government cancelled the
company's contract to develop and operate the country's main airport.

According to GMR's filing on the National Stock Exchange, a Maldives' tribunal has
judged the government's rejection of the contract "wrongful".
The tribunal has directed Maldives and the state-owned Maldives Airports Company
(MACL) to pay $4 million legal damages to GMR within 42 days.

GMR has in addition, demanded a compensation of $ 1.4 billion for losses incurred in
the last one year on its bid amount and investments in developing the airport.

Hassan Areef, a spokesman for the MACL didn't immediately respond to emailed
queries.

The ruling and possible compensation will bring much-needed relief for GMR whose
international airport projects have been facing trouble.

After winning its latest project the Phillipines Mactan-Cebu International airport last year,
the company had faced trouble when a rival bidder raised issues of conflict of interest.
GMR, however, subsequently bagged the project.

Last December, the company sold its 40% stake in its second Turkey's Istanbul Sabiha
Gokcen International Airport for 220 million. The company had invested 90 million (7737
crore) in the airport but lost/123 crore on it in 2012-13.

On July 28, 2010, a joint venture between GMR Infra (77%) and Malaysia Airports
(Labuan) Private Limited (23%) bagged a development and operations contract for
Ibrahim Nasir International Airport a brownfield airport at Male. The venture had bid
$511 million.

The new terminal development project was on track for an early 2014 commercial
opening date before it had to be halted due to a 'Stop-Work' order by the Maldives
aviation ministry in August, 2012, according to GMR's latest annual
report.44chanroblesvirtuallawlibrary

GMR's Maldives airport concession pact was not void: Singapore-based tribunal

The tribunal has said that Maldives government and MACL should pay GMR $4
million as compensation within 42 days.

BY ANURADHA VERMA

GMR Infrastructure Limited's subsidiary GMR Male International Airport Ltd (GMIAL),
whose contract for modernisation of Male international airport was unilaterally
terminated by the Maldives government in 2012, has got relief as an international
tribunal has declared its concession agreement for Maldives airport as valid.

In a filing to the stock exchanges, GMR Infrastructure said that the Singapore-based Rt
Hon Hoffman's Tribunal declared that the concession agreement "was not void for any
mistake of law or discharged by frustration".
"Government of Maldives and Maldives Airport Co. Ltd (MACL) are jointly and severally
liable in damages to GMIAL for loss caused by wrongful repudiation of the agreement
as per the concession agreement," GMR Infrastructure said.

After detailed proceedings lasting more than 18 months, the tribunal has said that
Maldives government and MACL should pay GMR $4 million of compensation within 42
days.

GMIAL had signed a concession agreement with the government of Maldives and
MACL for the $500 million modernisation and operation of Ibrahim Nasir International
Airport in 2010.

However, the Maldives government terminated the contract and subsequently started
off arbitration proceedings on November 29, 2012, seeking a declaration that the
concession agreement was void ab initio. GMIAL had disputed this termination.

Shares of the GMR Infrastructure were trading at Rs 33.15, up 0.91 per cent on the
BSE from their previous close, in a flat Mumbai market on Thursday. GMR
Infrastructure runs airports in Hyderabad and New Delhi. (Edited by Joby
Puthuparampil Johnson)45chanrobleslaw

While the foregoing information was not yet available during the post-qualification stage,
we find no unfairness or arbitrariness on the part of public respondents when they relied
on the opinion of the IFC PPP Services for Southeast Asia that the Male project "was
conducted in an open and transparent manner and in accordance with international best
practice," citing the June 2013 report of the Anti-Corruption Commission of the Maldives
which concluded that "there was no corruption involved in the award and concession of
the Male airport to GMR-MAHB." As the lead advisor for the project, IFC has in fact,
included the Male International Airport as among the successful PPPs in various
infrastructure sectors.46 Public respondents thus committed no grave abuse of discretion
in determining that GMR has complied with the technical qualifications insofar as the
absence of Unsatisfactory Performance Record is concerned.

As to the financial incapacity of private respondents, this, too, has been sufficiently
addressed by PBAC when it further evaluated the financial proposal of MCC prior to the
execution of the Final Concession Agreement. And contrary to the claims of petitioner
Osmefia III, representatives from GMR have satisfactorily answered the issue raised on
their financial capability for the MCIA Project during the Senate hearing held on March
25, 2014. What petitioner Osmefia III chiefly assailed was DOTC's due diligence which
to him, fell short because they did not "dig in" and made a more in-depth investigation
into GMR's background, specifically on the negative findings of India's Comptroller and
General Auditor. Herein reproduced are relevant portions of the transcript taken during
said hearing:

THE ACTING CHAIRMAN (SEN. OSMEÑA). All right. Now, let's go to GMR so that
they'll have a chance to explain.
You wanted to react to a certain point we raised earlier. You're Mr. Kapur?

MR. KAPUR. Yes, sir.

THE ACTING CHAIRMAN (SEN. OSMEÑA). Yes. Yes, please.

MR. KAPUR. I think there have been three points which were raised. One was about
the financial.

And just to react to that point, as far as GMR is concerned, as I had mentioned in my
last hearing also, the group is absolutely financially sound. It's rated BBB investment
grade by the rating agencies. It has not departed to any lender. It has got letters of good
standing from Asian Development Bank and Standard Chartered Bank which have been
submitted at the time of our submission. That was primarily about the GMR Group. And,
in fact, last time, I had also made a very detailed submission about its financials, its
operating profits and its cash profits and the group is very much profitable. It has the
ability to meet the finances required to complete this project.

Having said that, the prime criteria of financial capability was that of Megawide because
they were the 60 percent partner as far as this project is concerned.

xxxx

THE ACTING CHAIRMAN (SEN. OSMEÑA).

xxxx

Your net losses increased -- surged to 10.7 billion rupees during the nine-month period
ending December 31st 2013, is that correct?

xxxx

MR. KAPUR. ... Just give me a moment.

Our GMR's consolidated net loss for the 9-month period ending December of 2013 was
about 4 billion Indian rupees.

THE ACTING CHAIRMAN (SEN. OSMEÑA). That's your net loss.

MR. KAPUR. Net loss. This is the net loss.

THE ACTING CHAIRMAN (SEN. OSMEÑA). Okay. And your EBITDA increased to 18
billion-

MR. KAPUR. Yeah. It is about 7 billion profit. There's a positive of 7 billion Indian
rupees.

THE ACTING CHAIRMAN (SEN. OSMEÑA). No. I'm giving you more. I'm giving you 18
billion in EBITDA. That's Earnings Before Income Tax, Depreciation and Amortization.

MR. KAPUR. Ah, okay. That is 17 billion. Nine months is 17 billion—It's about 18.8
billion.

THE ACTING CHAIRMAN (SEN. OSMEÑA). Eighteen point eight billion. And your
interest expenses jumped to 20.5 billion in that same period.

MR. KAPUR. That's right, that's right.

THE ACTING CHAIRMAN (SEN. OSMEÑA). So, therefore, you don't even have-
generate enough cash, operating profit to cover your interest expense?

It's just a simple question. Twenty billion is more than 18 billion, right?

MR. KAPUR. Your Honor, I think one has to understand this is a consolidated balance
sheet.

THE ACTING CHAIRMAN (SEN. OSMEÑA). I'm just asking. I know it's a consolidated
balance sheet, I know it's a mother company.

MR. KAPUR. So, I think what is really the element is that the GMR has the ability to
implement this project whether it is credit rating because everybody has their own
discretion to analyze what the profitability is and come to their own subjective judgment.
But the subjective judgment has to be based upon a credible third party. And the
credible third party in this case are the rating agencies who continuously rate any listed
entity. And if found giving that information in public domain, other purpose of
consumption of people who are going to deal with that entity. And the rating of GMR is
something which is the most important and should be relied upon. Because if any point
of time, GMR is potentially and financially distressed, it would impact the rating. And
automatically, the rating agencies are going to come back and change the rating, and
that has not happened. The rating agencies have maintained consistently the
investment credit rating of GMR Group. And I would just like to reiterate that the
GMR Group is not in financial distress. It is robust, it has got the ability to meet
its long-term debt as well as the short-term debt.

THE ACTING CHAIRMAN (SEN. OSMEÑA). By borrowing some more.

MR. KAPUR. I think, sir, that is the-

THE ACTING CHAIRMAN (SEN. OSMEÑA). I'm not saying you're going belly up. What
I am saying is that there are always warnings that those of us who understand the-how
to read financial statements can always come to preliminary conclusions. We do ratios,
we do analysis. And right here, this is very clear that you're spending more in interest
than what you are earning. So, if things were to stand still today, you wouldn't be able to
pay 2 billion in interest, 2 billion rupees interest.

That's all I'm saying. I'm not saying you're not going to pay it because you can always
borrow some more tomorrow. But this is a situation that's been obtaining for some time.
This is not just 2013. This happened in 2012, this happened in 2011. So, you've had
operating losses for three years running.

MR. KAPUR. The EBITDA is before other income also. If you actually see the financial
statement, there is another income also which is below the line after EBITDA. And that
is also used to meet the interest and the payment liabilities.

THE ACTING CHAIRMAN (SEN. OSMEÑA). I understand what's below the line. Thank
you for that. Anyway-

MR. KAPUR. And sir, I think can I also respond on the CAG report which you raised?

THE ACTING CHAIRMAN (SEN. OSMEÑA). On the...?

MR. KAPUR. The report of the Comptroller and Auditor General-Indian government

audited.

THE ACTING CHAIRMAN (SEN. OSMEÑA). I think you responded to that already in
the previous hearing.

MR. KAPUR. We have not responded. Last time we did not respond. It was not an
issue raised last time.

THE ACTING CHAIRMAN (SEN. OSMEÑA). All right. Please respond to it.

MR. KAPUR. Let me explain the process of-

THE ACTING CHAIRMAN (SEN. OSMEÑA). You know, the whole point I'm trying to
make is that there's always a response to any charge that's made. There are two sides
in a question: There is the prosecutor; there is the defense. You can always come up
with a defense. It will always sound very rational and very logical. But what I am
questioning is that why the DOTC did not exercise the due diligence to pick up
the Comptroller and Auditor General's Report with regard to the performance of
GMR. That's all I am saying. Whether it's valid or not, whether you will dispute it or not,
we expected you to dispute that, we expected you to have answers, and we have read
your answers. But what I am saying is why didn't you know about it? Why didn't you
take the effort to do more in-depth due diligence on whoever bidders came before you
in order to protect the interest of the Filipino people. That's what I am saying. So,
whether you can answer it or not is really beside the point. It's why did they not pick it
up? And you can answer that, you can answer me why DOTC didn't pick it up?
MR. KAPUR. No, sir.

THE ACTING CHAIRMAN (SEN. OSMEÑA). So, I think you'll have to hold your
comments first, Mr. Kapur, because we know what you're going to say, and we are not
saying that they're not valid answers. My concern is why didn't they pick it up.

MR. KAPUR. Can I respond to that?

THE ACTING CHAIRMAN (SEN. OSMEÑA). I don't think you can answer that question
why they didn't pick it up. That's the DOTC's question.

MR. KAPUR. No, sir. I just wanted to say something which is relevant for that purpose.
He had submitted a letter which is dated 19 December from the government of India,
Ministry of Civil Aviation to the DOTC and PBAC, which actually is that DIAL has been
operating the airport from May 2006 satisfactorily as per the provisions of the UNDA,
executed between DIAL and airport authority. Further, we have also been operating the
Flyderabad Airport, and the airport also has been operating satisfactorily.

THE ACTING CHAIRMAN (SEN. OSMEÑA). Yes. That's a good side. Did you disclose
it? Did you disclose the CAG findings to DOTC?

MR. KAPUR. That is for the letter of good standing from the government of India.

THE ACTING CHAIRMAN (SEN. OSMEÑA). And you disclosed that we were charged
by the Comptroller and Auditor General of India with this, and this is our response. Did
you disclose that you were charged?

MR. KAPUR. Sir, let me make a correction here, sir, may I request?

THE ACTING CHAIRMAN (SEN. OSMEÑA). No. Just answer the question. Yes or no.
Did you disclose it?

MR. KAPUR. We were not charged by the CAG.

THE ACTING CHAIRMAN (SEN. OSMEÑA). Did you disclose the existence of the
CAG report?

MR. KAPUR. No, we were not required to disclose.

THE ACTING CHAIRMAN (SEN. OSMEÑA). You're not required.

MR. KAPUR. The charge is not on us.47 (Emphasis supplied)

The issues raised against DIAL, as contained in the CAG's report had been addressed
and resolved by the PBAC. In the same vein, GMR's alleged violation of the conflict of
interest rule was found to be non-existent. Contrary to petitioners' asseveration, the
interpretation made by PBAC on this bidding rule was reasonable, fair and practical.
Under the BOT Law IRR, the PBAC shall be responsible for all aspects of the bidding
process, including the interpretation of the rules regarding the bidding, the conduct of
bidding, evaluation of bids, resolution of disputes between bidders, and
recommendation for the acceptance of the bid award and/or for the award of the
project.48chanroblesvirtuallawlibrary

Petitioner Osmeña contends that the DOTC may not apply its own bidding rules in a
manner that puts bidders on unequal footing. He emphasizes that the grounds raised to
disqualify private respondents are not minor defects that may be waived by the PBAC in
order to qualify a disqualified bidder. He points out that the arbitrariness of PBAC is
apparent because despite its knowledge of grounds to disqualify private
respondents, i.e., the existence of a violation of the rule on conflict of interest and a
showing of private respondents' poor financial health and track record, the resulting
decision nevertheless declared them as qualified bidders. 49chanroblesvirtuallawlibrary

The contention has no merit.

As earlier stated, PBAC's interpretation of the Conflict of Interest provision requiring

direct involvement or participation in the deliberations and decision-making related to
the bidding for the MCIA Project was fair, reasonable and practical. The issues
regarding GMR's Male airport case and MCC's financial capability have been fully
ventilated during the post-qualification stage. Both private respondents and the second
highest bidder, FDC, argued their respective positions which were duly considered,
including a detailed evaluation of their technical and financial qualification documents.
That PBAC's own inquiry did not yield any concrete evidence of GMR's unsatisfactory
performance, as defined in the ITPB, and MCC's poor financial health does not
necessarily indicate preference for one bidder over the others, especially as the bidding
in this case was conducted with transparency.

Increased Terminal Fees Valid and Legal

On the legality of the increased terminal fees imposed by GMCAC, this is based on the
right granted under the Concession Agreement to collect such fees. For this kind of
BOT projects, the law expressly provides that the project proponent operates the facility
over a fixed term during which it is allowed to charge facility users appropriate tolls,
fees, rentals and charges not exceeding those proposed in its bid or as negotiated and
incorporated in the contract to enable the project proponent to recover its investment
and operating and maintenance expenses in the project. 50chanroblesvirtuallawlibrary

At any rate, the Concession Agreement provided for a formula and procedure to be
applied should there be an increase in Passenger Service Charge, Aircraft Parking
Fees and Tacking Fees, thus:

24.2.c Unless otherwise provided by any Relevant Rules and Procedure

 promulgated by MCIAA or by any Government Authority, the following
procedure shall apply for every increase in the Passenger Service Charge,
aircraft Parking Fees, and Tacking Fees, after the expiration of the first (1st)
Contract Year:
24.2.c The Concessionaire shall file with the MCIAA an application for
(1) such increase no later than six (6) months prior to the date that the
relevant increase in the Passenger Service Charge, Aircraft Parking
Fees, and Tacking Fees shall take effect.
24.2.c The Concessionaire shall publish the application in a newspaper of
(2) general circulation at least two (2) weeks before the first hearing on
the application.
24.2.c MCIAA shall conduct a public hearing on the said application in
(3) accordance with any rule of procedure that it may promulgate.
24.2.c The Concessionaire shall comply with all other requirements of
(4) Relevant Rules and Procedures that may be promulgated by
MCIAA or any Government Authority for the increase of the
Passenger Service Charge, Aircraft Parking Fees, and Tacking
Fees.
24.2.c The Grantors and the Concessionaire shall conduct the procedure
(5) for implementing the increase in Passenger Service Charge,
Aircraft Parking Fees, and Tacking Fees in such a manner as to
ensure that all Relevant Consents are secured promptly to enable
the Concessionaire to implement a timely increase in Passenger
Service Charge, Aircraft Parking Fees, and Tacking Fees in
accordance with the parametric formula and at such times as
contemplated in Annex 21-A (Parametric Formula for Passenger
Service Charge) or Annex 21-B (Parametric Formula for Aircraft
Parking Fee and Tacking Fee), as the case may be.51

Petitioners Not Entitled to Preliminary Injunction

For the writ of injunction to issue, the existence of a clear and positive right especially
calling for judicial protection must be shown; injunction is not to protect contingent or
future rights; nor is it a remedy to enforce an abstract right. An injunction will not issue
to protect a right not in esse and which may never arise or to restrain an act which does
not give rise to cause of action. There must exist an actual right.

Petitioners failed to establish such actual right that needs to be protected by injunctive
relief. There being no violation of any law, regulation or the bidding rules, nor any
arbitrariness or unfairness committed by public respondents, the presumption of
regularity of the bidding for the MCI A Project must stand.

WHEREFORE, the petition in G.R. No. 211737 is hereby DISMISSED for lack of merit.

The petition in G.R. No. 214756 is DENIED for lack of sufficient legal and factual bases.

No pronouncement as to costs.

SO ORDERED.cralawlawlibrary
People vs. Azarraga, 659 SCRA 34

G.R. Nos. 187117 and 187127               October 12, 2011

PEOPLE OF THE PHILIPPINES, Petitioner,

vs.
HON. JOSE D. AZARRAGA and JOHN REY PREVENDIDO, Respondents.

DECISION

SERENO, J.:

In the present Petition for Prohibition with Prayer for Temporary Restraining
Order/Preliminary Mandatory Injunction under Rule 65 of the Rules of Court, petitioner
questions the legality of Chapter V, Section 9 of A.M. No. 03-8-02-SC or the "Guidelines
on the Selection and Appointment of Executive Judges and Defining Their Powers,
Prerogatives and Duties" issued by this Court on 27 January 2004, in relation to Section
90 of the Comprehensive Dangerous Drugs Act of 2002.

The antecedent facts are as follows:

On 7 February 2009, petitioner filed two (2) Informations 1 before the Regional Trial
Court (RTC) of Iloilo City against private respondent John Rey Prevendido for Violation
of Article II, Sections 5 and 11 of Republic Act (R.A.) No. 9165 or the Comprehensive
Dangerous Drugs Act of 2002. The cases were raffled to Branch 36, a designated
special court pursuant to R.A. 9165, presided by Judge Victor E. Gelvezon. Soon after,
however, Judge Gelvezon disclosed that Coreen Gemarino, the Philippine Drug
Enforcement Agency (PDEA) operative who conducted the entrapment operation
against private respondent, had close family ties with him. Thus, in order to preserve the
integrity of the court, Judge Gelvezon issued an Order 2 dated 17 February 2009
inhibiting himself from trying the case. The cases were then reassigned to the other
special court, Branch 25, presided by Judge Evelyn E. Salao.

On 24 February 2009, Judge Salao also issued an Order 3 whereby she inhibited herself
for the reason that Coreen Gemarino was a cousin; thus, the cases were endorsed to
the Office of the Executive Judge for reassignment.

Citing Chap. V, Sec. 9 of A.M. No. 03-8-02-SC, Executive Judge Antonio M. Natino
ordered the Clerk of Court to forward the entire records of the cases to Branch 37
presided over by public respondent, the pairing judge of Branch 36, which was the
special court that originally handled the cases. 4

On 16 March 2009, however, as soon as public respondent proceeded with the cases,
Prosecutor Kenneth John Amamanglon filed a Motion to Transfer Case to a Branch of
Competent Jurisdiction.5 He questioned the jurisdiction of public respondent to hear the
cases, citing Sec. 90 of R.A. 9165. Prosecutor Amamanglon also claimed that, as the
prosecutor assigned to Branch 37, he was not among the prosecutors who had been
designated to handle cases exclusively involving violations of R.A. 9165.

On the same day, respondent judge denied the motion on three grounds, to wit:

1. This motion ought not to have been filed in this court for lack of legal basis;

2. This court is not without jurisdiction to hear the instant case;

3. The matter about the appearance of Trial Prosecutor Kenneth John

Amamanglon should have been addressed to the Department concerned. 6

Respondent judge thus set the hearing on the Motion for Admission to Bail 7 filed on 10
February 2008. He directed the city prosecutor to assign an assistant city prosecutor to
handle the case effective 20 March 2009.

Prosecutor Amamanglon, however, moved for a reconsideration 8 of respondent judge’s

Order, contending that the trial court needed a special designation from this Court in
order to have jurisdiction over the cases. Thus, Prosecutor Amamanglon concluded,
absent the special designation, respondent court should remand the cases to the Office
of the Executive Judge for re-raffling to another court specially designated pursuant to
R.A. 9165. To support its contention, petitioner further cited this Court’s 11 October
2005 Resolution in A.M. No. 05-9-03-SC, which clarified whether drug courts should be
included in the regular raffle.

Respondent judge denied the Motion for Reconsideration in its Order dated 20 March
2009.9 He held that A.M. No. 03-8-02-SC should be deemed to have modified the
designation of special courts for drug cases. He declared that, under the circumstances
enumerated in A.M. No. 03-8-02-SC, Branch 37 itself became a special court. He
further ruled that A.M. No. 05-9-03-SC was inapplicable.

On 23 March 2009, the city prosecutor endorsed the assailed Orders of respondent
judge to the Office of the Solicitor General for the appropriate review and filing of the
necessary action.10 Thus, on 24 March 2009, petitioner filed the present petition before
this Court.

On 27 March 2009, while the Petition for Prohibition was pending, respondent judge
issued an Order11 inhibiting himself from hearing the case after private respondent
alleged that the former was biased for the prosecution. The cases were thereafter
transferred to Branch 35, also a regular court, presided by Judge Fe Gallon-Gayanilo.

Absent a temporary restraining order from this Court, the trial court proceeded to hear
the cases.

The present petition raises two (2) issues, to wit:

 I. WHETHER OR NOT RESPONDENT JUDGE HAS JURISDICTION OVER THE
DRUG CASES IN CRIMINAL CASE NOS. 09-68815/16 DESPITE HIS
ASSIGNMENT TO A REGULAR COURT

II. WHETHER OR NOT A.M. NO. 03-8-02-SC IS IN CONFORMITY WITH

SECTION 90 OF REPUBLIC ACT NO. 9165, MANDATING THE DESIGNATION
OF SPECIAL COURTS TO EXCLUSIVELY TRY AND HEAR DRUG CASES 12

At the outset, it is an established policy that parties must observe the hierarchy of courts
before they can seek relief directly from this Court. The rationale for this rule is twofold:
(a) it would be an imposition upon the limited time of this Court; and (b) it would
inevitably result in a 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.13 It is only for special and compelling reasons that this Court
shall exercise its primary jurisdiction over the extraordinary remedy of writ of prohibition.
However, in the case at bar, since it is only the Supreme Court itself that can clarify the
assailed guidelines, petitioner is exempted from this rule.

The petition, however, must fail.

The crux of the matter in the present case is whether or not this Court violated Sec. 90
of R.A. 9165 when it issued A.M. 03-8-02-SC, particularly Chap. V, Sec. 9, which
prescribes the manner in which the executive judge reassigns cases in instances of
inhibition or disqualification of judges sitting in special courts. Petitioner insists that
should respondent judge (now Judge Fe Gallon-Gayanilo of Branch 35) continue
hearing and trying the case, it "would result in the circumvention of the legislative
conferment of jurisdiction to a court to exclusively try and hear drug offenses only." 14

Contrary to the assertion of petitioner, this Court did not commit any violation of R.A.
9165 when it issued the assailed guidelines. Rather, it merely obeyed Article VIII, Sec.
5(5) of the 1987 Constitution, which mandates that the rules promulgated by this Court
should provide a simplified and inexpensive procedure for the speedy disposition of
cases, in conformity with the right of all persons to a speedy disposition of their cases
before all judicial, quasi-judicial, or administrative bodies. 15 As this Court stated in San
Ildefonso Lines v. Court of Appeals,16 there must be a renewed adherence to the time-
honored dictum that procedural rules are designed not to defeat, but to safeguard, the
ends of substantial justice.

Petitioner grounds its assertion on Sec. 90 of R.A. 9165, which states:

Jurisdiction. — The Supreme Court shall designate special courts from among the
existing Regional Trial Courts in each judicial region to exclusively try and hear cases
involving violations of this Act. The number of courts designated in each judicial region
shall be based on the population and the number of cases pending in their respective
jurisdiction.
 x x x           x x x          x x x

Trial of the case under this Section shall be finished by the court not later than sixty (60)
days from the date of the filing of the information. Decision on said cases shall be
rendered within a period of fifteen (15) days from the date of submission of the case for
resolution.

Petitioner interprets the above provision to mean that a court must be specifically
designated by the Supreme Court as a special court. But what is Chap. V, Sec. 9 of
A.M. No. 03-8-02-SC if not an express designation of a special court?

Chap. V, Sec. 9 of A.M. No. 03-8-02-SC provides:

Raffle and re-assignment of cases in special courts where judge is disqualified or

voluntarily inhibits himself/herself from hearing case. — (a) Where a judge in a court
designated to try and decide

x x x           x x x          x x x

(3) cases involving violations of the Dangerous Drugs Act, or ...

is disqualified or voluntarily inhibits himself/herself from hearing a case, the following

guidelines shall be observed:

x x x           x x x          x x x

(ii) Where there are more than two special courts of the same nature in the station, the
Executive Judge shall immediately assign the case by raffle to the other or another
special court of the same nature. In case the Presiding Judge of the other special court
is also disqualified or inhibits himself/herself, the case shall be forwarded to the pairing
judge of the special court which originally handled the said case. If the pairing judge is
also disqualified or inhibits himself/herself, the case shall be raffled to the other regular
courts. At the next raffle, an additional case shall be assigned to the disqualified or
inhibiting judge/s to replace the case so removed from his/her/their court... (Emphasis
supplied.)

Under R.A. 9165, Congress empowered this Court with the full discretion to designate
special courts to hear, try and decide drug cases. It was precisely in the exercise of this
discretionary power that the powers of the executive judge were included in Chap. V,
Sec. 9 of A.M. No. 03-8-02-SC vis-à-vis Sec. 5(5) of Article VIII of the 1987 Constitution.
Thus, in cases of inhibition or disqualification, the executive judge is mandated to assign
the drug case to a regular court in the following order: first, to the pairing judge of the
special court where the case was originally assigned; and, second, if the pairing judge is
likewise disqualified or has inhibited himself, then to another regular court through a
raffle. Under these exceptional circumstances, this Court designated the regular court,
ipso facto, as a special court – but only for that case. Being a "designated special
court," it is likewise bound to follow the relevant rules in trying and deciding the drug
case pursuant to R.A. 9165.

Petitioner also contends that the legislative intent of R.A. 9165 is "to make use of the
expertise of trial judges in complicated and technical rules of the special drug law."
Thus, petitioner suggests that in instances in which all the judges of special courts have
inhibited themselves or are otherwise disqualified, the venue for the affected drug cases
should be transferred to the nearest station that has designated special courts.

Petitioner’s suggestion is ill-advised. To subscribe to this suggestion is to defeat the

purpose of the law. Undoubtedly, petitioner’s unwarranted suggestion would entail the
use of precious resources, time and effort to transfer the cases to another station. On
the other hand, the assailed guidelines provide for a much more practical and expedient
manner of hearing and deciding the cases. To reiterate, over and above utilizing the
expertise of trial judges, the rationale behind Sec. 90 of R.A. 9165 and Chap. V, Sec. 9
of A.M. No. 03-8-02-SC is to effect an efficient administration of justice and speedy
disposition of cases, as well as to breathe life into the policy enunciated in Sec. 2 of
R.A. 9165, to wit:

Declaration of policy. – It is the policy of the State to safeguard the integrity of its
territory and the well-being of its citizenry particularly the youth, from the harmful effects
of dangerous drugs on their physical and mental well-being, and to defend the same
against acts or omissions detrimental to their development and preservation. In view of
the foregoing, the State needs to enhance further the efficacy of the law against
dangerous drugs, it being one of today's more serious social ills.

Toward this end, the government shall pursue an intensive and unrelenting campaign
against the trafficking and use of dangerous drugs and other similar substances through
an integrated system of planning, implementation and enforcement of anti-drug abuse
policies, programs, and projects. The government shall however aim to achieve a
balance in the national drug control program so that people with legitimate medical
needs are not prevented from being treated with adequate amounts of appropriate
medications, which include the use of dangerous drugs.

It is further declared the policy of the State to provide effective mechanisms or

measures to re-integrate into society individuals who have fallen victims to drug abuse
or dangerous drug dependence through sustainable programs of treatment and
rehabilitation. (Emphasis supplied.)

As a matter of fact, this Court also issued similar guidelines with regard to
environmental cases,17 election cases involving elective municipal officials, 18 and cases
that involve killings of political activists and members of media. 19 Foremost in its mind is
the speedy and efficient administration of justice.

Petitioner further points out that this Court issued A.M. No. 05-9-03-SC to define the
phrase "to exclusively try and hear cases involving violations of this Act" to mean "...
[c]ourts designated as special courts for drug cases shall try and hear drug-related
cases only, i.e., cases involving violations of RA 9165, to the exclusion of other courts."
Hence, petitioner submits, drug cases should not be assigned to regular courts
according to the procedure provided in A.M. No. 03-8-02-SC; in other words, the two
issuances contradict each other.

Again, this Court disagrees.

Petitioner underestimates the rule-making power of this Court. Nothing in A.M. No. 05-
9-03-SC or in A.M. No. 03-8-03-SC suggests that they contradict each other. In fact,
both were issued with a common rationale, that is, to "expeditiously resolve criminal
cases involving violations of R.A. 9165," especially in the light of the strict time frame
provided in Sec. 90 of R.A. 9165. Both provide for the guidelines regarding the
assignment of drug cases to special courts. Thus, A.M. No. 05-9-03-SC provides for the
exemption of special courts from the regular raffle under normal circumstances, while
A.M. No. 03-8-02-SC provide for the assignment of drug cases to special courts except
under special circumstances that would warrant reassignment to a regular court.

Moreover, the exemption of special courts from the regular raffle was not established as
an ironclad rule.1avvphi1 A.M. No. 05-9-03-SC does in fact allow special courts to
acquire jurisdiction over cases that are not drug cases. In the interest of justice,
executive judges may recommend to the Supreme Court the inclusion of drug courts in
the regular raffle, and this Court has the discretion to approve the recommendation, as
the Resolution states:

WHEREFORE, Executive Judges and presiding judges of special courts for drug cases
shall hereby observe the following guidelines:

x x x           x x x          x x x

4. If, in the opinion of Executive Judges, the caseload of certain drug courts allows their
inclusion in the regular raffle without adversely affecting their ability to expeditiously
resolve the drug cases assigned to them and their inclusion in the regular raffle
becomes necessary to decongest the caseload of other branches, the concerned
Executive Judges shall recommend to this Court the inclusion of drug courts in their
jurisdiction in the regular raffle. The concerned drug courts shall remain exempt from
the regular raffle until the recommendation is approved. (Emphasis supplied.)

In conclusion, the two sets of guidelines are examples of this Court’s foresight and
prudence in the exercise of its rule-making power. These guidelines were issued to
prevent or address possible scenarios that might hinder the proper administration of
justice.

WHEREFORE, in view of the foregoing, the Petition for Prohibition is DISMISSED for
lack of merit.
SO ORDERED.
Rosario vs. De Guzman, G.R. No. 191247, July 10, 2013

G.R. No. 191247, July 10, 2013

FRANCISCO L. ROSARIO, JR., Petitioner, v. LELLANI DE GUZMAN, ARLEEN DE

GUZMAN, PHILIP RYAN DE GUZMAN, AND ROSELLA DE GUZMAN
BAUTISTA, Respondents.

DECISION

MENDOZA, J.:

This petition for review on certiorari under Rule 45 of the Rules of Court seeks to set
aside the November 23, 20091 and the February 11, 20102 Orders of the Regional Trial
Court, Branch 7, Manila (RTC), in Civil Case No. 89-50138, entitled "Loreta A. Chong v.
Sps. Pedro and Rosita de Guzman," denying the Motion to Determine Attorney's Fees
filed by the petitioner.

The Facts

Sometime in August 1990, Spouses Pedro and Rosita de Guzman (Spouses de

Guzman) engaged the legal services of Atty. Francisco L. Rosario, Jr. (petitioner) as
defense counsel in the complaint filed against them by one Loreta A. Chong (Chong) for
annulment of contract and recovery of possession with damages involving a parcel of
land in Parañaque City, covered by Transfer Certificate of Title (TCT) No. 1292, with an
area of 266 square meters, more or less. Petitioner’s legal services commenced from
the RTC and ended up in this Court. 3 Spouses de Guzman, represented by petitioner,
won their case at all levels. While the case was pending before this Court, Spouses de
Guzman died in a vehicular accident. Thereafter, they were substituted by their children,
namely: Rosella de Guzman-Bautista, Lellani de Guzman, Arleen de Guzman, and
Philip Ryan de Guzman (respondents).4

On September 8, 2009, petitioner filed the Motion to Determine Attorney’s Fees 5 before
the RTC. He alleged, among others, that he had a verbal agreement with the deceased
Spouses de Guzman that he would get 25% of the market value of the subject land if
the complaint filed against them by Chong would be dismissed. Despite the fact that he
had successfully represented them, respondents refused his written demand for
payment of the contracted attorney’s fees. Petitioner insisted that he was entitled to an
amount equivalent to 25% percent of the value of the subject land on the basis
of quantum meruit.

On November 23, 2009, the RTC rendered the assailed order denying petitioner’s
motion on the ground that it was filed out of time. The RTC stated that the said motion
was filed after the judgment rendered in the subject case, as affirmed by this Court, had
long become final and executory on October 31, 2007. The RTC wrote that considering
that the motion was filed too late, it had already lost jurisdiction over the case because a
final decision could not be amended or corrected except for clerical errors or mistakes.
There would be a variance of the judgment rendered if his claim for attorney’s fees
would still be included.

Petitioner filed a motion for reconsideration, but it was denied by the RTC for lack of
merit. Hence, this petition.

The Issues

This petition is anchored on the following grounds:cralavvonlinelawlibrary

THE TRIAL COURT COMMITTED A REVERSIBLE ERROR IN DENYING THE

MOTION TO DETERMINE ATTORNEY’S FEES ON THE GROUND THAT IT LOST
JURISDICTION OVER THE CASE SINCE THE JUDGMENT IN THE CASE HAS
BECOME FINAL AND EXECUTORY;chanroblesvirtualawlibrary

II

THE TRIAL COURT SERIOUSLY ERRED IN DECLARING THAT PETITIONER’S

CLAIM FOR ATTORNEY’S FEES WOULD RESULT IN A VARIANCE OF THE
JUDGMENT THAT HAS LONG BECOME FINAL AND
EXECUTORY;chanroblesvirtualawlibrary

III

THE TRIAL COURT ERRED IN NOT DECLARING THAT THE FINALITY OF THE
DECISION DID NOT BAR PETITIONER FROM FILING THE MOTION TO RECOVER
HIS ATTORNEY’S FEES.6nadcralavvonlinelawlibrary

Petitioner claims that Spouses de Guzman engaged his legal services and orally agreed
to pay him 25% of the market value of the subject land. He argues that a motion to
recover attorney’s fees can be filed and entertained by the court before and after the
judgment becomes final. Moreover, his oral contract with the deceased spouses can be
considered a quasi-contract upon which an action can be commenced within six (6)
years, pursuant to Article 1145 of the Civil Code. Because his motion was filed on
September 8, 2009, he insists that it was not yet barred by prescription. 7

For their part, respondents counter that the motion was belatedly filed and, as such, it
could no longer be granted. In addition, the RTC had already resolved the issue when it
awarded the amount of ?10,000.00 as attorney’s fees. Respondents further assert that
the law, specifically Article 2208 of the Civil Code, allows the recovery of attorney’s fees
under a written agreement. The alleged understanding between their deceased parents
and petitioner, however, was never put in writing. They also aver that they did not have
any knowledge or information about the existence of an oral contract, contrary to
petitioner’s claims. At any rate, the respondents believe that the amount of 25% of the
market value of the lot is excessive and unconscionable. 8

The Court’s Ruling

Preliminarily, the Court notes that the petitioner filed this petition for review
on certiorari under Rule 45 of the Rules of Court because of the denial of his motion to
determine attorney’s fees by the RTC. Apparently, the petitioner pursued the wrong
remedy. Instead of a petition for review under Rule 45, he should have filed a petition
for certiorari under Rule 65 because this case involves an error of jurisdiction or grave
abuse of discretion on the part of the trial court.

Moreover, petitioner violated the doctrine of hierarchy of courts which prohibits direct
resort to this Court unless the appropriate remedy cannot be obtained in the lower
tribunals.9 In this case, petitioner should have first elevated the case to the Court of
Appeals (CA) which has concurrent jurisdiction, together with this Court, over special
civil actions for certiorari.10 Even so, this principle is not absolute and admits of certain
exceptions, such as in this case, when it is demanded by the broader interest of
justice.11

Indeed, on several occasions, this Court has allowed a petition to prosper despite the
utilization of an improper remedy with the reasoning that the inflexibility or rigidity of the
application of the rules of procedure must give way to serve the higher ends of justice.
The strict application of procedural technicalities should not hinder the speedy
disposition of the case on the merits.12 Thus, this Court deems it expedient to consider
this petition as having been filed under Rule 65.

With respect to the merits of the case, the Court finds in favor of petitioner.

In order to resolve the issues in this case, it is necessary to discuss the two concepts of
attorney’s fees – ordinary and extraordinary. In its ordinary sense, it is the reasonable
compensation paid to a lawyer by his client for legal services rendered. In its
extraordinary concept, it is awarded by the court to the successful litigant to be paid by
the losing party as indemnity for damages.13 Although both concepts are similar in some
respects, they differ from each other, as further explained below:cralavvonlinelawlibrary

The attorney’s fee which a court may, in proper cases, award to a winning litigant is,
strictly speaking, an item of damages. It differs from that which a client pays his
counsel for the latter’s professional services. However, the two concepts have many
things in common that a treatment of the subject is necessary. The award that the
court may grant to a successful party by way of attorney’s fee is an indemnity for
damages sustained by him in prosecuting or defending, through counsel, his
cause in court. It may be decreed in favor of the party, not his lawyer, in any of the
instances authorized by law. On the other hand, the attorney’s fee which a client
pays his counsel refers to the compensation for the latter’s services. The losing
party against whom damages by way of attorney’s fees may be assessed is not bound
by, nor is his liability dependent upon, the fee arrangement of the prevailing party with
his lawyer. The amount stipulated in such fee arrangement may, however, be taken into
account by the court in fixing the amount of counsel fees as an element of damages.

The fee as an item of damages belongs to the party litigant and not to his lawyer.
It forms part of his judgment recoveries against the losing party. The client and his
lawyer may, however, agree that whatever attorney’s fee as an element of damages the
court may award shall pertain to the lawyer as his compensation or as part thereof. In
such a case, the court upon proper motion may require the losing party to pay such fee
directly to the lawyer of the prevailing party.

The two concepts of attorney’s fees are similar in other respects. They both require, as
a prerequisite to their grant, the intervention of or the rendition of professional services
by a lawyer. As a client may not be held liable for counsel fees in favor of his lawyer
who never rendered services, so too may a party be not held liable for attorney’s fees
as damages in favor of the winning party who enforced his rights without the assistance
of counsel. Moreover, both fees are subject to judicial control and modification. And the
rules governing the determination of their reasonable amount are applicable in one as in
the other.14 [Emphases and underscoring supplied]

In the case at bench, the attorney’s fees being claimed by the petitioner refers to the
compensation for professional services rendered, and not as indemnity for damages.
He is demanding payment from respondents for having successfully handled the civil
case filed by Chong against Spouses de Guzman. The award of attorney’s fees by the
RTC in the amount of P10,000.00 in favor of Spouses de Guzman, which was
subsequently affirmed by the CA and this Court, is of no moment. The said award,
made in its extraordinary concept as indemnity for damages, forms part of the judgment
recoverable against the losing party and is to be paid directly to Spouses de Guzman
(substituted by respondents) and not to petitioner. Thus, to grant petitioner’s motion to
determine attorney’s fees would not result in a double award of attorney’s fees. And,
contrary to the RTC ruling, there would be no amendment of a final and executory
decision or variance in judgment.

The Court now addresses two (2) important questions: (1) How can attorney’s fees for
professional services be recovered? (2) When can an action for attorney’s fees for
professional services be filed? The case of Traders Royal Bank Employees Union-
Independent v. NLRC15 is instructive:cralavvonlinelawlibrary

As an adjunctive episode of the action for the recovery of bonus differentials in NLRC-
NCR Certified Case No. 0466, private respondent’s present claim for attorney’s fees
may be filed before the NLRC even though or, better stated, especially after its earlier
decision had been reviewed and partially affirmed. It is well settled that a claim for
attorney’s fees may be asserted either in the very action in which the services of
a lawyer had been rendered or in a separate action.

With respect to the first situation, the remedy for recovering attorney’s fees as an
incident of the main action may be availed of only when something is due to the
client. Attorney’s fees cannot be determined until after the main litigation has
been decided and the subject of the recovery is at the disposition of the
court. The issue over attorney’s fees only arises when something has been recovered
from which the fee is to be paid.

While a claim for attorney’s fees may be filed before the judgment is rendered, the
determination as to the propriety of the fees or as to the amount thereof will have
to be held in abeyance until the main case from which the lawyer’s claim for
attorney’s fees may arise has become final. Otherwise, the determination to be
made by the courts will be premature. Of course, a petition for attorney’s fees
may be filed before the judgment in favor of the client is satisfied or the proceeds
thereof delivered to the client.

It is apparent from the foregoing discussion that a lawyer has two options as to when to
file his claim for professional fees. Hence, private respondent was well within his
rights when he made his claim and waited for the finality of the judgment for
holiday pay differential, instead of filing it ahead of the award’s complete
resolution. To declare that a lawyer may file a claim for fees in the same action
only before the judgment is reviewed by a higher tribunal would deprive him of
his aforestated options and render ineffective the foregoing pronouncements of
this Court. [Emphases and underscoring supplied]

In this case, petitioner opted to file his claim as an incident in the main action, which is
permitted by the rules. As to the timeliness of the filing, this Court holds that the
questioned motion to determine attorney’s fees was seasonably filed.

The records show that the August 8, 1994 RTC decision became final and executory on
October 31, 2007. There is no dispute that petitioner filed his Motion to Determine
Attorney’s Fees on September 8, 2009, which was only about one (1) year and eleven
(11) months from the finality of the RTC decision. Because petitioner claims to have had
an oral contract of attorney’s fees with the deceased spouses, Article 1145 of the Civil
Code16 allows him a period of six (6) years within which to file an action to recover
professional fees for services rendered. Respondents never asserted or provided any
evidence that Spouses de Guzman refused petitioner’s legal representation. For this
reason, petitioner’s cause of action began to run only from the time the respondents
refused to pay him his attorney’s fees, as similarly held in the case of Anido v.
Negado:17

In the case at bar, private respondent’s allegation in the complaint that petitioners
refused to sign the contract for legal services in October 1978, and his filing of the
complaint only on November 23, 1987 or more than nine years after his cause of action
arising from the breach of the oral contract between him and petitioners point to the
conclusion that the six-year prescriptive period within which to file an action based on
such oral contract under Article 1145 of the Civil Code had already lapsed.
As a lawyer, private respondent should have known that he only had six years
from the time petitioners refused to sign the contract for legal services and to
acknowledge that they had engaged his services for the settlement of their
parents’ estate within which to file his complaint for collection of legal fees for
the services which he rendered in their favor. [Emphases supplied]

At this juncture, having established that petitioner is entitled to attorney’s fees and that
he filed his claim well within the prescribed period, the proper remedy is to remand the
case to the RTC for the determination of the correct amount of attorney’s fees. Such a
procedural route, however, would only contribute to the delay of the final disposition of
the controversy as any ruling by the trial court on the matter would still be open for
questioning before the CA and this Court. In the interest of justice, this Court deems it
prudent to suspend the rules and simply resolve the matter at this level. The Court has
previously exercised its discretion in the same way in National Power Corporation v.
Heirs of Macabangkit Sangkay:18

In the event of a dispute as to the amount of fees between the attorney and his client,
and the intervention of the courts is sought, the determination requires that there be
evidence to prove the amount of fees and the extent and value of the services rendered,
taking into account the facts determinative thereof. Ordinarily, therefore, the
determination of the attorney’s fees on quantum meruit is remanded to the lower court
for the purpose. However, it will be just and equitable to now assess and fix the
attorney’s fees of both attorneys in order that the resolution of “a comparatively
simple controversy,” as Justice Regalado put it in Traders Royal Bank
Employees Union-Independent v. NLRC, would not be needlessly prolonged, by
taking into due consideration the accepted guidelines and so much of the pertinent data
as are extant in the records.19 [Emphasis supplied]

With respect to petitioner’s entitlement to the claimed attorney’s fees, it is the Court’s
considered view that he is deserving of it and that the amount should be based
on quantum meruit.

Quantum meruit – literally meaning as much as he deserves – is used as basis for

determining an attorney’s professional fees in the absence of an express agreement.
The recovery of attorney’s fees on the basis of quantum meruit is a device that prevents
an unscrupulous client from running away with the fruits of the legal services of counsel
without paying for it and also avoids unjust enrichment on the part of the attorney
himself. An attorney must show that he is entitled to reasonable compensation for the
effort in pursuing the client’s cause, taking into account certain factors in fixing the
amount of legal fees.20

Rule 20.01 of the Code of Professional Responsibility lists the guidelines for

determining the proper amount of attorney fees, to wit:cralavvonlinelawlibrary

Rule 20.1 – A lawyer shall be guided by the following factors in determining his
fees:cralavvonlinelawlibrary
a) The time spent and the extent of the services rendered or
required;chanroblesvirtualawlibrary

b) The novelty and difficulty of the questions involved;chanroblesvirtualawlibrary

c) The importance of the subject matter;chanroblesvirtualawlibrary

d) The skill demanded;chanroblesvirtualawlibrary

e) The probability of losing other employment as a result of acceptance of the proffered

case;chanroblesvirtualawlibrary

f) The customary charges for similar services and the schedule of fees of the IBP
chapter to which he belongs;chanroblesvirtualawlibrary

g) The amount involved in the controversy and the benefits resulting to the client from
the service;chanroblesvirtualawlibrary

h) The contingency or certainty of compensation;chanroblesvirtualawlibrary

i) The character of the employment, whether occasional or established; and

j) The professional standing of the lawyer.

Petitioner unquestionably rendered legal services for respondents’ deceased parents in

the civil case for annulment of contract and recovery of possession with damages. He
successfully represented Spouses de Guzman from the trial court level in 1990 up to
this Court in 2007, for a lengthy period of 17 years. After their tragic death in 2003,
petitioner filed a notice of death and a motion for substitution of parties with entry of
appearance and motion to resolve the case before this Court. 21 As a consequence of his
efforts, the respondents were substituted in the place of their parents and were
benefited by the favorable outcome of the case.

As earlier mentioned, petitioner served as defense counsel for deceased Spouses de

Guzman and respondents for almost seventeen (17) years. The Court is certain that it
was not an easy task for petitioner to defend his clients’ cause for such a long period of
time, considering the heavy and demanding legal workload of petitioner which included
the research and preparation of pleadings, the gathering of documentary proof, the
court appearances, and the various legal work necessary to the defense of Spouses de
Guzman. It cannot be denied that petitioner devoted much time and energy in handling
the case for respondents. Given the considerable amount of time spent, the diligent
effort exerted by petitioner, and the quality of work shown by him in ensuring the
successful defense of his clients, petitioner clearly deserves to be awarded reasonable
attorney’s fees for services rendered. Justice and equity dictate that petitioner be paid
his professional fee based on quantum meruit.
The fact that the practice of law is not a business and the attorney plays a vital role in
the administration of justice underscores the need to secure him his honorarium lawfully
earned as a means to preserve the decorum and respectability of the legal profession.
A layer is as much entitled to judicial protection against injustice, imposition or fraud on
the part of his client as the client against abuse on the part of his counsel. The duty of
the court is not alone to see that a lawyer acts in a proper and lawful manner; it is also
its duty to see that a lawyer is paid his just fees. With his capital consisting of his brains
and with his skill acquired at tremendous cost not only in money but in expenditure of
time and energy, he is entitled to the protection of any judicial tribunal against any
attempt on the part of his client to escape payment of his just compensation. It would be
ironic if after putting forth the best in him to secure justice for his client he himself would
not get his due.22

The Court, however, is resistant in granting petitioner's prayer for an award of 25%
attorney's fees based on the value of the property subject of litigation because petitioner
failed to clearly substantiate the details of his oral agreement with Spouses de Guzman.
A fair and reasonable amount of attorney's fees should be 15% of the market value of
the property.

WHEREFORE, the petition is GRANTED. Accordingly, the Court grants the Motion to
Determine Attorney's Fees filed by petitioner Atty. Francisco L. Rosario, Jr. Based
on quantum meruit, the amount of attorney's fees is at the rate of 15% of the market
value of the parcel of land, covered by Transfer Certificate of Title No. 1292, at the time
of payment.

SO ORDERED.
United Claimants Association of NEA v. National Electrification Administration, G.R. NO.
187107, January 31, 2012

G.R. No. 187107               January 31, 2012

UNITED CLAIMANTS ASSOCIATION OF NEA (UNICAN), represented by its

representative BIENVENIDO R. LEAL, in his official capacity as its President and
in his own individual capacity, EDUARDO R. LACSON, ORENCIO F. VENIDA, JR.,
THELMA V. OGENA, BOBBY M. CARANTO, MARILOU B. DE JESUS, EDNA G.
RAÑA, and ZENAIDA P. OLIQUINO, in their own capacities and in behalf of all
those similarly situated officials and employees of the National Electrification
Administration, Petitioners,
vs.
NATIONAL ELECTRIFICATION ADMINISTRATION (NEA), NEA BOARD OF
ADMINISTRATORS (NEA BOARD), ANGELO T. REYES as Chairman of the NEA
Board of Administrators, EDITHA S. BUENO, Ex-Officio Member and NEA
Administrator, and WILFRED L. BILLENA, JOSPEPH D. KHONGHUN, and FR.
JOSE VICTOR E. LOBRIGO, Members, NEA Board, Respondents.

DECISION

VELASCO, JR., J.:

The Case

This is an original action for Injunction to restrain and/or prevent the implementation of
Resolution Nos. 46 and 59, dated July 10, 2003 and September 3, 2003, respectively,
otherwise known as the National Electrification Administration (NEA) Termination Pay
Plan, issued by respondent NEA Board of Administrators (NEA Board).

The Facts

Petitioners are former employees of NEA who were terminated from their employment
with the implementation of the assailed resolutions.

Respondent NEA is a government-owned and/or controlled corporation created in

accordance with Presidential Decree No. (PD) 269 issued on August 6, 1973. Under PD
269, Section 5(a)(5), the NEA Board is empowered to organize or reorganize NEA’s
staffing structure, as follows:

Section 5. National Electrification Administration; Board of Administrators; Administrator.

(a) For the purpose of administering the provisions of this Decree, there is hereby
established a public corporation to be known as the National Electrification
Administration. All of the powers of the corporation shall be vested in and exercised by
a Board of Administrators, which shall be composed of a Chairman and four (4)
members, one of whom shall be the Administrator as ex-officio member. The Chairman
and the three other members shall be appointed by the President of the Philippines to
serve for a term of six years. x x x

xxxx

The Board shall, without limiting the generality of the foregoing, have the following
specific powers and duties.

1. To implement the provisions and purposes of this Decree;

xxxx

5. To establish policies and guidelines for employment on the basis of merit, technical
competence and moral character, and, upon the recommendation of the Administrator
to organize or reorganize NEA’s staffing structure, to fix the salaries of personnel and to
define their powers and duties. (Emphasis supplied.)

Thereafter, in order to enhance and accelerate the electrification of the whole country,
including the privatization of the National Power Corporation, Republic Act No. (RA)
9136, otherwise known as the Electric Power Industry Reform Act of 2001 (EPIRA Law),
was enacted, taking effect on June 26, 2001. The law imposed upon NEA additional
mandates in relation to the promotion of the role of rural electric cooperatives to achieve
national electrification. Correlatively, Sec. 3 of the law provides:

Section 3. Scope. - This Act shall provide a framework for the restructuring of the
electric power industry, including the privatization of the assets of NPC, the transition to
the desired competitive structure, and the definition of the responsibilities of the various
government agencies and private entities. (Emphasis supplied.)

Sec. 77 of RA 9136 also provides:

Section 77. Implementing Rules and Regulations. - The DOE shall, in consultation with
the electric power industry participants and end-users, promulgate the Implementing
Rules and Regulations (IRR) of this Act within six (6) months from the effectivity of this
Act, subject to the approval by the Power Commission.

Thus, the Rules and Regulations to implement RA 9136 were issued on February 27,
2002. Under Sec. 3(b)(ii), Rule 33 of the Rules and Regulations, all the NEA employees
and officers are considered terminated and the 965 plantilla positions of NEA vacant, to
wit:

Section 3. Separation and Other Benefits.

(a) x x x
(b) The following shall govern the application of Section 3(a) of this Rule:

xxxx

(ii) With respect to NEA officials and employees, they shall be considered legally
terminated and shall be entitled to the benefits or separation pay provided in Section
3(a) herein when a restructuring of NEA is implemented pursuant to a law enacted by
Congress or pursuant to Section 5(a)(5) of Presidential Decree No. 269. (Emphasis
supplied.)

Meanwhile, on August 28, 2002, former President Gloria Macapagal- Arroyo issued
Executive Order No. 119 directing the NEA Board to submit a reorganization plan. Thus,
the NEA Board issued the assailed resolutions.

On September 17, 2003, the Department of Budget and Management approved the
NEA Termination Pay Plan.

Thereafter, the NEA implemented an early retirement program denominated as the

"Early Leavers Program," giving incentives to those who availed of it and left NEA
before the effectivity of the reorganization plan. The other employees of NEA were
terminated effective December 31, 2003.

Hence, We have this petition.

The Issues

Petitioners raise the following issues:

1. The NEA Board has no power to terminate all the NEA employees;

2. Executive Order No. 119 did not grant the NEA Board the power to terminate
all NEA employees; and

3. Resolution Nos. 46 and 59 were carried out in bad faith.

On the other hand, respondents argue in their Comment dated August 20, 2009 that:

1. The Court has no jurisdiction over the petition;

2. Injunction is improper in this case given that the assailed resolutions of the
NEA Board have long been implemented; and

3. The assailed NEA Board resolutions were issued in good faith.

The Court’s Ruling

This petition must be dismissed.

The procedural issues raised by respondents shall first be discussed.

This Court Has Jurisdiction over the Case

Respondents essentially argue that petitioners violated the principle of hierarchy of

courts, pursuant to which the instant petition should have been filed with the Regional
Trial Court first rather than with this Court directly.

We explained the principle of hierarchy of courts in Mendoza v. Villas, 1 stating:

In Chamber of Real Estate and Builders Associations, Inc. (CREBA) v. Secretary of

Agrarian Reform, a petition for certiorari filed under Rule 65 was dismissed for having
been filed directly with the Court, violating the principle of hierarchy of courts, to wit:

Primarily, although this Court, the Court of Appeals and the Regional Trial Courts have
concurrent jurisdiction to issue writs of certiorari, prohibition, mandamus, quo warranto,
habeas corpus and injunction, such concurrence does not give the petitioner
unrestricted freedom of choice of court forum. In Heirs of Bertuldo Hinog v. Melicor,
citing People v. Cuaresma, this Court made the following pronouncements:

This Court’s original jurisdiction to issue writs of certiorari is not exclusive. It is shared
by this Court with Regional Trial Courts and with the Court of Appeals. 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
therefor 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 for 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 Court’s 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 Court’s time and attention which are better devoted to those matters
within its exclusive jurisdiction, and to prevent further over-crowding of the Court’s
docket. (Emphasis supplied.)

Evidently, the instant petition should have been filed with the RTC. However, as an
exception to this general rule, the principle of hierarchy of courts may be set aside for
special and important reasons. Such reason exists in the instant case involving as it
does the employment of the entire plantilla of NEA, more than 700 employees all told,
who were effectively dismissed from employment in one swift stroke. This to the mind of
the Court entails its attention.
Moreover, the Court has made a similar ruling in National Power Corporation Drivers
and Mechanics Association (NPC-DAMA) v. National Power Corporation (NPC). 2 In that
case, the NPC-DAMA also filed a petition for injunction directly with this Court assailing
NPC Board Resolution Nos. 2002-124 and 2002-125, both dated November 18, 2002,
directing the termination of all employees of the NPC on January 31, 2003. Despite
such apparent disregard of the principle of hierarchy of courts, the petition was given
due course. We perceive no compelling reason to treat the instant case differently.

The Remedy of Injunction Is still Available

Respondents allege that the remedy of injunction is no longer available to petitioners

inasmuch as the assailed NEA Board resolutions have long been implemented.

Taking respondents’ above posture as an argument on the untenability of the petition on

the ground of mootness, petitioners contend that the principle of mootness is subject to
exceptions, such as when the case is of transcendental importance.

In Funa v. Executive Secretary,3 the Court passed upon the seeming moot issue of the
appointment of Maria Elena H. Bautista (Bautista) as Officer-in-Charge (OIC) of the
Maritime Industry Authority (MARINA) while concurrently serving as Undersecretary of
the Department of Transportation and Communications. There, even though Bautista
later on was appointed as Administrator of MARINA, the Court ruled that the case was
an exception to the principle of mootness and that the remedy of injunction was still
available, explaining thus:

A moot and academic case is one that ceases to present a justiciable controversy by
virtue of supervening events, so that a declaration thereon would be of no practical use
or value. Generally, courts decline jurisdiction over such case or dismiss it on ground of
mootness. However, as we held in Public Interest Center, Inc. v. Elma, supervening
events, whether intended or accidental, cannot prevent the Court from rendering a
decision if there is a grave violation of the Constitution. Even in cases where
supervening events had made the cases moot, this Court did not hesitate to resolve the
legal or constitutional issues raised to formulate controlling principles to guide the
bench, bar, and public.

As a rule, the writ of prohibition will not lie to enjoin acts already done. However, as an
exception to the rule on mootness, courts will decide a question otherwise moot if it is
capable of repetition yet evading review. (Emphasis supplied.)

Similarly, in the instant case, while the assailed resolutions of the NEA Board may have
long been implemented, such acts of the NEA Board may well be repeated by other
government agencies in the reorganization of their offices. Petitioners have not lost their
remedy of injunction.

The Power to Reorganize Includes the Power to Terminate

The meat of the controversy in the instant case is the issue of whether the NEA Board
had the power to pass Resolution Nos. 46 and 59 terminating all of its employees.

This must be answered in the affirmative.

Under Rule 33, Section 3(b)(ii) of the Implementing Rules and Regulations of the EPIRA
Law, all NEA employees shall be considered legally terminated with the implementation
of a reorganization program pursuant to a law enacted by Congress or pursuant to Sec.
5(a)(5) of PD 269 through which the reorganization was carried out, viz:

Section 5. National Electrification Administration; Board of Administrators; Administrator.

(a) For the purpose of administering the provisions of this Decree, there is hereby
established a public corporation to be known as the National Electrification
Administration. x x x

xxxx

The Board shall, without limiting the generality of the foregoing, have the following
specific powers and duties.

xxxx

5. To establish policies and guidelines for employment on the basis of merit, technical
competence and moral character, and, upon the recommendation of the Administrator
to organize or reorganize NEA’s staffing structure, to fix the salaries of personnel and to
define their powers and duties. (Emphasis supplied.)

Thus, petitioners argue that the power granted unto the NEA Board to organize or
reorganize does not include the power to terminate employees but only to reduce NEA’s
manpower complement.

Such contention is erroneous.

In Betoy v. The Board of Directors, National Power Corporation, 4 the Court upheld the
dismissal of all the employees of the NPC pursuant to the EPIRA Law. In ruling that the
power of reorganization includes the power of removal, the Court explained:

[R]eorganization involves the reduction of personnel, consolidation of offices, or

abolition thereof by reason of economy or redundancy of functions. It could result in the
loss of one’s position through removal or abolition of an office. However, for a
reorganization for the purpose of economy or to make the bureaucracy more efficient to
be valid, it must pass the test of good faith; otherwise, it is void ab initio. (Emphasis
supplied.)
Evidently, the termination of all the employees of NEA was within the NEA Board’s
powers and may not successfully be impugned absent proof of bad faith.

Petitioners Failed to Prove that the NEA Board Acted in Bad Faith

Next, petitioners challenge the reorganization claiming bad faith on the part of the NEA
Board.

Congress itself laid down the indicators of bad faith in the reorganization of government
offices in Sec. 2 of RA 6656, an Act to Protect the Security of Tenure of Civil Service
Officers and Employees in the Implementation of Government Reorganization, to wit:

Section 2. No officer or employee in the career service shall be removed except for a
valid cause and after due notice and hearing. A valid cause for removal exists when,
pursuant to a bona fide reorganization, a position has been abolished or rendered
redundant or there is a need to merge, divide, or consolidate positions in order to meet
the exigencies of the service, or other lawful causes allowed by the Civil Service Law.
The existence of any or some of the following circumstances may be considered as
evidence of bad faith in the removals made as a result of reorganization, giving rise to a
claim for reinstatement or reappointment by an aggrieved party:

(a) Where there is a significant increase in the number of positions in the new
staffing pattern of the department or agency concerned;

(b) Where an office is abolished and other performing substantially the same
functions is created;

(c) Where incumbents are replaced by those less qualified in terms of status of
appointment, performance and merit;

(d) Where there is a reclassification of offices in the department or agency

concerned and the reclassified offices perform substantially the same function as
the original offices;

(e) Where the removal violates the order of separation provided in Section 3
hereof. (Emphasis supplied.)

It must be noted that the burden of proving bad faith rests on the one alleging it. As the
Court ruled in Culili v. Eastern Telecommunications, Inc., 5 "According to jurisprudence,
‘basic is the principle that good faith is presumed and he who alleges bad faith has the
duty to prove the same.’ " Moreover, in Spouses Palada v. Solidbank Corporation, 6 the
Court stated, "Allegations of bad faith and fraud must be proved by clear and convincing
evidence."

Here, petitioners have failed to discharge such burden of proof.

In alleging bad faith, petitioners cite RA 6656, particularly its Sec. 2, subparagraphs (b)
and (c).1âwphi1 Petitioners have the burden to show that: (1) the abolished offices were
replaced by substantially the same units performing the same functions; and (2)
incumbents are replaced by less qualified personnel.

Petitioners failed to prove such facts. Mere allegations without hard evidence cannot be
considered as clear and convincing proof.

Next, petitioners state that the NEA Board should not have abolished all the offices of
NEA and instead made a selective termination of its employees while retaining the other
employees.

Petitioners argue that for the reorganization to be valid, it is necessary to only abolish
the offices or terminate the employees that would not be retained and the retention of
the employees that were tasked to carry out the continuing mandate of NEA. Petitioners
argue in their Memorandum dated July 27, 2010:

A valid reorganization, pursued in good faith, would have resulted to: (1) the abolition of
old positions in the NEA’s table of organization that pertain to the granting of franchises
and rate fixing functions as these were all abolished by Congress (2) the creation of
new positions that pertain to the additional mandates of the EPIRA Law and (3)
maintaining the old positions that were not affected by the EPIRA Law.

The Court already had the occasion to pass upon the validity of the similar
reorganization in the NPC. In the aforecited case of Betoy, 7 the Court upheld the policy
of the Executive to terminate all the employees of the office before rehiring those
necessary for its operation. We ruled in Betoy that such policy is not tainted with bad
faith:

It is undisputed that NPC was in financial distress and the solution found by Congress
was to pursue a policy towards its privatization. The privatization of NPC necessarily
demanded the restructuring of its operations. To carry out the purpose, there was a
need to terminate employees and re-hire some depending on the manpower
requirements of the privatized companies. The privatization and restructuring of the
NPC was, therefore, done in good faith as its primary purpose was for economy and to
make the bureaucracy more efficient. (Emphasis supplied.)

Evidently, the fact that the NEA Board resorted to terminating all the incumbent
employees of NPC and, later on, rehiring some of them, cannot, on that ground alone,
vitiate the bona fides of the reorganization.

WHEREFORE, the instant petition is hereby DISMISSED. Resolution Nos. 46 and 59,
dated July 10, 2003 and September 3, 2003, respectively, issued by the NEA Board of
Directors are hereby UPHELD.

No costs.
SO ORDERED.
Suico Industrial Corp. vs. Court of Appeals, 301 SCRA 212

[G.R. No. 123050. January 20, 1999]

SUICO INDUSTRIAL CORPORATION, SPS. ESMERALDO and ELIZABETH

SUICO, Petitioners, v. COURT OF APPEALS and PDCP DEVELOPMENT BANK,
INC., Respondents.

DECISION

MARTINEZ, J.:

On January 19, 1987, petitioner Suico Industrial Corporation, represented by Esmeraldo

Suico, its President, secured a loan of P2,500,000.00 payable in five (5) years, from
respondent Private Development Corporation of the Philippines (now PDCP Bank). As
security thereof, petitioner spouses mortgaged their two (2) real estate properties
situated at Mandaue City, Cebu covered by Transfer Certificate of Title (TCT) Nos.
18324 and 23116. Sometime in 1991, petitioners obtained a second loan
of P2,000,000.00 payable in five (5) years, and secured it with the same real properties,
which was granted by respondent PDCP Bank.

For failure to pay the balance of the loan amounting to P3,900,000.00 as of 1993,
respondent PDCP Bank caused the extrajudicial foreclosure of the real estate
mortgage. It was adjudge as the highest bidder and a Certificate of Sale dated February
29, 1993 was duly issued by the Sheriff of Mandaue in its favor. Petitioner failed to
redeem the said properties. After expiration of the one (1)-year redemption period,
ownership over the properties were consolidated and TCT Nos. 34988 and 34987 were
correspondingly issued in the name of respondent PDCP Bank.

On November 16, 1994, respondent PDCP Bank filed with the Regional Trial Court
(RTC of Mandaue City, Branch 28 an Ex parte Motion for the Issuance of Writ of
Possession1 which was granted in an Order dated December 8, 1994. 2 On December
15, 1994, a writ of possession3 was thereafter issued. However, the writ could not be
enforced because on December 9, 1994, petitioners filed a Complaint for Specific
Performance, Injunction and Damages (with Prayer for Restraining Order) 4 before the
RTC of Mandaue City, Branch 56 seeking to enjoin respondent PDCP Bank from selling
the mortgaged properties and from taking physical possession over the same during the
pendency of the case.

On January 17, 1995, RTC Branch 56 issued an Order 5 granting the injunction sought
for by petitioners (therein plaintiffs). It likewise deferred resolution of the motion to
dismiss petitioners complaint filed by respondent PDCP Bank (therein defendant).
Pertinent portions of the order state that:
During the hearing on Plaintiffs application for preliminary injunction, Plaintiffs presented
Esmeraldo Suico who testified that per arrangement with a certain Mae Siy and
Fajardo , former officers of Defendant bank, Plaintiffs were supposed to intentionally
default in their payments and eventually consolidate title in Defendant. In exchange
Defendant was supposed to allow a repurchase of the property by Plaintiffs or their
recommendee at Five Million Pesos (P5,000,000.00).

Also presented was Raul Perez, Asset Clerk of the Assessors Office of Mandaue City,
who testified that it was indeed herein Plaintiffs-spouses who facilitated the transfer of
the lots to Defendant whose two representatives, even showed up to inquire if Plaintiffs
had been at Perez office.

After careful consideration of the evidence so far submitted, this Court convinced that
there indeed was an arrangement between herein Plaintiffs and Defendant as adverted
to by Plaintiffs. This conviction by the Court however will naturally be influenced by
whatever evidence the parties will present in the course of the trial of this case.

The Court also realizes that a denial of the prayer for preliminary injunction will result in
irreparable damage to Plaintiffs as a consequence of the dislocation of their family and
business and possible loss of the properties under litigation should Defendant decide to
dispose of the same.

On the other hand, maintenance of status quo thru injunction will hardly prejudice the
Defendant bank in whose name the properties have been already titled. Furthermore,
Defendants interest will be amply protected not only by the injunction bond which the
Court will issue but also because the passage of time will certainly enhance the value of
the properties.

Foregoing considered, the Court in the interest of justice and equity, hereby GRANTS
the injunction prayed for and accordingly orders the Defendant, its representatives and
assigns (enjoined) from disposing of the properties covered by Transfer Certificate of
Title Nos. 18324 and 23116 including improvements found therein or taking physical
possession of the same until further orders from this Court.

Bond is hereby fixed at Fifty Thousand Pesos (P50,000.00).

Resolution of Defendants Motion to Dismiss is deferred pending further reception of

evidence.

SO ORDERED.6

On January 18, 1995, RTC Branch 56 issued the Writ of Preliminary Injunction,
providing therein:

Whereas, on December 13, 1994, the Regional Trial Court, Branch 28 of Mandaue City,
issued a Restraining Order in the above-entitled case, enjoining the defendant PDCP
Bank, its attorneys, agents or its duly authorized officer or persons acting for and in their
behalf from selling the mortgaged properties described in the complaint to persons not
recommended by plaintiffs and from taking physical possession over the same pending
resolution of the prayer for issuance of permanent injunction.

"Whereas, after hearing, this Court on January 17, 1995, issued an Order expanding the
restraining order dated December 13, 1994, issued by RTC Branch 28 into an order for
the issuance of a writ of preliminary injunction, upon plaintiffs posting of a bond in the
amount of P50,000.00 conditioned for the payment of damages which the defendant
may suffer by reason of the issuance of the injunction.

Whereas, the bond as required was duly filed and approved by the Court on January
18, 1995.

Whereas, you Private Development Corporation of the Philippines now known as PDCP
Bank, your representatives and assigns are hereby ordered not to dispose of the
properties covered by transfer Certificate of Title Nos. 18324 and 23116 including
improvements found therein or to take physical possession of the same until further
orders from this Court.7

The Motion for Reconsideration (of the Order dated January 17, 1995) and the Motion
to Dismiss (petitioners complaint) both filed by respondent PDCP Bank were denied by
RTC Branch 56 in an Order dated June 21, 1995. 8cräläwvirtualibräry

In its petition for certiorari and mandamus with prayer for a writ of preliminary prohibitory

injunction filed with the Court of Appeals on June 26, 1995, respondent PDCP Bank
prayed that the Order dated January 17, 1995 granting the writ of preliminary injunction
be set aside, declared void and without any further force and effect. It likewise prayed
that the sheriff of Mandaue City be ordered to implement the writ of possession.

On August 28, 1995, respondent Court of Appeals rendered the challenged

decision9 which ruled that RTC Branch 56 exceeded its jurisdiction when it issued the
writ of injunction against the enforcement of the writ of possession granted by RTC
Branch 28. It ratiocinated in this wise:

In a Petition for Certiorari, the court must confine itself to the issue of whether or not the
respondent court lacked or exceeded its jurisdiction or committed grave abuse of
discretion (San Pedro vs. Court of Appeals, 235 SCRA 145). Here, the respondent
Regional Trial Court exceeded its jurisdiction when it issued the writ of injunction
complained of.

Well-settled is the rule that no court has the power to interfere by injunction with the
judgments or orders of another court of concurrent jurisdiction having the power to grant
the relief sought by injunction. x x x (Rafael Aquino, Sr., et al v. Judge Julito B.
Valenciano, et al., A.M. No. Mtj-93-746, December 27, 1994, 239 SCRA 428; Prudential
Bank v. Gapultos, No. L-41835, 19 January 1990, 181 SCRA 159; Darwin v. Tokonaga,
G.R. No. 54177, 27 May 1991, 197 SCRA 442; Santos v. Bayhon, G.R. No. 88643, 23
July 1991, 199 SCRA 525).

Here, the respondent court issued an injunction against the enforcement of the writ of
possession granted by the Regional Trial Court, Branch 28. This cannot be done. It was
the ministerial duty of the trial court to grant such writ of possession.

Said the Supreme Court:

x x x With more reason, a purchaser can demand a writ of possession after the
expiration of the redemption period. Thus, in F. David Enterprises vs. Insular Bank of
Asia & America, we held:

It is settled the buyer in a foreclosure sale becomes the absolute owner of the property
purchased if it is not redeemed during the period of one year after the registration of
sale. As such, he is entitled to the possession of the property and can demand it at any
time following the consolidation of ownership in his name and the issuance to him of a
new transfer certificate of title. The buyer can in fact demand possession of the land
even during the redemption period except that he has to post a bond in accordance with
Section 7 of Act 3135 as amended. No such bond is required after the redemption
period if the property is not redeemed. Possession of the land then becoming an
absolute right of the purchaser as confirmed owner. Upon proper application and proof
of title, the issuance of the writ of possession becomes a ministerial duty of the court.
(Aurora Gonzales Vda. de Zaballero, et al, v. Hon. Court of Appeals, et al., G.R. No.
106958, February 9, 1994, 229 SCRA 810; F. David Enterprises vs. Insular Bank of
Asia & America, 184 SCRA 294)

Much as We sympathize with private respondents, it was clearly petitioners right to ask
for the writ and to acquire possession of subject properties and it is improper for the
respondent court to stay implementation of said writ.

As to the other reasons advanced by petitioner, as stressed by private respondents, the

same are questions of fact better left for respondent courts determination, at this stage
of the litigation below.

WHEREFORE, the petition is hereby GRANTED; and the questioned Order of January
17, 1995 is SET ASIDE. Costs against private respondents.

SO ORDERED.10

The motion for reconsideration having been denied in a Resolution dated December 12,
199511 petitioners filed this instant certiorari petition praying that the writ of preliminary
injunction issued by RTC Branch 56 be upheld so that a trial on the merits of the case
may ensue.
The focal point of inquiry is whether or not RTC Branch 56 can enjoin the enforcement
of the writ of possession issued by RTC Branch 28.

Petitioners alleged in their complaint for specific performance, injunction and damages
filed before RTC Branch 56 that they had agreed on a plan with respondent PDCP Bank
to intentionally default in their payments so that a foreclosure of mortgage can be
effected and title to the parcels of land would eventually be consolidated in the name of
respondent PDCP Bank. Thereafter, respondent PDCP Bank was supposed to allow
them to purchase the properties for P5,000,000.00 thru the latters recommended buyer.
The recommendees of petitioners were rejected by respondent PDCP Bank. The selling
price thereof was increased thereby preventing petitioners from redeeming the
properties. In this regard, petitioners sought to enjoin the respondents PDCP Bank from
selling the said mortgaged properties to persons not recommended by petitioners and
from taking physical possession thereof during the pendency of the case.

Thus, petitioners now seek to uphold the propriety of the writ of injunction issued by the
RTC Branch 56 enjoining the enforcement of the writ of possession granted by RTC
Branch 28.

The petition does not deserve merit.

First. RTC Branch 56 acted with grave abuse of discretion for having issued the writ of
injunction which prevented the implementation of the writ of possession issued by RTC
Branch 28. The issuance of the writ of injunction was not proper in the absence of any
legal right on the part of petitioners to enjoin the enforcement of the writ of possession
in favor of respondent PDCP Bank.

We espoused in Arcega v. Court of Appeals12 that:

For the issuance of the writ of preliminary injunction to be proper, it must be shown that
the invasion of the right sought to be protected is material and substantial, that the right
of complainant is clear and unmistakable and there is an urgent and paramount
necessity for the writ to prevent serious damage.13

"In the absence of a clear legal right, the issuance of the injunctive writ constitute grave
abuse of discretion.14 Injunction is not designed to protect contingent or future rights,
Where the complainants right or title is doubtful or disputed, injunction is not
proper.15 The possibility of irreparable damage without proof of actual existing right is no
ground for an injunction.16

When petitioners failed to pay the balance of the loan and thereafter failed to redeem
the properties, title to the property had already been transferred to respondent PDCP
Bank. Respondent PDCP Banks right to possess the property is clear and is based on
its right of ownership as a purchaser of the properties in the foreclosure sale to whom
title has been conveyed.17 Under Section 7 of Act No. 3135 and Section 35 of Rule 39,
the purchaser in a foreclosure sale is entitled to possession of the
property.18 Respondent PDCP Bank has a better right to possess the subject property
because of its title over the same.19cräläwvirtualibräry

Furthermore, petitioners undertook a procedural misstep when it filed a suit for specific
performance, injunction and damages before the RTC Branch 56 instead of a petition to
set aside the sale and cancellation of the writ of possession as provided under Section
8 of Act 3135:

"Sec. 8. The debtor may, in the proceedings in which possession was requested, but
not later than thirty days after the purchaser was given possession, petition that the sale
be set aside and the writ of possession cancelled, specifying the damages suffered by
him, because the mortgage was not violated or the sale was not made in accordance
with the provisions hereof, and the court shall take cognizance of this petition in
accordance with the summary procedure provided for in section one hundred and
twelve of Act Number Four Hundred and ninety six; and if it finds the complaint of the
debtor justified, it shall dispose in his favor of all or part of the bond furnished by the
person who obtained possession. Either of the parties may appeal from the order of the
judge in accordance with section fourteen of Act Numbered Four hundred and ninety-
six; but the order of possession shall continue in effect during the pendency of the
appeal.20

Second. Indeed, it is the ministerial duty of the trial court to grant such writ of
possession.

In Sulit v. Court of Appeals,21 the rule was applied in this manner:

No discretion appears to be left to the Court. Any question regarding the regularity and
validity of the sale, as well as the consequent cancellation of the writ is to be determined
in a subsequent proceeding as outlined in Section 8, and it cannot be raised as a
justification for opposing the issuance of the writ of possession since, under the Act, the
proceeding for this is ex parte.22 Such recourse is available of the mortgagee, who
effects the extrajudicial foreclosure of the mortgage, even before the expiration of the
period of redemption provided by law and the Rules of Court. 23

This is stated also in A.G. Development Corporation v. Court of

Appeals:24cräläwvirtualibräry

A writ of possession is generally understood to be an order whereby the sheriff is

commanded to place a person in possession of a real or personal property, 25 such as
when a property is extrajudicially foreclosed.26 In this regard, the issuance of a writ of
possession to a purchaser in an extrajudicial foreclosure is merely a ministerial
function.27 As such, the Court neither exercises its official discretion nor judgment. 28

Third. The statute books are replete with jurisprudence to the effect that trial courts
have no power to interfere by injunction with the orders or judgments issued by another
court of concurrent or coordinate jurisdiction. 29 In this regard, RTC Branch 56 therefore
has no power nor authority to nullify or enjoin the enforcement of the writ of possession
issued by RTC Branch 28.

WHEREFORE, the petition is DENIED. The Decision dated August 28, 1995 and the
Resolution dated December 12, 1995 of respondent Court of Appeals are hereby
AFFIRMED. Costs against petitioners.

SO ORDERED.
Omictin v. Court of Appeals, G.R. No. 148004, January 22, 2007

G.R. No.148004             January 22, 2007

VINCENT E. OMICTIN, Petitioner,
vs.
HON. COURT OF APPEALS (Special Twelfth Division) and GEORGE I.
LAGOS, Respondents.

DECISION

AZCUNA, J.:

This is a petition for certiorari1 with prayer for a writ of preliminary injunction seeking the
nullification of the decision rendered by the Court of Appeals (CA) on June 30, 2000,
and its resolution, dated March 5, 2001 in CA-G.R. SP No. 55834 entitled "George I.
Lagos v. Hon. Reinato G. Quilala, Presiding Judge of RTC, Br. 57, Makati, Hon.
Elizabeth Tayo Chua, Asst. City Prosecutor, Makati City, and Vincent E. Omictin."

In its assailed decision, the CA declared the existence of a prejudicial question and
ordered the suspension of the criminal proceedings initiated by petitioner Vincent E.
Omictin on behalf of Saag Phils., Inc. against private respondent George I. Lagos, in
view of a pending case before the Securities and Exchange Commission (SEC) filed by
the latter against the former, Saag Pte. (S) Ltd., Nicholas Ng, Janifer Yeo and Alex Y.
Tan.

The facts are as follows:

Petitioner Vincent E. Omictin, Operations Manager Ad Interim of Saag Phils., Inc., filed
a complaint for two counts of estafa with the Office of the City Prosecutor of Makati
against private respondent George I. Lagos. He alleged that private respondent, despite
repeated demands, refused to return the two company vehicles entrusted to him when
he was still the president of Saag Phils., Inc..

On February 26, 1999, public prosecutor Alex G. Bagaoisan recommended the

indictment of private respondent, and on the same day, respondent was charged with
the crime of estafa under Article 315, par. 1(b) of the Revised Penal Code before the
Regional Trial Court (RTC), Branch 57 of Makati City. The case was docketed as
Criminal Case No. 99-633, entitled "People of the Philippines v. George I. Lagos."

On June 4, 1999, private respondent filed a motion to recuse praying that Presiding
Judge Reinato G. Quilala inhibit himself from hearing the case based on the following
grounds:
 a) In an order, dated May 28, 1999, the presiding judge summarily denied
respondent’s motion: 1) to defer issuance of the warrant of arrest; and 2) to order
reinvestigation.

b) Immediately before the issuance of the above-mentioned order, the presiding

judge and Atty. Alex Y. Tan, SAAG Philippines, Inc.’s Ad Interim President, were
seen together.2

On June 24, 1999, private respondent filed a motion to suspend proceedings on the
basis of a prejudicial question because of a pending petition with the Securities and
Exchange Commission (SEC) involving the same parties.

It appears that on January 7, 1999, private respondent filed SEC Case No. 01-99-6185
for the declaration of nullity of the respective appointments of Alex Y. Tan and petitioner
as President Ad Interim and Operations Manager Ad Interim of Saag Phils., Inc.,
declaration of dividends, recovery of share in the profits, involuntary dissolution and the
appointment of a receiver, recovery of damages and an application for a temporary
restraining order (TRO) and injunction against Saag (S) Pte. Ltd., Nicholas Ng, Janifer
Yeo, Tan and petitioner. 3

In the action before the SEC, private respondent averred that Saag (S) Pte. Ltd. is a
foreign corporation organized and existing under the laws of Singapore, and is fully
owned by Saag Corporation (Bhd). On July 1, 1994, he was appointed as Area Sales
Manager in the Philippines by Thiang Shiang Hiang, Manager of Saag (S) Pte. Ltd.
Pursuant to his appointment, respondent was authorized to organize a local joint
venture corporation to be known as Saag Philippines, Inc. for the wholesale trade and
service of industrial products for oil, gas and power industries in the Philippines.

On September 9, 1994, Saag Philippines, Inc. was incorporated with Saag (S) Pte. Ltd.
as the majority stockholder. Private respondent was appointed to the board of directors,
along with Rommel I. Lagos, Jose E. Geronimo, Gan Ching Lai and Thiang Shiang
Hiang, and was elected president of the domestic corporation.

Later, due to intra-corporate disputes, Gan and Thiang resigned and divested their
shares in Saag Corporation (Bhd), thereby resulting in a change in the controlling
interest in Saag (S) Pte. Ltd.

Barely three months after, or on June 23, 1998, private respondent resigned his post as
president of Saag Phils., Inc. while still retaining his position as a director of the
company.4 According to private respondent, the joint venture agreement (JVA) between
him or Saag Phils., Inc. and Saag (S) Pte. Ltd. provided that should the controlling
interest in the latter company, or its parent company Saag Corp. (Bhd), be acquired by
any other person or entity without his prior consent, he has the option either to require
the other stockholders to purchase his shares or to terminate the JVA and dissolve
Saag Phils., Inc. altogether. Thus, pursuant to this provision, since private respondent
did not give his consent as regards the transfer of shares made by Gan and Thiang, he
made several requests to Nicholas Ng, who replaced Gan as director, and Janifer Yeo,
Executive Director of Saag (S) Pte. Ltd., to call for a board meeting in order to discuss
the following: a) implementation of the board resolution declaring dividends; b)
acquisition of private respondent’s shares by Saag (S) Pte. Ltd.; c) dissolution of Saag
Phils., Inc.; and d) the termination of the JVA.

Ng and Yeo failed to appear, however, in the scheduled board meetings. Instead, on
September 30, 1998 they issued a letter appointing Alex Y. Tan as President Ad Interim
of Saag Phils., Inc. Tan, in turn, appointed petitioner Omictin as the company’s
Operations Manager Ad Interim.

Citing as a reason the absence of a board resolution authorizing the continued

operations of Saag Phils., Inc., private respondent retained his possession of the office
equipment of the company in a fiduciary capacity as director of the corporation pending
its dissolution and/or the resolution of the intra-corporate dispute. He likewise changed
the locks of the offices of the company allegedly to prevent Tan and petitioner from
seizing company property.

Private respondent stressed that Tan’s appointment was invalid because it was in
derogation of the company by-laws requiring that the president must be chosen from
among the directors, and elected by the affirmative vote of a majority of all the members
of the board of directors.5 As Tan’s appointment did not have the acquiescence of the
board of directors, petitioner’s appointment by the former is likewise allegedly invalid.
Thus, neither has the power or the authority to represent or act for Saag Phils., Inc. in
any transaction or action before the SEC or any court of justice.

The trial court, in an order dated September 8, 1999, denied respondent’s motion to
suspend proceedings and motion to recuse.

His motion for reconsideration having been denied by the trial court in its order issued
on October 29, 1999, respondent filed with the CA the petition for certiorari[6] assailing
the aforesaid orders.

On June 30, 2000, the CA rendered its challenged decision. The pertinent portion
reads:

In a case for estafa, a valid demand made by an offended party is one of the essential
elements. It appears from the records that the delay of delivery of the motor vehicles by
petitioner to Saag Corporation is by reason of petitioner’s contention that the demand
made by Omictin and Atty. Tan to him to return the subject vehicles is not a valid
demand. As earlier mentioned, petitioner filed a case with the SEC questioning therein
private respondents’ appointment.

If the SEC should rule that the dissolution of Saag Phils. is proper, or that the
appointments of private respondents are invalid, the criminal case will eventually be
dismissed due to the absence of one of the essential elements of the crime of estafa.
Based on the foregoing, it is clear that a prejudicial question exists which calls for the
suspension of the criminal proceedings before the lower court.

WHEREFORE, in view of the foregoing, the assailed Order of September 8, 1999 and
October 29, 1999, are hereby MODIFIED. The motion to suspend proceedings is
hereby GRANTED and respondent court is hereby enjoined from hearing Criminal Case
No. 99-633, entitled "People of the Philippines v. George I. Lagos," until the termination
of the case with the Securities and Exchange Commission. The denial of the motion to
recuse is hereby AFFIRMED.

SO ORDERED.7

Incidentally, on January 18, 2001, the SEC case 8 was transferred to the Regional Trial
Court (RTC) of Mandaluyong City, Branch 214, pursuant to A.M. No. 00-11-03-
SC9 implementing the Securities and Regulation Code (Republic Act No.
8799)10 enacted on July 19, 2000, vesting in the RTCs jurisdiction over intra-corporate
disputes.11

Meanwhile, on March 5, 2001, the CA, addressing petitioner’s motion for

reconsideration of the aforementioned decision, issued its assailed resolution:

Considering that the petition for review on certiorari of the 30 June 2000 decision of this
Court, filed by the Office of the Solicitor General before the Supreme Court has already
TERMINATED on November 20, 2000 and a corresponding entry of judgment has
already been issued by the High Court, that the same is final and executory, the private
respondent’s motion for reconsideration of the decision 30 June 2000 before this Court
is NOTED for being moot and academic.

SO ORDERED.12

Hence, this petition raises the following issues:

RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OF JURISDICTION -

A) WHEN IT DECREED THAT A PREJUDICIAL QUESTION EXISTS IN THE SEC

CASE FILED BY PRIVATE RESPONDENT AGAINST SAAG (S) PTE. LTD., A
FOREIGN CORPORATION, ALTHOUGH THE PRIVATE COMPLAINANT IN THE
CRIMINAL CASE FOR ESTAFA (WHERE PRIVATE RESPONDENT IS THE
ACCUSED THEREIN) IS ACTUALLY SAAG PHILIPPINES, INC. A DOMESTIC
CORPORATION WITH A SEPARATE JURIDICAL PERSONALITY OF ITS OWN AND
WHICH IS NOT EVEN A PARTY IN THE SEC CASE; AND,
B) WHEN IT ORDERED THE SUSPENSION OF THE PROCEEDINGS IN CRIMINAL
CASE NO. 99-633 AGAINST PRIVATE RESPONDENT.

II

THIS PETITION FOR CERTIORARI IS THE ONLY PLAIN, SPEEDY AND ADEQUATE
REMEDY IN THE PREMISES.

In support of the above, petitioner argues, as follows:

1. The action before the SEC and the criminal case before the trial court do not
involve any prejudicial question.13 SEC Case No. 01-99-6185 mainly involves the
dissolution of Saag (S) Pte. Ltd., the appointment of a receiver, the distribution of
profits, and the authority of petitioner and Tan to represent Saag Phils., Inc. The
entity which is being sued is Saag (S) Pte. Ltd., a foreign corporation over which
the SEC has yet to acquire jurisdiction. Hence, any decision that may be
rendered in the SEC case will neither be determinative of the innocence or guilt
of the accused nor bind Saag Phils., Inc. because the same was not made a
party to the action even if the former is its holding corporation;

2. Saag Phils., Inc. has a separate corporate existence and is to be treated as a

separate entity from its holding or parent company, Saag (S) Pte. Ltd. The mere
fact that one or more corporations are owned or controlled by the same or single
stockholder is not a sufficient ground for disregarding separate corporate
personalities;

3. Private respondent’s petition with the SEC seeks affirmative relief against
Saag (S) Pte. Ltd. for the enforcement or application of the alleged terms of the
joint venture agreement (JVA) that he purportedly entered into with the foreign
corporation while he was still its Area Sales Manager in the Philippines. The
foreign corporation is not licensed to do business in the Philippines, thus, a party
to a contract with a foreign corporation doing business in the Philippines without
a license is not entitled to relief from the latter; and

4. There is no pending civil or administrative case in SEC against Saag Phils.,

Inc. that warrants the application of a prejudicial question and the consequent
suspension of the criminal action it has instituted against private respondent. If
any, the action before the SEC was merely a ploy to delay the resolution of the
criminal case and eventually frustrate the outcome of the estafa case.

In sum, the main issue is whether or not a prejudicial question exists to warrant the
suspension of the criminal proceedings pending the resolution of the intra-corporate
controversy that was originally filed with the SEC.

A prejudicial question is defined as that which arises in a case, the resolution of which is
a logical antecedent of the issue involved therein and the cognizance of which pertains
to another tribunal.14 Here, the case which was lodged originally before the SEC and
which is now pending before the RTC of Mandaluyong City by virtue of Republic Act No.
8799 involves facts that are intimately related to those upon which the criminal
prosecution is based.

Ultimately, the resolution of the issues raised in the intra-corporate dispute will
determine the guilt or innocence of private respondent in the crime of estafa filed
against him by petitioner before the RTC of Makati. As correctly stated by the CA, one
of the elements of the crime of estafa with abuse of confidence under Article 315, par.
1(b) of the Revised Penal Code is a demand made by the offended party to the
offender:

The elements of estafa with abuse of confidence under subdivision No. 1, par. (b) of Art.
315 are as follows:

1. That money, goods, or other personal property be received by the offender in

trust, or on commission, or for administration, or under any other obligation
involving the duty to make delivery of, or to return the same;

2. That there be misrepresentation or conversion of such money or property by

the offender, or denial on his part of such receipt;

3. That such misappropriation or conversion or denial is to the prejudice of

another; and

4. That there is a demand made by the offended party to the offender. 15

Logically, under the circumstances, since the alleged offended party is Saag Phils., Inc.,
the validity of the demand for the delivery of the subject vehicles rests upon the
authority of the person making such a demand on the company’s behalf. Private
respondent is challenging petitioner’s authority to act for Saag Phils., Inc. in the
corporate case pending before the RTC of Mandaluyong, Branch 214. Taken in this
light, if the supposed authority of petitioner is found to be defective, it is as if no demand
was ever made, hence, the prosecution for estafa cannot prosper. Moreover, the mere
failure to return the thing received for safekeeping or on commission, or for
administration, or under any other obligation involving the duty to deliver or to return the
same or deliver the value thereof to the owner could only give rise to a civil action and
does not constitute the crime of estafa. This is because the crime is committed by
misappropriating or converting money or goods received by the offender under a lawful
transaction. As stated in the case of United States v. Bleibel:16

The crime of estafa is not committed by the failure to return the things received for sale
on commission, or to deliver their value, but, as this class of crime is defined by law, by
misappropriating or converting the money or goods received on commission. Delay in
the fulfillment of a commission or in the delivery of the sum on such account received
only involves civil liability. So long as the money that a person is under obligation to
deliver is not demanded of him, and he fails to deliver it for having wrongfully disposed
of it, there is no estafa, whatever be the cause of the debt.

Likewise, by analogy, the doctrine of primary jurisdiction may be applied in this case.
The issues raised by petitioner particularly the status of Saag Phils., Inc. vis-à-vis Saag
(S) Pte. Ltd., as well as the question regarding the supposed authority of the latter to
make a demand on behalf of the company, are proper subjects for the determination of
the tribunal hearing the intra-corporate case which in this case is the RTC of
Mandaluyong, Branch 214. These issues would have been referred to the expertise of
the SEC in accordance with the doctrine of primary jurisdiction had the case not been
transferred to the RTC of Mandaluyong.

Strictly speaking, the objective of the doctrine of primary jurisdiction is to guide a court
in determining whether it should refrain from exercising its jurisdiction until after an
administrative agency has determined some question or some aspect of some question
arising in the proceeding before the court.17 The court cannot or will not determine a
controversy involving a question which is within the jurisdiction of the administrative
tribunal prior to resolving the same, where the question demands the exercise of sound
administrative discretion requiring special knowledge, experience and services in
determining technical and intricate matters of fact. 18

While the above doctrine refers specifically to an administrative tribunal, the Court
believes that the circumstances in the instant case do not proscribe the application of
the doctrine, as the role of an administrative tribunal such as the SEC in determining
technical and intricate matters of special competence has been taken on by specially
designated RTCs by virtue of Republic Act No. 8799. 19 Hence, the RTC of Mandaluyong
where the intra-corporate case is pending has the primary jurisdiction to determine the
issues under contention relating to the status of the domestic corporation, Saag Phils.,
Inc., vis-à-vis Saag Pte. Ltd.; and the authority of petitioner to act on behalf of the
domestic corporation, the determination of which will have a direct bearing on the
criminal case. The law recognizes that, in place of the SEC, the regular courts now have
the legal competence to decide intra-corporate disputes. 20

In view of the foregoing, the Court finds no substantial basis in petitioner’s contention
that the CA committed grave abuse of discretion amounting to lack or excess of
jurisdiction. Absent a showing of a despotic, whimsical and arbitrary exercise of power
by the CA, the petition must fail.

WHEREFORE, the petition is DISMISSED. The decision and resolution of the Court of
Appeals in CA-G.R. SP No. 55834, dated June 30, 2000 and March 5, 2001,
respectively, are AFFIRMED.

No costs.

SO ORDERED.
Republic v. Lacap, 517 SCRA 255 [2007]

G.R. No. 158253             March 2, 2007

REPUBLIC OF THE PHILIPPINES, represented by the DEPARTMENT OF PUBLIC

WORKS AND HIGHWAYS, COMMISSION ON AUDIT and THE NATIONAL
TREASURER, Petitioner,
vs.
CARLITO LACAP, doing business under the name and style CARWIN
CONSTRUCTION AND CONSTRUCTION SUPPLY, Respondent.

DECISION

AUSTRIA-MARTINEZ, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Revised
Rules of Court assailing the Decision1 dated April 28, 2003 of the Court of Appeals (CA)
in CA-G.R. CV No. 56345 which affirmed with modification the Decision 2 of the Regional
Trial Court, Branch 41, San Fernando, Pampanga (RTC) in Civil Case No. 10538,
granting the complaint for Specific Performance and Damages filed by Carlito Lacap
(respondent) against the Republic of the Philippines (petitioner).

The factual background of the case is as follows:

The District Engineer of Pampanga issued and duly published an "Invitation To Bid"
dated January 27, 1992. Respondent, doing business under the name and style Carwin
Construction and Construction Supply (Carwin Construction), was pre-qualified together
with two other contractors. Since respondent submitted the lowest bid, he was awarded
the contract for the concreting of Sitio 5 Bahay Pare.3 On November 4, 1992, a Contract
Agreement was executed by respondent and petitioner. 4 On September 25, 1992,
District Engineer Rafael S. Ponio issued a Notice to Proceed with the concreting
of Sitio 5 Bahay Pare.5 Accordingly, respondent undertook the works, made advances
for the purchase of the materials and payment for labor costs. 6

On October 29, 1992, personnel of the Office of the District Engineer of San Fernando,
Pampanga conducted a final inspection of the project and found it 100% completed in
accordance with the approved plans and specifications. Accordingly, the Office of the
District Engineer issued Certificates of Final Inspection and Final Acceptance. 7

Thereafter, respondent sought to collect payment for the completed project. 8 The
DPWH prepared the Disbursement Voucher in favor of petitioner. 9 However, the DPWH
withheld payment from respondent after the District Auditor of the Commission on Audit
(COA) disapproved the final release of funds on the ground that the contractor’s license
of respondent had expired at the time of the execution of the contract. The District
Engineer sought the opinion of the DPWH Legal Department on whether the contracts
of Carwin Construction for various Mount Pinatubo rehabilitation projects were valid and
effective although its contractor’s license had already expired when the projects were
contracted.10

In a Letter-Reply dated September 1, 1993, Cesar D. Mejia, Director III of the DPWH
Legal Department opined that since Republic Act No. 4566 (R.A. No. 4566), otherwise
known as the Contractor’s License Law, does not provide that a contract entered into
after the license has expired is void and there is no law which expressly prohibits or
declares void such contract, the contract is enforceable and payment may be paid,
without prejudice to any appropriate administrative liability action that may be imposed
on the contractor and the government officials or employees concerned. 11

In a Letter dated July 4, 1994, the District Engineer requested clarification from the
DPWH Legal Department on whether Carwin Construction should be paid for works
accomplished despite an expired contractor’s license at the time the contracts were
executed.12

In a First Indorsement dated July 20, 1994, Cesar D. Mejia, Director III of the Legal
Department, recommended that payment should be made to Carwin Construction,
reiterating his earlier legal opinion.13 Despite such recommendation for payment, no
payment was made to respondent.

Thus, on July 3, 1995, respondent filed the complaint for Specific Performance and
Damages against petitioner before the RTC. 14

On September 14, 1995, petitioner, through the Office of the Solicitor General (OSG),
filed a Motion to Dismiss the complaint on the grounds that the complaint states no
cause of action and that the RTC had no jurisdiction over the nature of the action since
respondent did not appeal to the COA the decision of the District Auditor to disapprove
the claim.15

Following the submission of respondent’s Opposition to Motion to Dismiss, 16 the RTC

issued an Order dated March 11, 1996 denying the Motion to Dismiss. 17 The OSG filed
a Motion for Reconsideration18 but it was likewise denied by the RTC in its Order dated
May 23, 1996.19

On August 5, 1996, the OSG filed its Answer invoking the defenses of non-exhaustion
of administrative remedies and the doctrine of non-suability of the State. 20

Following trial, the RTC rendered on February 19, 1997 its Decision, the dispositive
portion of which reads as follows:

WHEREFORE, in view of all the foregoing consideration, judgment is hereby rendered

in favor of the plaintiff and against the defendant, ordering the latter, thru its District
Engineer at Sindalan, San Fernando, Pampanga, to pay the following:
a) ₱457,000.00 – representing the contract for the concreting project of Sitio 5 road,
Bahay Pare, Candaba, Pampanga plus interest at 12% from demand until fully paid;
and

b) The costs of suit.

SO ORDERED.21

The RTC held that petitioner must be required to pay the contract price since it has
accepted the completed project and enjoyed the benefits thereof; to hold otherwise
would be to overrun the long standing and consistent pronouncement against enriching
oneself at the expense of another.22

Dissatisfied, petitioner filed an appeal with the CA. 23 On April 28, 2003, the CA rendered
its Decision sustaining the Decision of the RTC. It held that since the case involves the
application of the principle of estoppel against the government which is a purely legal
question, then the principle of exhaustion of administrative remedies does not apply;
that by its actions the government is estopped from questioning the validity and binding
effect of the Contract Agreement with the respondent; that denial of payment to
respondent on purely technical grounds after successful completion of the project is not
countenanced either by justice or equity.

The CA rendered herein the assailed Decision dated April 28, 2003, the dispositive
portion of which reads:

WHEREFORE, the decision of the lower court is hereby AFFIRMED with modification in
that the interest shall be six percent (6%) per annum computed from June 21, 1995.

SO ORDERED.24

Hence, the present petition on the following ground:

THE COURT OF APPEALS ERRED IN NOT FINDING THAT RESPONDENT HAS NO

CAUSE OF ACTION AGAINST PETITIONER, CONSIDERING THAT:

(a) RESPONDENT FAILED TO EXHAUST ADMINISTRATIVE REMEDIES; AND

(b) IT IS THE COMMISSION ON AUDIT WHICH HAS THE PRIMARY JURISDICTION

TO RESOLVE RESPONDENT’S MONEY CLAIM AGAINST THE GOVERNMENT. 25

Petitioner contends that respondent’s recourse to judicial action was premature since
the proper remedy was to appeal the District Auditor’s disapproval of payment to the
COA, pursuant to Section 48, Presidential Decree No. 1445 (P.D. No. 1445), otherwise
known as the Government Auditing Code of the Philippines; that the COA has primary
jurisdiction to resolve respondent’s money claim against the government under Section
2(1),26 Article IX of the 1987 Constitution and Section 26 27 of P.D. No. 1445; that non-
observance of the doctrine of exhaustion of administrative remedies and the principle of
primary jurisdiction results in a lack of cause of action.

Respondent, on the other hand, in his Memorandum 28 limited his discussion to Civil
Code provisions relating to human relations. He submits that equity demands that he be
paid for the work performed; otherwise, the mandate of the Civil Code provisions
relating to human relations would be rendered nugatory if the State itself is allowed to
ignore and circumvent the standard of behavior it sets for its inhabitants.

The present petition is bereft of merit.

The general rule is that before a party may seek the intervention of the court, he should
first avail of all the means afforded him by administrative processes. 29 The issues which
administrative agencies are authorized to decide should not be summarily taken from
them and submitted to a court without first giving such administrative agency the
opportunity to dispose of the same after due deliberation. 30

Corollary to the doctrine of exhaustion of administrative remedies is the doctrine of

primary jurisdiction; that is, courts cannot or will not determine a controversy involving a
question which is within the jurisdiction of the administrative tribunal prior to the
resolution of that question by the administrative tribunal, where the question demands
the exercise of sound administrative discretion requiring the special knowledge,
experience and services of the administrative tribunal to determine technical and
intricate matters of fact.31

Nonetheless, the doctrine of exhaustion of administrative remedies and the corollary

doctrine of primary jurisdiction, which are based on sound public policy and practical
considerations, are not inflexible rules. There are many accepted exceptions, such as:
(a) where there is estoppel on the part of the party invoking the doctrine; (b) where the
challenged administrative act is patently illegal, amounting to lack of jurisdiction; (c)
where there is unreasonable delay or official inaction that will irretrievably prejudice the
complainant; (d) where the amount involved is relatively small so as to make the rule
impractical and oppressive; (e) where the question involved is purely legal and will
ultimately have to be decided by the courts of justice; 32 (f) where judicial intervention is
urgent; (g) when its application may cause great and irreparable damage; (h) where the
controverted acts violate due process; (i) when the issue of non-exhaustion of
administrative remedies has been rendered moot; 33 (j) when there is no other plain,
speedy and adequate remedy; (k) when strong public interest is involved; and, (l) in quo
warranto proceedings.34 Exceptions (c) and (e) are applicable to the present case.

Notwithstanding the legal opinions of the DPWH Legal Department rendered in 1993
and 1994 that payment to a contractor with an expired contractor’s license is proper,
respondent remained unpaid for the completed work despite repeated demands.
Clearly, there was unreasonable delay and official inaction to the great prejudice of
respondent.
Furthermore, whether a contractor with an expired license at the time of the execution of
its contract is entitled to be paid for completed projects, clearly is a pure question of law.
It does not involve an examination of the probative value of the evidence presented by
the parties. There is a question of law when the doubt or difference arises as to what
the law is on a certain state of facts, and not as to the truth or the falsehood of alleged
facts.35 Said question at best could be resolved only tentatively by the administrative
authorities. The final decision on the matter rests not with them but with the courts of
justice. Exhaustion of administrative remedies does not apply, because nothing of an
administrative nature is to be or can be done. 36 The issue does not require technical
knowledge and experience but one that would involve the interpretation and application
of law.

Thus, while it is undisputed that the District Auditor of the COA disapproved
respondent’s claim against the Government, and, under Section 48 37 of P.D. No. 1445,
the administrative remedy available to respondent is an appeal of the denial of his claim
by the District Auditor to the COA itself, the Court holds that, in view of exceptions (c)
and (e) narrated above, the complaint for specific performance and damages was not
prematurely filed and within the jurisdiction of the RTC to resolve, despite the failure to
exhaust administrative remedies. As the Court aptly stated in Rocamora v. RTC-Cebu
(Branch VIII):38

The plaintiffs were not supposed to hold their breath and wait until the Commission on
Audit and the Ministry of Public Highways had acted on the claims for compensation for
the lands appropriated by the government. The road had been completed; the Pope had
come and gone; but the plaintiffs had yet to be paid for the properties taken from them.
Given this official indifference, which apparently would continue indefinitely, the private
respondents had to act to assert and protect their interests. 39

On the question of whether a contractor with an expired license is entitled to be paid for
completed projects, Section 35 of R.A. No. 4566 explicitly provides:

SEC. 35. Penalties. Any contractor who, for a price, commission, fee or wage, submits
or attempts to submit a bid to construct, or contracts to or undertakes to construct, or
assumes charge in a supervisory capacity of a construction work within the purview of
this Act, without first securing a license to engage in the business of contracting in this
country; or who shall present or file the license certificate of another, give false evidence
of any kind to the Board, or any member thereof in obtaining a certificate or license,
impersonate another, or use an expired or revoked certificate or license, shall be
deemed guilty of misdemeanor, and shall, upon conviction, be sentenced to pay a fine
of not less than five hundred pesos but not more than five thousand pesos. (Emphasis
supplied)

The "plain meaning rule" or verba legis in statutory construction is that if the statute is
clear, plain and free from ambiguity, it must be given its literal meaning and applied
without interpretation.40 This rule derived from the maxim Index animi sermo est (speech
is the index of intention) rests on the valid presumption that the words employed by the
legislature in a statute correctly express its intention or will and preclude the court from
construing it differently. The legislature is presumed to know the meaning of the words,
to have used words advisedly, and to have expressed its intent by use of such words as
are found in the statute.41 Verba legis non est recedendum, or from the words of a
statute there should be no departure. 42

The wordings of R.A. No. 4566 are clear. It does not declare, expressly or impliedly, as
void contracts entered into by a contractor whose license had already expired.
Nonetheless, such contractor is liable for payment of the fine prescribed therein. Thus,
respondent should be paid for the projects he completed. Such payment, however, is
without prejudice to the payment of the fine prescribed under the law.

Besides, Article 22 of the Civil Code which embodies the maxim Nemo ex alterius
incommode debet lecupletari (no man ought to be made rich out of another’s injury)
states:

Art. 22. Every person who through an act of performance by another, or any other
means, acquires or comes into possession of something at the expense of the latter
without just or legal ground, shall return the same to him.

This article is part of the chapter of the Civil Code on Human Relations, the provisions
of which were formulated as "basic principles to be observed for the rightful relationship
between human beings and for the stability of the social order, x x x designed to
indicate certain norms that spring from the fountain of good conscience, x x x guides
human conduct [that] should run as golden threads through society to the end that law
may approach its supreme ideal which is the sway and dominance of justice." 43 The
rules thereon apply equally well to the Government. 44 Since respondent had rendered
services to the full satisfaction and acceptance by petitioner, then the former should be
compensated for them. To allow petitioner to acquire the finished project at no cost
would undoubtedly constitute unjust enrichment for the petitioner to the prejudice of
respondent. Such unjust enrichment is not allowed by law.

WHEREFORE, the present petition is DENIED for lack of merit. The assailed Decision
of the Court of Appeals dated April 28, 2003 in CA-G.R. CV No. 56345 is AFFIRMED.
No pronouncement as to costs.

SO ORDERED.
GMA vs. ABS-CBN, G.R. No. 160703, September 23, 2005

GMA NETWORK, INC., G.R. NO. 160703

Petitioner,

'Present:

Davide, Jr., C.J . (Chairman),

- versus - Quisumbing,

Ynares-Santiago,

Carpio, and

Azcuna, JJ.

ABS-CBN BROADCASTING

CORPORATION, CENTRAL

CATV, INC., PILIPINO CABLE Promulgated:

CORPORATION and PHILIPPINE

HOME CABLE HOLDINGS, INC.,

Respondents. September 23, 2005

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

DECISION

YNARES-SANTIAGO, J .:

 
 

Petitioner GMA Network, Inc. (GMA') filed on May 6, 2003 before the Regional Trial
Court of Quezon City a complaint for damages [1] against respondents ABS-CBN
Broadcasting Corporation (ABS-CBN'), Central CATV, Inc. (SkyCable'), Philippine
Home Cable Holdings, Inc. (Home Cable') and Pilipino Cable Corporation (Sun Cable'),
which was raffled to Branch 97 [2] and docketed as Civil Case No. Q03-49500.

In its complaint, GMA alleged that respondents engaged in unfair competition when the
cable companies arbitrarily re-channeled petitioner's cable television broadcast
on February 1, 2003, in order to arrest and destroy its upswing performance in the
television industry.

GMA argued that respondents were able to perpetrate such unfair business practice
through a common ownership and interlocking businesses. SkyCable and Sun Cable
are wholly-owned subsidiaries of Sky Vision Corporation (Sky Vision') which is allegedly
controlled by Lopez, Inc. On the other hand, Home Cable is a wholly-owned subsidiary
of Unilink Communications Corporation (Unilink'), which is owned by Mediaquest
Holdings, Inc., a company controlled by the Pension Trust Fund of the PLDT Employees
(PLDT Group').

Pursuant to a Master Consolidation Agreement, the ownership, rights and interests in

Sky Vision and Unilink were purportedly placed under a holding company known as
'Beyond Cable', 66.5 % of which is owned by the Benpres Group, composed of Lopez
Inc., Benpres Holdings and ABS-CBN, while 33.5% thereof is owned by the PLDT
Group. As a result of this business combination, respondents have cornered at least
71% of the total cable television market in Mega Manila. They are thus able to dictate
the signal transmission, channel position, and the airing of shows, programs, and
broadcast of non-cable companies like ABS-CBN and GMA, which the law requires
them to carry.

GMA alleged that the re-channeling of its cable television broadcast resulted in damage
to its business operations, thus:

...
 
17. Following their arbitrary act of re-channeling the cable position of
plaintiff GMA from 'Channel 12 to 'Channel 14', the defendants SkyCable
and Pilipino Cable (or 'Sun Cable') deliberately failed to transmit the signal
of plaintiff GMA to their channels in clear audio transmission resulting in
noticeable dropouts and spillover of extraneous sound and in clear visual
transmission resulting in distorted and/or degraded visual presentation;
18. Soon thereafter, numerous complaints of distortions, degradations and
disorders of GMA's shows on the cable channels were received by plaintiff
GMA from subscribers of the defendant cable companies 'SkyCable',
'Home Cable and 'Sun Cable', such as 'snowy reception', 'no signal', and
'no audio. These complaints escalated to alarming proportions when
plaintiff GMA made public the audio and visual distortions of its TV shows
on the cable channels;
 
19. The audio disorder and the visual distortion and/or degradation of
plaintiff GMA's signal transmission happened mostly during the showing of
plaintiff GMA's top rating programs;
19.1. These distortions did not occur in the cable TV shows
of defendant ABS-CBN on the channels of the co-defendant
cable companies;
 
20. It is a matter of common knowledge, and defendants are fully aware,
that the quality of signal and audio transmission and established channel
position in cable TV of a non-cable television network, like plaintiff GMA,
are crucial factors in arriving at the ratings of the network and its programs
and which ratings are, in turn, determinative of the business judgment of
commercial advertisers, producers and blocktimers to sign broadcast
contracts with the network, which contracts are the lifeblood of TV
networks and stations like plaintiff GMA;
 
20.1. Defendants are also aware that 50% of so-called
'people meter which is a device used by the ratings suppliers
(AGB Philippines and AC Nielsen) to determine the ratings
and audience shares of TV programs are placed in cable TV.
 
20.2. These unjust, high-handed and unlawful acts of the
defendants adversely affected the viewership, quality of the
 programs, and ratings of plaintiff GMA for which defendants
are liable;
 
...
 
22. As a result of defendants' acts of unfair competition, corporate
combinations and manipulations as well as unjust, oppressive, high-
handed and unlawful business practices, plaintiff suffered business
interruptions and injury in its operations for which it should be
compensated in the amount of P10Million by way of actual and
compensatory damages[.] [3]
 

On July 15, 2003, SkyCable and Sun Cable moved for dismissal of the complaint on the
grounds of litis pendentia and forum-shopping since there was a similar case pending
before the National Telecommunications Commission (NTC) entitled 'GMA Network,
Inc. v. Central CATV, Inc., Philippine Home Cable Holdings, Inc., and Pilipino Cable
Corporation. The case, docketed as NTC ADM Case No. 2003-085, allegedly involved
the same cause of action and the same parties, except for ABS-CBN. SkyCable and
Sun Cable also asserted that it is the NTC that has primary jurisdiction over the issues
raised in the complaint. Moreover, GMA had no cause of action against the two entities
and failed to exhaust administrative remedies. [4]

On July 17, 2003, Home Cable filed an Answer with Compulsory

Counterclaims [5] pleading, as affirmative defenses, the same matters alleged in the
motion to dismiss of SkyCable and Sun Cable. ABS-CBN also filed an Answer with
Compulsory Counterclaims [6] contending that GMA had no cause of action against it
and that the complaint failed to state any.

GMA opposed the motion to dismiss [7] and filed a Reply to the answer of Home
Cable [8] and ABS-CBN. [9] A preliminary hearing was held on the motion to dismiss as
well as the affirmative defenses.

 
In due course, the trial court issued the assailed resolution [10] dismissing the
complaint. The trial court held that the resolution of the legal issues raised in the
complaint required the determination of highly technical, factual issues over which the
NTC had primary jurisdiction. Additionally, it held that GMA had no cause of action
against ABS-CBN because:

... It is evident that plaintiff's cause of action is against the cable

companies and not against ABS-CBN since it does not establish that
defendant ABS-CBN had a hand in the re-channeling of plaintiff's cable
transmission because essentially defendant ABS-CBN is similarly situated
as plaintiff. The mere fact that the people behind ABS-CBN is allegedly
the same people who are at the helm of these cable companies, and thus
were 'engaged in unfair competition and/or unfair trade practices' is a
conclusion of law and does not satisfy the requirement that the plaintiff
state 'ultimate facts' in asserting its cause of action. ' [11]

Hence, this petition filed by GMA under Section 2(c), Rule 41 in relation to Rule 45 of
the Rules of Court, asserting that:

A
 
THE TRIAL COURT ERRED IN RULING THAT THE NTC HAS PRIMARY
JURISDICTION OVER PETITIONER'S COMPLAINT FOR DAMAGES
AND IN DISMISSING THE CASE FOR LACK OF JURISDICTION.
 
B
 
THE TRIAL COURT ERRED IN RULING THAT PETITIONER'S
COMPLAINT STATES NO CAUSE OF ACTION AGAINST
RESPONDENT ABS-CBN. [12]

GMA asserts that the resolution of the issues raised in the complaint does not entail
highly technical matters requiring the expertise of the NTC. Petitioner insists that the
subject matter of the complaint merely involves respondents' wrongful acts of unfair
competition and/or unfair trade practices resulting to damages, jurisdiction over which
lies with the regular courts and not the NTC.

We disagree.

GMA's complaint for damages is based on the alleged arbitrary re-channeling of its
broadcast over the cable companies' television systems, thereby resulting in the
distortion and degradation of its video and audio signals. The re-channeling was
allegedly made possible through the common ownership and interlocking businesses of
respondent corporations and was designed to thwart petitioner's upswing performance
in the television ratings game. In other words, the wrongful acts complained of and upon
which the damages prayed for are based, have to do with the operations and ownership
of the cable companies. These factual matters undoubtedly pertain to the NTC and not
the regular courts.

That the matters complained of by GMA are within the NTC's exclusive domain can be
discerned from the statutes governing the broadcasting and cable television industry.
Section 15 of Executive Order No. 546, [13] by which the NTC was created, provides for
its general functions as follows:

 
a. Issue Certificate of Public Convenience for the operation of
communications utilities and services, radio communications systems,
wire or wireless telephone or telegraph system, radio and television
broadcasting system and other similar public utilities;
b. Establish, prescribe and regulate areas of operation of particular
operators of public service communications; and determine and prescribe
charges or rates pertinent to the operation of such public utility facilities
and services except in cases where charges or rates are established by
international bodies or associations of which the Philippines is a
participating member or by bodies recognized by the Philippine
Government as the proper arbiter of such charges or rates;
 
...
 
g. Promulgate such rules and regulations, as public safety and interest
may require, to encourage a larger and more effective use of
communications, radio and television broadcasting facilities, and to
 maintain effective competition among private entities in these activities
whenever the Commission finds it reasonably feasible[.]

In 1987, Executive Order No. 205 [14] was issued which empowers the NTC to grant
certificates of authority for the operation of cable antenna television system subject to
the limitation that the authority to operate shall not infringe on the television and
broadcast markets. Executive Order No. 436 [15] issued in 1997, specifically vests the
NTC with the sole power of regulation and supervision over the cable television
industry.

In Batangas CATV, Inc. v. Court of Appeals, [16] we held that the NTC's regulatory
power over the broadcasting and cable television industry extends to matters which are
peculiarly within its competence. These include the: (1) determination of rates, (2)
issuance of certificates of authority, (3) establishment of areas of operation, (4)
examination and assessment of the legal, technical and financial qualifications of
applicant operators, (5) granting of permits for the use of frequencies, (6) regulation of
ownership and operation, (7) adjudication of issues arising from its functions, and (8)
other similar matters. [17] With respect to the foregoing, therefore, the NTC exercises
exclusive, original and primary jurisdiction to the exclusion of the regular courts.

In the case at bar, before the trial court can resolve the issue of whether GMA is entitled
to an award of damages, it would have to initially ascertain whether there was arbitrary
re-channeling which distorted and downgraded GMA's signal. The ascertainment of
these facts, which relate to the operations of the cable companies, would require the
application of technical standards imposed by the NTC as well as determination of
signal quality 'within the limitations imposed by the technical state of the art. [18] These
factual questions would necessarily entail specialized knowledge in the fields of
communications technology and engineering which the courts do not possess. It is the
NTC which has the expertise and skills to deal with such matters.

The regulation of ownership of television and cable television companies is likewise

within the exclusive concern of the NTC, pursuant to its broader regulatory power of
ensuring and promoting a 'larger and more effective use of communications, radio and
television broadcasting facilities' in order that the public interest may well be served.
The NTC is mandated to maintain effective competition among private entities engaged
in the operation of public service communications. It is also the agency tasked to grant
certificates of authority to cable television operators, provided that the same 'does not
infringe on the television and broadcast markets.

 
As such, GMA's allegations of unlawful business combination and unjust business
practices also properly pertain to the NTC. It is in the best position to judge matters
relating to the broadcasting industry as it is presumed to have an unparalleled
understanding of its market and commercial conditions. Moreover, it is the NTC that has
the information, statistics and data peculiar to the television broadcasting industry. It is
thus the body that is ideally suited to act on petitioner's allegations of market control and
manipulation.

In Industrial Enterprises, Inc. v. Court of Appeals, [19] the Court held that:

 
It may occur that the Court has jurisdiction to take cognizance of a
particular case, which means that the matter involved is also judicial in
character. However, if the case is such that its determination requires the
expertise, specialized skills and knowledge of the proper administrative
bodies because technical matters or intricate questions of facts are
involved, then relief must first be obtained in an administrative proceeding
before a remedy will be supplied by the courts even though the matter is
within the proper jurisdiction of a court. This is the doctrine of primary
jurisdiction. It applies 'where a claim is originally cognizable in the courts,
and comes into play whenever enforcement of the claim requires the
resolution of issues which, under a regulatory scheme, have been placed
within the special competence of an administrative body; in such case the
judicial process is suspended pending referral of such issues to the
administrative body for its view[.] [20]

Consequently, while it is true that the regular courts are possessed of general
jurisdiction over actions for damages, it would nonetheless be proper for the courts to
yield its jurisdiction in favor of an administrative body when the determination of
underlying factual issues requires the special competence or knowledge of the latter. In
this era of clogged court dockets, administrative boards or commissions with special
knowledge, experience and capability to promptly hear and determine disputes on
technical matters or intricate questions of facts, subject to judicial review in case of
grave abuse of discretion, are well nigh indispensable. Between the power lodged in an
administrative body and a court, therefore, the unmistakable trend is to refer it to the
former. [21]

In this regard, we note that there is a pending case before the NTC in which the factual
issues raised in petitioner's complaint have also been pleaded. Although petitioner
prays in the NTC case for the administrative remedy of cancellation of the cable
companies' certificates of authority, licenses and permits, it is inevitable that, in granting
or denying this prayer, the NTC would have to pass upon the same factual issues posed
in petitioner's complaint before the trial court. The latter was thus correct in applying the
doctrine of primary jurisdiction if only to avoid conflicting factual findings between the
court and the NTC.

Finally, the complaint failed to state a cause of action against ABS-CBN and the other
respondents, considering that the ultimate facts upon which the complaint for damages
depends fall within the technical competence of an administrative body. Otherwise
stated, pending determination by the NTC of the factual questions involved in the case,
petitioner's complaint, which is founded upon such factual issues, would be premature.

WHEREFORE, the petition is DENIED. The assailed resolution dated October 30,

2003 of the Regional Trial Court of Quezon City, Branch 97, is AFFIRMED.

SO ORDERED.
Abad, et al. v. RTC of Manila, et al., G.R. No. L-65505, October 12, 1987
[G.R. No. L-65505. October 12, 1987.]

GABRIEL ABAD, PIO AGANON, MARIO ALARCIO, JOSE AQUINO, CESAR

ATANACIO, LEONARDO AURELIO, SOTERO BERNARDO, AURELIO CABRAL,
JESUS CARREON, ABELARDO CARILLO, ET AL., Petitioners, v. REGIONAL
TRIAL COURT OF MANILA, BRANCH LII — HON. DAVID G. NITAFAN and THE
PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY, INC., Respondents.

DECISION

PARAS, J.:

The instant petition for Certiorari originated from a complaint by the petitioner filed on

August 18, 1978 against respondent Philippines American General Insurance
Company, Inc. (PHILAMGEN, for brevity) for the enforcement of contract and recovery
of loss of money basically praying for, among other things, payment of the money value
of the respective accumulated sick leave with pay of the separated employees of
respondent company either thru retirement, retrenchment or resignation. Instead of filing
an answer thereto, PHILAMGEN moved to dismiss the complaint, which the trial court
granted in its order 1 dated February 16, 1979. After a denial of their motion to
reconsider the aforesaid order by the trial court on May 2, 1979, petitioners filed before
Us a petition for Certiorari, docketed as G.R. No. 50563. A decision 2 was rendered by
this Court promulgated on October 30, 1981, the decretal portion of which
reads:jgc:chanrobles.com.ph

"WHEREFORE, the orders of the respondent court, dated February 16, 1979 and May
2, 1979, are hereby set aside, the dismissed complaint is reinstated; and said court is
directed to conduct further proceedings for the disposition of Civil Case No. 117708. No
costs.

"SO ORDERED."cralaw virtua1aw library

The case was remanded to the trial court for further proceedings. Unfortunately fire
destroyed the sala wherein the entire records of Civil Case No. 117708 were kept.
However, the records of the case were reconstituted on January 21, 1982 and the case
was renumbered as Civil Case No. 82-1324. Thereafter, respondent Philamgen filed sit
Answer to the complaint. On January, 1983, judicial reorganization took place by the
passage of Executive Order No. 864 and the case at bar was re-raffled to respondent
Regional Trial Court of Manila, which was presided over by Judge David G. Nitafan.
Respondent court motu proprio dismissed the complaint in Civil Case No. 82-1324
declaring that it lacked jurisdiction over the subject matter, being money claims arising
from employer-employee relations. Motion for reconsideration filed by petitioner was
denied by respondent judge. Hence, this petition for certiorari with the
following:jgc:chanrobles.com.ph

"ASSIGNMENTS OF ERROR

"FIRST ASSIGNMENT OF ERROR

"Respondent Court erred in reversing motu proprio this Honorable Supreme Court’s
decision in G.R. No. L-50563 by dismissing once again petitioners’ action on the
erroneous ground of lack jurisdiction.

"SECOND ASSIGNMENT OF ERROR

"Respondent Court in holding itself a different court from the Court of First Instance
whose cases were merely taken over by Respondent Court." (p. 25, Rollo)

By way of reference the entire record and decision of this Court in G.R. No. L-50563
(108 SCRA 717) were incorporated by petitioners in their petition.

The pertinent portion of the assailed decision of the lower court reads as
follows:jgc:chanrobles.com.ph

"Even before receiving the views of the parties, however, this Court has decided to
proceed with and resolve the issue of jurisdiction motu proprio, for the same is so basic
as to affect the validity and propriety of any and all proceedings in this case.

"1. It is the perception of this Court that the jurisdictional issue decided and settled in
G.R. No. 50563 cannot be considered as the law of the case insofar as this proceeding
now pends before this Court. What was there put to rest was the jurisdiction of the Court
of First Instance.

"Section 1 of Executive Order No. 864 provides that the Courts of First Instance shall be
deemed automatically abolished upon the constitution and organization of the courts
provided in Batas Pambansa Blg. 129 as of 12:00 o’clock midnight of January 17, 1983,
which re-echoes a sentence in Section 44 of said Act.

"With the abolition of the Court of First Instance — which was held in G.R. No. 50563 as
having jurisdiction over the case, the jurisdiction of said court was abolished with it. This
is supported by the repeal of Rep. Act No. 296 (defining the jurisdiction of, among
others, the Courts of First Instance) by Section 47 of B.P. Blg. 129, and which law (B.P.
Blg. 129) in turn defines the jurisdiction of the Regional Trial Courts in its Sections 19,
20, 21 and 22.

"2. The postulate that once jurisdiction is acquired by a court, the same lasts until the
termination of the case, notwithstanding changes in the law on jurisdiction, does not
apply to this case because it was the court itself which acquired initial jurisdiction that
was abolished so that there is no more court to continue exercising such initially
acquired jurisdiction.

"3. Jurisdiction of this Court (the reorganized Regional Trial Court) must be tested by
the laws in force at the time the reorganization took place, and when this case re-raffled,
not at the time of the commencement of the action because the courts then existing
were all abolished upon is the reorganization.

"What were the relevant laws on jurisdiction in force at the time of declaration of judicial
reorganization?

"Of course, insofar as the reorganized courts vested with general jurisdiction, Batas
Pambansa Blg. 129 was and still the controlling law. When it comes to labor-related
actions, however, such as the one at bar, initial jurisdiction is vested on ‘administrative
machiner(ies)’ provided ‘for the expeditious settlement of labor or industrial disputes’
(Sec Art. 211, P.D. 442, which are the National Labor Relations Commissions and the
Labor Arbiters, the jurisdiction of the latter of which are defined as follows:chanrob1es
virtual 1aw library

‘Art. 217. Jurisdiction of Labor Arbiters and the Commission. — (a) The Labor Arbiters
shall have the original and exclusive jurisdiction to hear and decide within thirty (30)
working days after submission of the case by the parties for decision, the following
cases involving all workers, whether agricultural or non-agricultural:chanrob1es virtual
1aw library

‘1. Unfair labor practice cases;

‘2. Those that workers may file involving wages, hours of work and other terms and
conditions of employment;

‘3. All money claims of workers, including those based on non-payment or

underpayment of wages, overtime compensation, separation pay and other benefits
provided by law or appropriate agreement. Except claims for employees compensation,
social security, medicare and maternity benefits.

‘4. Cases involving household services; and

‘5. Cases arising from any violation of article 265 of this Code, including questions
involving the legality of strikes and lockouts.’

(This article of the Labor Code was originally Article 216 of PD 442, but subsequently
renumbered to Art. 217, amended by PD 1367 which took effect 1 May 1978, further
amended by PD 1691 which took effect 1 May 1980, then further amended by BP Blg.
130 which took effect on 21 August 1981 and finally amended by BP Blg. 227 which
took effect on 1 June 1982; Emphasis supplied.)
As last amended by BP Blg. 130 and 227, the above provision was in force on 17
January 1983 when the judicial reorganization took place.

"Note, that BP Blg. 130 was considered by the Batasan Pambansa in the same session
when it enacted BP Blg. 129, the judicial reorganization act, so that there could have
been no doubt in the legislative mind at the time that jurisdiction over labor-related
claims was being initially vested, not to the courts but to administrative machineries.
Besides the underscored portions of the above-quoted provisions of the Labor Code are
clear and comprehensive enough to include that claims embodied in the complaint in
this action. And what is most important is that the administrative jurisdiction vested but
the law upon the Labor Arbiters is ‘original and exclusive.’

"That it was the evident intention of the legislature of divest the courts of general
jurisdiction initial jurisdiction over cases such as that involved in this action is further
corroborated by Art 292,293 and 294 of the labor Code which outline the procedure of
‘prosecuting all money claims accruing’ both during or prior to the effectivity of the
Code.

"More particularly, the second paragraph of Art. 293 of the Labor code provides —

‘Pending the final determination of the merit of money claim filed with the appropriate
entity, no civil action arising from the same cause of action shall be filed with any court. .
. .’

"We are not unmindful of the fact that G.R. No. 50563 was decided by the highest Court
on the basis of the provisions of Article 217 of the Labor Code, as amended by BP
1367, which took effect on 1 May 1978, but as heretofore indicated, subsequent
amendments of the same provision took place. In said decision in G.R. No. 50563,
mention was made of the amendment brought about by PD 1367 having been given
retroactive application. Following this rule of retrospective application, we can not see
any reason why the subsequent amendment to Article 217 of the Labor Code, brought
about by PD 1691 (1 May 1980), BP Blg. 130 (21 August 1981) and BP Blg. 227 (1
June 1982) may not also be applied to this action which was filed on 28 August 1978.

"Neither is this Court unaware of the 10 February 1983 resolution of the Hon. Supreme
Court providing for administrative guidelines in the distribution of cases relative to the
implementation of BP Blg. 129, but said administrative regulation cannot be interpreted
to have the effect of modifying or abrogating substantive provisions of laws on
jurisdiction because by express mandate of the Constitution, the rule making power of
the Supreme Court is limited to procedural rules merely, which may not diminish,
increase or modify substantive laws. (Sec. 5[5], Art. X, Constitution).

"This Court is not also unaware of that portion of Section 44 of BP Blg. 129 providing
that cases pending in the abolished courts shall be transferred to the appropriate courts
created in the Act, but it is evident that the phrase ‘appropriate courts’ must have
reference to those courts whose jurisdiction are clearly defined in other parts of the law,
otherwise a mere transitory provision will serve to negate the primary and avowed
purpose of the judiciary reorganization act. But be that as it may, this provision has
hardly any application here because this case is being referred to an administrative
machinery which has better facilities of adjudicating the claim (MOLE is furnished with
copies of CBA’s) more expeditiously as they are not hamstrung by the strict rules of
procedure and evidence.

"In any event, even if limitations of actions are also provided in the Labor Code (Art. 292
thereof), the pendency of this action before the then Court of First Instance of Manila
may be deemed to have suspended the period of limitations if only to give meaning to
the social justice spirit and orientation of the Labor Code." (pp. 40-44, Rollo).

Based on such findings, the respondent court issued the following dispositive
portions:jgc:chanrobles.com.ph

"WHEREFORE, without prejudice to plaintiff’s pursuing their claims before the

appropriate administrative machineries in the Ministry of Labor & Employment, the
complaint in this case is dismissed. No costs.

"SO ORDERED." (p. 45, Rollo, Emphasis supplied).

Petitioners’ allegations do not deserve merit. One of the important features in the
Judiciary Reorganization effected through B.P. Blg. 129 is the addition of paragraph (6),
Sec. 19, in defining the jurisdiction of Regional Trial Courts (which took the place of the
abolished Courts of First Instance), reading as follows:jgc:chanrobles.com.ph

"In all cases not within the exclusive jurisdiction of any court, tribunal, person or body
exercising judicial or quasi-judicial functions." (Emphasis supplied)

A provision not found in Sec. 44 of the Judiciary Act of 1948. It was the intention of the
legislative body to unclog the courts of cases which may be adjudicated, in the first
instance, by officials or bodies exercising quasi-judicial adjudicatory powers like the
Labor Arbiters or the National Labor Relations Commission a specialized body or
bodies on labor related provisions and are not restricted by the technical rules of
pleading and evidence.

The Regional Trial Courts of today are actually the same courts that functioned as
Courts of First Instance before the Judiciary Reorganization Act (Batas Pambansa
Bilang 129). There might have been a change in the name and in some incidental
features, but essentially, they are the same.

However, whereas before jurisdiction over money claims of laborers and employees
appertained to Courts of First Instance, the same are now to be taken cognizance of by
proper entities in the Department of Labor and Employment.
The rule of adherence of jurisdiction until a cause is finally resolved or adjudicated does
not apply when the change in jurisdiction is curative in character. Thus in the instant
case, there is nothing wrong in holding that Courts of First Instance/Regional Trial
Courts no longer have jurisdiction over aforesaid monetary claims of labor.

WHEREFORE, premises considered, the petition is hereby DENIED and the ruling of
the respondent court is hereby AFFIRMED. Let the parties file the appropriate action
before the proper administrative bodies in the Department of Labor and Employment.

SO ORDERED.