SECOND DIVISION

[ G.R. No. 189127, April 25, 2012 ]

NATIONAL POWER CORPORATION, PETITIONER, VS.
SPOUSES BERNARDO AND MINDALUZ SALUDARES,
RESPONDENTS.
DECISION
SERENO, J.:
This Rule 45 Petition questions the 21 July 2009 Decision of the Court of
Appeals (CA),[1] which affirmed the 10 September 2002 Decision of the
Regional Trial Court (RTC),[2] Branch 31, Tagum City. The RTC had ruled that
respondent spouses are entitled to P4,920,750 as just compensation for the
exercise of the power of eminent domain by petitioner National Power
Corporation (NAPOCOR).
Sometime in the 1970s, NAPOCOR constructed high-tension transmission
lines to implement the Davao-Manat 138 KV Transmission Line Project. [3]
These transmission lines traversed a 12,060-square meter portion of a parcel
of agricultural land covered by Transfer Certificate of Title (TCT) No. T-15343
and owned by Esperanza Pereyras, Marciano Pereyras, Laureano Pereyras
and Mindaluz Pereyras.
In 1981, NAPOCOR commenced expropriation proceedings covering TCT No.
T-15343 in National Power Corporation v. Esperanza Pereyras, Marciano
Pereyras, Laureano Pereyras and Mindaluz Pereyras.[4] These proceedings
culminated in a final Decision ordering it to pay the amount of P300,000 as
just compensation for the affected property.[5]
The trial court issued an Order[6] subrogating Tahanan Realty Development
Corporation to the rights of the defendants in National Power Corporation v.
Pereyras. Pursuant to this Order, NAPOCOR paid the corporation the
judgment award of P300,000[7] and Tahanan Realty Development Corporation
executed a Deed of Absolute Sale in favor of the former.[8] This Deed covered
Lot 481-B, Psd-11012718, which was a portion of Lot 481, Cad. 276 of Barrio
Magugpo, Municipality of Tagum, Davao.[9]
Respondent Spouses Bernardo and Mindaluz Pereyras-Saludares are
registered owners of a 6,561-square-meter parcel of land covered by TCT No.
T-109865,[10] more particularly described as follows:

A parcel of land (Lot 15, Pcs-11-000704, Amd.), being a portion of Lots 481D, Psd-11-012718; 480-B, Psd-51550; H-148559 & 463-A-2 (LRC) Psd150796, situated in the Barrio of Magugpo, Mun. of Tagum, Province of
Davao, Island of Mindanao. x x x[11]
On 19 August 1999, respondents filed the instant Complaint against
NAPOCOR and demanded the payment of just compensation. They alleged
that it had entered and occupied their property by erecting high-tension
transmission lines therein and failed to reasonably compensate them for the
intrusion.[12]
Petitioner averred that it already paid just compensation for the
establishment of the transmission lines by virtue of its compliance with the
final and executory Decision in National Power Corporation v. Pereyras.
Furthermore, assuming that respondent spouses had not yet received
adequate compensation for the intrusion upon their property, NAPOCOR
argued that a claim for just compensation and damages may only be filed
within five years from the date of installation of the transmission lines
pursuant to the provisions of Republic Act (R.A.) No. 6395. [13]
Pretrial terminated without the parties having entered into a compromise
agreement.[14] Thereafter, the court appointed Lydia Gonzales and Wilfredo
Silawan as Commissioners for the purpose of determining the valuation of
the subject land.[15] NAPOCOR recommended Loreto Monteposo as the third
Commissioner,[16] but later clarified that its conformity to the appointment of
commissioners was only for the purpose of determining the exact portion of
the subject land, and that it was not admitting its liability to pay just
compensation.[17]
After the proceedings, the Commissioners recommended the amount of ?750
per square meter as the current and fair market value of the subject property
based on the Schedule of Market Values of Real Properties within the City of
Tagum effective in the year 2000.[18]
Trial on the merits ensued. On 10 September 2002, the Court rendered
judgment in favor of respondent spouses, the dispositive portion of which
reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of
the plaintiffs, and against the defendant-National Power Corporation,
ordering the latter to pay the plaintiffs the Just Compensation as herein fixed
which they claimed for the use, occupation and utilization of their land from
which it benefited and profited since January 1982, as follows:
First: To pay plaintiff Spouses Bernardo and Mindaluz Saludares as just
compensation of their 6,561 square meters, more or less, titled land covered
by TCT No. T-109865 of the Registry of Deeds of Davao del Norte hereby
fixed in the amount of FOUR MILLION NINE HUNDRED TWENTY THOUSAND

SEVEN HUNDRED FIFTY (P4,920,750.00) PESOS, Philippine Currency, plus

interest at the rate of 12% per annum reckoned from January 01, 1982, until
said amount is fully paid, or deposited in Court;
Second: To pay plaintiffs-spouses Bernardo and Mindaluz Saludares
attorneys fees of Fifty Thousand (P50,000.00) Pesos, Philippine Currency,
plus appearance fee of P2,000.00 per appearance and litigation expenses
which shall be supported in a Bill of Costs to be submitted for the Courts
approval;
Third. To pay the costs of the suit.
Fourth. For utter lack of merit, the counterclaim is dismissed.
SO ORDERED.[19]
NAPOCOR appealed the trial courts Decision to the CA.[20] After a review of
the respective parties Briefs, the appellate court rendered the assailed
Decision on 21 July 2009, denying NAPOCORs appeal and affirming the trial
courts Decision, but reducing the rate of interest to 6% per annum. [21]
Aggrieved, petitioner then filed the instant Rule 45 Petition before this Court.
The Issues
The pivotal issues as distilled from the pleadings are as follows:
1. Whether NAPOCOR has previously compensated the spouses for
establishing high-tension transmission lines over their property;
2. Whether the demand for payment of just compensation has already
prescribed;
3. Whether petitioner is liable for only ten percent of the fair market
value of the property or for the full value thereof; and
4. Whether the trial court properly awarded the amount of ?4,920,750
as just compensation, based on the Approved Schedule of Market
Values for Real Property in Tagum City for the Year 2000.
The Courts Ruling
We uphold the Decisions of the CA and the RTC.
I
NAPOCOR failed to prove that it had adequately compensated
respondents for the establishment of high tension transmission lines
over their property

NAPOCOR argues that the parcel of land involved in the instant Petition had
already been expropriated in National Power Corporation v. Pereyras.[22] In
support of this argument, it alleges that one of the sources of the spouses
TCT No. T-109865 is TCT No. 39660; and that TCT No. 39660 is a transfer
from TCT No. T-15343, the subject land in National Power Corporation v.
Pereyras.[23] Thus, having paid just compensation to Tahanan Realty
Development Corporation, the successor-in-interest of defendants Pereyras in
the aforementioned case, petitioner submits that it should no longer be made
to pay just compensation in the present case.
We disagree.
While it is true that respondent spouses TCT No. T-109865 was indeed
indirectly sourced from TCT No. T-15343, the CA correctly ruled that
NAPOCOR failed to prove that the lands involved in National Power
Corporation v. Pereyras and in the instant Petition are identical. One cannot
infer that the subject lands in both cases are the same, based on the fact
that one of the source titles of TCT No. T-109865 happens to be TCT No. T38660, and that TCT No. T-38660 itself was derived from T-15343.
Furthermore, the evidence before us supports respondent spouses
contention that the lands involved in both cases are different. National Power
Corporation v. Pereyras involved Lot 481-B, Psd-11012718, which was a
portion of Lot 481, Cad. 276 of Barrio Magugpo, Municipality of Tagum,
Davao.[24] On the other hand, the instant Petition involves Lot 15, Pcs-11000704, Amd., which is a portion of Lots 481-D, Psd-11-012718; 480-B, Psd51550; H-148559 and 463-A-2 (LRC), Psd-150796, in Barrio Magugpo,
Municipality of Tagum, Davao. Clearly, these lots refer to different parcels of
land.[25]
We rule, therefore, that NAPOCOR failed to prove its previous payment of
just compensation for its expropriation of the land in question.
II
The demand for payment of just compensation
has not prescribed
Petitioner maintains that, in the event respondent spouses have not been
adequately compensated for the entry into their property, their claim for just
compensation would have already prescribed,[26] pursuant to Section 3 (i) of
R.A. No. 6395, as amended by Presidential Decrees Nos. 380, 395, 758, 938,
1360 and 1443. This provision empowers the NAPOCOR to do as follows:
x x x [E]nter upon private property in the lawful performance or prosecution
of its business or purposes, including the construction of the transmission
lines thereon; Provided, that the owner of such private property shall be paid
the just compensation therefor in accordance with the provisions hereinafter

provided; Provided, further, that any action by any person claiming

compensation and/or damages shall be filed within five (5) years
after the right-of-way, transmission lines, substations, plants or
other facilities shall have been established; Provided, finally, that after
the said period no suit shall be brought to question the said right-of-way,
transmission lines, substations, plants or other facilities nor the amounts of
compensation and/or damages involved. (Emphasis supplied.)
NAPOCORs reliance on this provision is misplaced.
The right to recover just compensation is enshrined in no less than our Bill of
Rights, which states in clear and categorical language that [p]rivate
property shall not be taken for public use without just compensation.[27] This
constitutional mandate cannot be defeated by statutory prescription. [28] Thus,
we have ruled that the prescriptive period under Section 3 (i) of R.A. No.
6395 does not extend to an action to recover just compensation. [29] It would
be a confiscatory act on the part of the government to take the property of
respondent spouses for a public purpose and deprive them of their right to
just compensation, solely because they failed to institute inverse
condemnation proceedings within five years from the time the transmission
lines were constructed. To begin with, it was not the duty of respondent
spouses to demand for just compensation. Rather, it was the duty of
NAPOCOR to institute eminent domain proceedings before occupying their
property. In the normal course of events, before the expropriating power
enters a private property, it must first file an action for eminent domain [30]
and deposit with the authorized government depositary an amount
equivalent to the assessed value of the property.[31] Due to its omission,
however, respondents were constrained to file inverse condemnation
proceedings to demand the payment of just compensation before the trial
court. We therefore rule that NAPOCOR cannot invoke the statutory
prescriptive period to defeat respondent spouses constitutional right to just
compensation.
III
NAPOCOR is liable to pay the full market value
of the affected property
NAPOCOR submits that it should pay for only ten percent (10%) of the fair
market value of the landowners property because, under its Charter,[32] it is
only authorized to acquire easements of right-of-way over agricultural lands.
[33]

Petitioners arguments fail to convince.

We have ruled that when petitioner takes private property to construct
transmission lines, it is liable to pay the full market value upon proper
determination by the courts.[34]

In National Power Corporation v. Gutierrez,[35] the petitioner likewise argued

that it should only be made to pay easement fees instead of the full market
value of the land traversed by its transmission lines. In striking down its
argument and ruling that the property owners were entitled to the full
market value of the land in question, we ruled:
x x x While it is true that plaintiff [is] only after a right-of-way easement, it
nevertheless perpetually deprives defendants of their proprietary rights as
manifested by the imposition by the plaintiff upon defendants that below said
transmission lines no plant higher than three (3) meters is allowed.
Furthermore, because of the high-tension current conveyed through said
transmission lines, danger to life and limbs that may be caused beneath said
wires cannot altogether be discounted, and to cap it all, plaintiff only pays
the fee to defendants once, while the latter shall continually pay the taxes
due on said affected portion of their property.[36]
Similarly, in this case, while respondent spouses could still utilize the area
beneath NAPOCORs transmission lines provided that the plants to be
introduced underneath would not exceed three meters, [37] danger is posed to
the lives and limbs of respondents farm workers, such that the property is
no longer suitable for agricultural production.[38] Considering the nature and
effect of the Davao-Manat 138 KV transmission lines, the limitation imposed
by NAPOCOR perpetually deprives respondents of the ordinary use of their
land.
Moreover, we have ruled that Section 3A of R.A. No. 6395, as amended, is
not binding upon this Court.[39] [T]he determination of just compensation in
eminent domain cases is a judicial function and . . . any valuation for just
compensation laid down in the statutes may serve only as a guiding principle
or one of the factors in determining just compensation but it may not
substitute the court's own judgment as to what amount should be awarded
and how to arrive at such amount.[40]
We therefore rule that NAPOCOR is liable to pay respondents the full market
value of the affected property as determined by the court a quo.
IV
The trial court did not err in awarding just compensation based on
the Approved Schedule of Market Values for Real Property for the
Year 2000
As its final argument, petitioner contends that the amount of just
compensation fixed by the trial court is unjust, unlawful and contrary to
existing jurisprudence, because just compensation in expropriation cases
must be determined from the time of the filing of the complaint or the time
of taking of the subject property, whichever came first. [41] It therefore posits
that since the taking of the property happened in the 1970s, the trial court
erred in fixing the amount of just compensation with reference to real

property market values in the year 2000.[42]

Petitioners contention holds no water.
We have ruled in National Power Corporation v. Heirs of Macabangkit
Sangkay[43] that the reckoning value of just compensation is that prevailing at
the time of the filing of the inverse condemnation proceedings for the
following reason:
[c]ompensation that is reckoned on the market value prevailing at the time
either when NPC entered x x x would not be just, for it would compound the
gross unfairness already caused to the owners by NPC's entering without the
intention of formally expropriating the land x x x. NPC's entry denied
elementary due process of law to the owners since then until the
owners commenced the inverse condemnation proceedings. The Court is
more concerned with the necessity to prevent NPC from unjustly profiting
from its deliberate acts of denying due process of law to the owners. As a
measure of simple justice and ordinary fairness to them, therefore, reckoning
just compensation on the value at the time the owners commenced these
inverse condemnation proceedings is entirely warranted.
Indeed, respondent spouses would be deprived of their right to just
compensation if the value of the property is pegged back to its value in the
1970s. To reiterate, NAPOCOR should have instituted eminent domain
proceedings before it occupied respondent spouses property. Because it
failed to comply with this duty, respondent spouses were constrained to file
the instant Complaint for just compensation before the trial court. From the
1970s until the present, they were deprived of just compensation, while
NAPOCOR continuously burdened their property with its transmission lines.
This Court cannot allow petitioner to profit from its failure to comply with the
mandate of the law. We therefore rule that, to adequately compensate
respondent spouses from the decades of burden on their property, NAPOCOR
should be made to pay the value of the property at the time of the filing of
the instant Complaint when respondent spouses made a judicial demand for
just compensation.
WHEREFORE, premises considered, the instant Petition for Review is
DENIED, and the Decision of the Court of Appeals in CA-G.R. CV No. 81098
dated 21 July 2009 is AFFIRMED.
SO ORDERED.

SECOND DIVISION

[ G.R. No. 177611, April 18, 2012 ]

REPUBLIC OF THE PHILIPPINES (UNIVERSITY OF THE
PHILIPPINES), PETITIONER, VS. RODOLFO L. LEGASPI,
SR., QUEROBIN L. LEGASPI, OFELIA LEGASPI-MUELA,
PURISIMA LEGASPI VDA. DE MONDEJAR, VICENTE
LEGASPI, RODOLFO LEGASPI II, AND SPOUSES
ROSALINA LIBO-ON AND DOMINADOR LIBO-ON,
RESPONDENTS.
DECISION
PEREZ, J.:
Assailed in this petition for review on certiorari filed pursuant to Rule 45 of
the 1997 Rules of Civil Procedure is the Decision dated 26 April 2007[1]
rendered by the Eighteenth Division of the Court of Appeals (CA) in CA-G.R.
SP No. 85735,[2] denying for lack of merit the Rule 65 petition for certiorari
filed by petitioner Republic of the Philippines, thru the University of the
Philippines in the Visayas (UPV), for the nullification of the orders dated 17
November 2003[3] and 31 May 2004[4] issued by the Hon. Roger B. Patricio,
Presiding Judge of Branch 38 of the Regional Trial Court (RTC) of Iloilo City,
in the expropriation case docketed thereat as Civil Case No. 19921.
The Facts
In December 1978, respondent Rosalina Libo-on (Rosalina) accomplished a
letter of intent signifying her willingness to sell to UPV Lot No. 1 of Psu193912 Amd., the 40,133-square meter property situated at Miag-ao, Iloilo
registered in her name under Original Certificate of Title (OCT) No. F-20020
of the Iloilo provincial registry.[5] Forthwith, a Deed of Definite Sale was
executed by the parties whereby Rosalina, with the conformity of her then
tenant, Vicente Libo-on, sold the subject parcel in favor of UPV for the stated
consideration of P56,479.50.[6] As a consequence, UPV immediately took
possession of the property and, in line with its educational development plan,
started building thereon road networks, infrastructure and school facilities.
The record shows that further use and development of the property was
subsequently taken up at the 1093rd meeting of the UP Board of Regents
held in Quezon City on 15 December 1995.[7]
On 4 January 1980, however, Rosalina wrote a letter, informing UPV that she
was rescinding the sale of the subject parcel on the ground that she was no
longer the owner of the property in view of her 5 September 1978
conveyance thereof by way of barter or exchange in favor of respondents

Rodolfo Legaspi, Sr., Querobin Legaspi,[8] Ofelia Legaspi-Muela, Purisima

Legaspi Vda. De Mondejar, Vicente Legaspi, Rodolfo Legaspi II and the
Spouses Rosalina and Dominador Libo-on, among others. UPV subsequently
learned that Lot 1 was subdivided into ten lots denominated and later
registered in the names of respondents[9] in the following wise:
Lot No.
21609-A

Area (Sqm.)
9,078

TCT No.
8192

21609-B
21609-C
21609-D

2,648
4,374
16,286

8193
8194
8195

21609-E
21609-F
21609-G
21609-H
21609-I

1,494
1,250
1,251
1,250
1,251

8196
8197
8198
8199
8200

21609-J

1,251

8201

Registered Owner
Querobin Legaspi, et
al.
Rodolfo Legaspi, Sr.
Rodolfo Legaspi, Sr.
Querobin Legaspi, et
al.
Rodolfo Legaspi, Sr.
Ofelia Legaspi Muela
Rodolfo Legaspi
Querobin Legaspi
Purisima Legaspi Vda.
De Mondejar
Vicente Legaspi

On 8 August 1991, petitioner, thru UPV, filed against respondents the

complaint for eminent domain docketed before the RTC as Civil Case No.
19921. Petitioner alleged, among other matters, that the subject parcel is
within the approved and delineated campus of the UPV which had wellestablished its presence in the area by building its laboratories, classrooms,
faculty and student centers, among other facilities; and, that it had been
constrained to resort to expropriation in view of the failure of its efforts to
negotiate with respondents for the retention of the property on which it
constructed considerable improvements already being used for academic
purposes. Maintaining that the fair market value of the property at the time
of its entry was P49,298.00, UPV sought confirmation of its right of
condemnation as well as the fixing of the just compensation for the property.
[10]

On 2 September 1991, the RTC issued an order granting petitioners motion

to allow UPV to continue its possession of the subject parcel upon deposit
with the Iloilo Provincial Treasurer of the sum of P50,070.00, representing
the provisional valuation of the property.[11] In their answer dated 16
December 1991, however, respondents averred that petitioners right of
expropriation should only be limited to the three lots covered by Transfer
Certificate of Title (TCT) Nos. T-8193, 8194 and 8196, [12] containing an
aggregate area of 8,516 square meters. Finding no opposition to petitioners
motion for a declaration on its right to expropriate the same, the RTC issued
an order of condemnation dated 1 April 1992,[13] upholding UPVs right to
expropriate said three parcels which had been denominated as Lot Nos.
21609-B, 21609-C and 21609-E, to wit:

WHEREFORE, an ORDER OF CONDEMNATION is hereby entered covering the

above-mentioned parcels of land, [petitioner] having a lawful right to take
the properties sought to be condemned, for the public use or purpose
described in the complaint, upon payment of just compensation to be
determined by three (3) Commissioners who shall ascertain and report to the
court the just compensation for the properties sought to be taken.
Appointment of the three (3) Commissioners is hereby held in abeyance to
give the court sufficient time to select the three (3) competent and
disinterested persons as Commissioners provided for under Section 5 of Rule
67 of the Revised Rules of Court.
Notify Counsels.
Considering that the foregoing condemnation order covered only three (3) of
the ten (10) lots comprising the subject property, petitioner moved for the
continuation of the condemnation proceedings insofar as the remaining seven
lots were concerned.[14] On 10 November 1994, petitioner also filed an
amended complaint, impleading as additional defendants the Rural Bank of
Miag-ao (Iloilo), Inc. (RBMI), the Philippine National Bank (PNB) and the
Iloilo Finance Corporation (IFC), in view of the mortgages constituted in their
favor by respondents over some of the lots into which the Lot 1 had been
subdivided.[15] Claiming to have relied on the certificates of title presented to
them by the mortgagors, however, RBMI, PNB and IFC filed their individual
answers maintaining that the said mortgages were entered into for value and
in good faith.[16] The issues thus joined and the pre-trial conference
subsequently terminated, the RTC went on to issue the 7 July 1997 pre-trial
order summarizing the parties admissions, their respective positions as well
as the issues to be tried in the case.[17]
On 13 April 1998, the Office of the UPV Chancellor sent respondent Rodolfo
Legaspi a letter, protesting against the latters occupation of a portion of the
property in litigation.[18] Calling the RTCs attention to its 2 September 1991
Order which allowed UPVs continued possession of the property, petitioner
also filed its 7 July 1998 manifestation and motion praying for the grant of a
writ of possession over the entirety of Lot 1.[19] Without resolving the motion,
however, the RTC went on to issue the 16 June 2000 order,[20] fixing the just
compensation for Lot Nos. 21609-B, 21609-C and 21609-E, based on the
evidence adduced by the parties and the report submitted by the
commissioners, to wit:
WHEREFORE, in view of all the foregoing, order is hereby issued fixing the
just compensation of subject Lots Nos. 21609-B, 21609-C and 21609-E
covering a total area of 8,516 sq. meters, as fifty one thousand ninety six
pesos (P51,096.00) at the rate of six pesos (P6.00) per sq. meter.
Accordingly, the [petitioner] is hereby ordered to pay [respondents] Judge
Rodolfo L. Legaspi, et al fifty one thousand ninety six pesos (P51,096.00) for
the total just compensation of the three (3) aforementioned subject lots.

This amount includes the amount of fifty thousand seventy pesos

(P50,070.00) deposited by the [petitioner] in the Office of the Provincial
Treasurer of Iloilo.
There being no evidence presented by the parties to support their respective
claims for damages, none is herein awarded.[21]
On 17 November 2003, the RTC further issued the herein assailed
condemnation order of the same date, upholding petitioners authority to
expropriate the remaining seven lots comprising the property, namely, Lot
Nos. 21609-A, 21609-D, 21609-F, 21609-G, 21609-H, 21609-I and 21609J. Excluding therefrom the area occupied by the Villa Marina Beach Resort
which respondent Rodolfo Legaspi, Sr. operated in the premises,[22] the RTC
ruled as follows:
WHEREFORE, an Order of Condemnation is hereby entered allowing the
[petitioner] to expropriate for public use the remaining seven (7) subject Lot
Nos. 21609-A, 21609-D, 21609-F, 21609-G, 21609-H, 21609-I and 21609-J
all situated in Barangay Sapa, Miag-ao, Iloilo, except such area therein as is
occupied by the Villa Marina Beach resort and which [respondent] Rodolfo L.
Legaspi, Sr. has been operating a business.
In properly fixing the just compensation to be paid to the [respondents]
Legaspis over the aforesaid 7 lots, the Provincial Treasurer, the Provincial
Assessor and the Provincial Engineer, all of the Province of Iloilo, are hereby
appointed as commissioners to assist the Court in the fixing the just
compensation of the subject lots. Before these commissioners so appointed
discharge their respective duties, they may take their oath to faithfully
perform their duties as such commissioners and their oaths shall be filed
before this Court as part of the records of the proceedings in this case.
The commissioners who are hereby appointed are requested to make known
their acceptance within ten (10) days from receipt of this order.
On 19 December 2003, petitioner[23] and UPV[24] filed motions for
reconsideration of the foregoing order on the ground that the exclusion of the
Villa Marina Beach Resort area from the condemned lots is bereft of legal
basis and contrary to the evidence presented in the case which showed that
the same is an integral part of the UPVs developmental plan for research and
educational use. On 22 December 2003, respondents also filed their
manifestation and partial motion for reconsideration of the same order
alleging, among other matters, that Lot Nos. 21609-F, 21609-G, 21609-H,
21609-I and 21609-J comprise the area occupied by Villa Marina Beach
Resort; that Lot No. 21609-A is the area where respondent Rodolfo Legaspi,
Sr. operates a business called Omps Corner; that UPV has no intended use
for Lot No. 21609-D which is being used for residential purposes by
respondent Vicente Legaspi; and, that the foregoing lots, together with the
portion of Lot No. 1 of Psu-193912 Amd. utilized by the Municipality of Miag-

ao as a public cemetery should be excluded from petitioners exercise of its

right of expropriation.[25] Finding that the exclusion of the aforesaid lots
would not defeat UPVs plan for its campus, the RTC issued the order dated
31 May 2004,[26] the decretal portion of which states as follows:
WHEREFORE, finding the [petitioners] Motion for Reconsideration dated
December 19, 2003 without merit, the same is denied. The Manifestation
and Partial Motion for Reconsideration dated December 19, 2003 of
[respondents] Legaspis being meritorious is, thus, granted and the Order
dated November 17, 2003 of this Court is partially reconsidered and
judgment is hereby entered denying the expropriation of subject Lots Nos.
21609-A, 21609-D, 21609-F, 21609-G, 21609-H, 21609-I and 21609-J.
As a consequence hereof, the order of this Court appointing as
Commissioners the Provincial Treasurer, the Provincial Assessor and the
Provincial Engineer, all of the Province of Iloilo is likewise reconsidered and
set aside.
Let copies of this Order be furnished the Office of the Solicitor General, Atty.
Cornelio Salinas, Atty. Rodolfo Legaspi, Sr., Atty. Legaspi II, Atty. Alejandro
Somo, the Provincial Treasurer, the Provincial Assessor and the Provincial
Engineer, all of the Province of Iloilo.
No pronouncement as to costs.[27]
Aggrieved, petitioner filed on 16 August 2004 the Rule 65 petition for
certiorari and mandamus docketed before the CA as CA-G.R. SP No. 85735,
assailing the RTCs order dated 31 May 2004 on the ground that grave abuse
of discretion attended the denial of the expropriation of the subject lots after
the right to expropriate the same was earlier upheld in the likewise assailed
order dated 17 November 2003.[28] On 26 April 2007, the CAs then
Eighteenth Division rendered the herein assailed decision denying the petition
on the ground that, under Rule 67 of the 1997 Rules of Civil Procedure, the
proper remedy from said assailed orders was an ordinary appeal which, once
lost, cannot be substituted by a Rule 65 petition for certiorari and
mandamus. Even if petitioners choice of remedy were, moreover, to be
considered proper under the circumstances, the CA ruled that the RTCs
issuance of said assailed orders was well within its power and duty to review,
amend or reverse its findings and conclusions if it deems it necessary for the
administration of justice within the scope of its jurisdiction. [29] Without
moving for a reconsideration of the foregoing decision, petitioner filed the
petition at bench on 25 June 2007.
The Issue
Petitioner urges the nullification of the CAs assailed 26 April 2007 Decision
on the following ground:

THE COURT OF APPEALS ERRED ON A QUESTION OF LAW IN

DENYING THE PETITION FOR CERTIORARI AND AFFIRMING THE
ORDER DATED MAY 31, 2004 OF BRANCH 38 OF THE REGIONAL
TRIAL COURT OF ILOILO CITY WHICH DID NOT STATE THE FACTS
AND THE LAW ON WHICH IT IS BASED.[30]
The Courts Ruling
We find the petition impressed with merit.
Expropriation or the exercise of the power of eminent domain is the inherent
right of the state and of those entities to which the power has been lawfully
delegated to condemn private property to public use upon payment of just
compensation.[31] Governed by Rule 67 of the Rules of Court, the
proceedings therefor consist of two (2) stages: (a) the condemnation of the
property after it is determined that its acquisition will be for a public purpose
or public use; and, (b) the determination of just compensation to be paid for
the taking of private property to be made by the court with the assistance of
not more than three commissioners. [32] The nature of these two stages was
discussed in the following wise in the case of Municipality of Bian vs. Judge
Garcia,[33] to wit:
1. There are two (2) stages in every action for expropriation. The first is
concerned with the determination of the authority of the plaintiff to exercise
the power of eminent domain and the propriety of its exercise in the context
of the facts involved in the suit. It ends with an order, if not of dismissal of
the action, "of condemnation declaring that the plaintiff has a lawful right to
take the property sought to be condemned, for the public use or purpose
described in the complaint, upon the payment of just compensation to be
determined as of the date of the filing of the complaint." An order of
dismissal, if this be ordained, would be a final one, of course, since it finally
disposes of the action and leaves nothing more to be done by the Court on
the merits. So, too, would an order of condemnation be a final one, for
thereafter, as the Rules expressly state, in the proceedings before the Trial
Court, "no objection to the exercise of the right of condemnation (or the
propriety thereof) shall be filed or heard.
The second phase of the eminent domain action is concerned with the
determination by the Court of "the just compensation for the property sought
to be taken." This is done by the Court with the assistance of not more than
three (3) commissioners. The order fixing the just compensation on the basis
of the evidence before, and findings of, the commissioners would be final,
too. It would finally dispose of the second stage of the suit, and leave
nothing more to be done by the Court regarding the issue. Obviously, one or
another of the parties may believe the order to be erroneous in its
appreciation of the evidence or findings of fact or otherwise. Obviously, too,
such a dissatisfied party may seek a reversal of the order by taking an appeal
therefrom.

It cannot, therefore, be gainsaid that the outcome of the first phase of

expropriation proceedings be it an order of expropriation or an order of
dismissal finally disposes of the case and is, for said reason, final. The
same is true of the second phase that ends with an order determining the
amount of just compensation[34] which, while essential for the transfer of
ownership in favor of the plaintiff, is but the last stage of the expropriation
proceedings and the outcome of the initial finding by the court that the
plaintiff has a lawful right to take the property sought to be expropriated, for
the public use or purpose described in the complaint. [35] In the same manner
that the order of expropriation may be appealed by any party by filing a
record on appeal, a second and separate appeal may likewise be taken from
the order fixing the just compensation. Indeed, jurisprudence recognizes the
existence of multiple appeals in a complaint for expropriation because of said
two stages in every action for expropriation.[36]
In the case at bench, the RTC split the determination of UPVs right of
expropriation over the ten lots into which Lot No. 1 of Psu-193912 Amd. had
been subdivided. Considering the lack of opposition on the part of
respondents, the RTC issued the order dated 1 April 1996, upholding UPVs
right to expropriate the three (3) lots denominated as Lot Nos. 21609-B,
21609-C and 21609-E, with an aggregate area of 8,516 square meters. [37]
Without any appeal having been perfected therefrom, the RTCs 1 April 1996
order attained finality and left no more question as to the propriety of the
acquisition of said lots for the public purpose alleged in the complaint from
which the instant suit originated. Accordingly, the RTC correctly went on to
issue the order dated 16 June 2000, fixing the just compensation for Lot Nos.
21609-B, 21609-D and 21609-E at P51,096.00, less the P50,070.00 UPV
appears to have already deposited with the Provincial Treasurer of Iloilo. [38]
On the other hand, with respect to Lot Nos. 21609-A, 21609-D, 21609-F,
21609-G, 21609-H, 21609-I and 21609-J, the record shows that the RTC
issued the herein assailed 17 November 2003 order which, while likewise
upholding UPVs right of expropriation over said lots, ordered the exclusion of
the portion occupied by Villa Marina Beach Resort from the 31,617 square
meters comprising said lots.[39] Acting on the motions for reconsideration of
said order filed by petitioner, UPV and respondents, however, the RTC issued
the second assailed 31 May 2004 order, altogether denying said right of
expropriation,[40] upon the following succinct findings and conclusions:
It bears stressing that even before the filing of the original complaint,
[respondent] Rodolfo Legaspi, Sr. was already operating as his business
establishment the Villa Marina Resort and this must be the reason why
[petitioner] had expressly excluded this area from the area it intended to
expropriate, the amended complaint notwithstanding, and must also be the
reason why former UP President Angara wrote a letter (Exh. 10) to defendant
Legaspi, Sr. conveying a happy compromise acceptable to all.

It likewise bears stressing the fact that insofar as Lot No. 21609-A, a portion
thereof has been utilized by defendant Rodolfo Legaspi, Sr.s Omps Corner
and the rest of the said lot has been utilized by the Municipality of Miag-ao,
Iloilo as a public cemetery.
The total area covered by Lots Nos. 21609-A, 21609-D, 21609-F, 21609-G,
21609-H, 21609-I and 21609-J is only 31,617 sq. meters. Based on the
locations of these lots, acquisition by [UPV] would not impair or defeat the
purpose of its campus site. In other words, without including in the
expropriation the Villa Marina Resort, the Omps Corner and the public
cemetery and the residential land where [respondent] Vicente Legaspis
family is residing, [UPVs] operation as a university would not be adversely
affected.
As to the Villa Marina Resort and the Omps Corner these places have been
utilized by defendant Rodolfo Legaspi, Sr. for his business even before the
filing of the instant complaint. As to [respondent] Vicente Legaspis lot,
including this in the expropriation would force his family to go astray as they
have no place where to live.
As to the portion being utilized as public cemetery, this Court believes and so
holds that allowing the plaintiff to expropriate the same would be bordering
to the long cherished and revered customs and tradition of respecting the
dead. x x x[41]
The order of denial of UPVs right to expropriate Lot Nos. 21609-A, 21609-D,
21609-F, 21609-G, 21609-H, 21609-I and 21609-J, is final in nature and not
merely interlocutory. However, instead of perfecting an appeal from said
order which it received on 16 June 2004, [42] petitioner filed on 16 August
2004 the Rule 65 petition for certiorari docketed before the CA as CA-G.R. SP
No. 85735, on the ground that the RTC acted with grave abuse of discretion
in denying the expropriation of the subject lots after its right to expropriate
the same had been earlier determined. Narrow in scope and unflexible in
character,[43] a petition for certiorari is, concededly, intended to correct errors
of jurisdiction or grave abuse of discretion amounting to lack or excess of
jurisdiction[44] and lies only when there is no appeal nor any plain, speedy
and adequate remedy in the ordinary course of law.[45] Hence, the CA denied
the petition filed by petitioner on the principle that certiorari cannot be used
as substitute for an appeal that has been lost. [46]
Although certiorari cannot be generally used as a substitute for a lapsed
appeal, the CA lost sight of the fact, however, that the rule had been relaxed
on a number of occasions, where its rigid application will result in a manifest
failure or miscarriage of justice.[47] This Court has allowed the issuance of a
writ of certiorari despite the availability of appeal where the latter remedy is
not adequate or equally beneficial, speedy and sufficient or there is need to
promptly relieve the aggrieved party from the injurious effects of the acts of
an inferior court or tribunal.[48] In SMI Development Corporation v. Republic

of the Philippines,[49] this Court significantly upheld the CAs grant of the Rule
65 petition for certiorari filed in lieu of an ordinary appeal which was not
considered a speedy and adequate remedy that can sufficiently address the
urgent need of the National Childrens Hospital to expand and extend quality
medical and other health services to indigent patients. Indeed, certiorari and
appeal are not mutually exclusive remedies in certain exceptional cases, such
as when there is grave abuse of discretion or when public welfare so
requires.[50]
Petitioner has more than amply demonstrated that the RTCs issuance of the
assailed orders dated 17 November 2003 and 31 May 2004 was attended
with grave abuse of discretion. In the context of a Rule 65 petition for
certiorari, grave abuse of discretion is meant such capricious and whimsical
exercise of judgment as is equivalent to lack of jurisdiction. [51] It has been
ruled that the abuse of discretion must be so patent and gross as to amount
to an evasion of a positive duty or a virtual refusal to perform a duty
enjoined by law or to act at all in contemplation of law, as where the power is
exercised in an arbitrary and despotic manner by reason of passion or
hostility.[52] To our mind, the grave abuse of discretion imputable against the
RTC was manifest as early in the assailed 17 November 2003 order where,
without giving any rationale therefor, and while it upheld petitioners right of
expropriation over Lot Nos. 21609-A, 21609-D, 21609-F, 21609-G, 21609-H,
21609-I and 21609-J, it excluded the area occupied by the Villa Marina Beach
Resort owned and operated by respondent Rodolfo Legaspi, Sr. No less than
the Constitution mandates that (n)o decision shall be rendered by any court
without expressing therein clearly and distinctly the facts and the law on
which it is based.[53]
Since it is a requirement of due process that the parties to a litigation be
informed of how it was decided, with an explanation of the factual and legal
reasons that led to the conclusions of the court,[54] the rule is settled that a
decision that does not conform to the form and substance required by the
Constitution and the law is void and deemed legally inexistent.[55] In Yao v.
Court of Appeals,[56] this Court ruled as follows:
Faithful adherence to the requirements of Section 14, Article VIII of the
Constitution is indisputably a paramount component of due process and fair
play. It is likewise demanded by the due process clause of the Constitution.
The parties to a litigation should be informed of how it was decided, with an
explanation of the factual and legal reasons that led to the conclusions of the
court. The court cannot simply say that judgment is rendered in favor of X
and against Y and just leave it at that without any justification whatsoever
for its action. The losing party is entitled to know why he lost, so he may
appeal to the higher court, if permitted, should he believe that the decision
should be reversed. A decision that does not clearly and distinctly state the
facts and the law on which it is based leaves the parties in the dark as to how
it was reached and is precisely prejudicial to the losing party, who is unable
to pinpoint the possible errors of the court for review by a higher tribunal.

More than that, the requirement is an assurance to the parties that, in

reaching judgment, the judge did so through the processes of legal
reasoning. It is, thus, a safeguard against the impetuosity of the judge,
preventing him from deciding ipse dixit. Vouchsafed neither the sword nor
the purse by the Constitution but nonetheless vested with the sovereign
prerogative of passing judgment on the life, liberty or property of his
fellowmen, the judge must ultimately depend on the power of reason for
sustained public confidence in the justness of his decision.
Thus the Court has struck down as void, decisions of lower courts and even
of the Court of Appeals whose careless disregard of the constitutional behest
exposed their sometimes cavalier attitude not only to their magisterial
responsibilities but likewise to their avowed fealty to the Constitution.
The RTC compounded its error when, acting on the motions for
reconsideration filed by the parties, it issued the assailed 31 May 2004 Order,
denying petitioners right of expropriation over Lot Nos. 21609-A, 21609-D,
21609-F, 21609-G, 21609-H, 21609-I and 21609-J, on the ground that the
same were already used by respondents for their businesses and/or
residences. Subject to the direct constitutional qualification that private
property shall not be taken for public use without just compensation,[57] the
power of eminent domain is, after all, the ultimate right of the sovereign
power to appropriate any property within its territorial sovereignty for a
public purpose[58] thru a method that partakes the nature of a compulsory
sale.[59] The fact that said lots are being utilized by respondents Legaspis for
their own private purposes is, consequently, not a valid reason to deny
exercise of the right of expropriation, for as long as the taking is for a public
purpose and just compensation is paid.
Our review of the documents attached to the pleadings filed in connection
with the petition before the CA and this Court also failed to yield any basis
for the RTCs pronouncement that UPV excluded the area occupied by the
Villa Marina Resort from its exercise of the right of expropriation. This is
belied by petitioners motion for continuation of the condemnation
proceedings for the seven remaining lots into which Lot No. 1 of Psu-193912
Amd. had been subdivided,[60] UPVs 13 April 1998 letter-protest against
respondent Rodolfo Legaspi, Sr.s occupation of the property,[61] its motion for
the grant of a writ of possession of the entire lot[62] and the motions for
reconsideration of petitioner and UPV filed from the condemnation order
dated 17 November 2003.[63] Considering that the site of the Villa Marina
Resort appears to have already been earmarked for UPVs proposed National
Institute of Marine Biotechnology,[64] the RTC clearly abused its discretion
when it ruled that the exclusion of 31,617 square meters from the original
40,133 sought to be expropriated would not adversely affect UPVs
operations. Granted that no part of the ground of a public cemetery can be
taken for other public uses under a general authority,[65] there is, likewise, no
showing in the record of the location and area of the public cemetery of
Miag-ao in relation to the subject property.

In sum, we find the RTC gravely abused its discretion when, without stating
the factual and legal bases therefor, it issued the assailed 17 November 2003
condemnation order, excluding the area occupied by the Villa Marina Resort
from petitioners exercise of its right of expropriation. The RTC likewise
gravely abused its discretion when, in total disregard of the evidence on
record, it issued the second assailed 31 May 2004 order which reconsidered
its first assailed order and altogether denied petitioners right of
expropriation over Lot Nos. 21609-A, 21609-D, 21609-F, 21609-G, 21609-H,
21609-I and 21609-J.
WHEREFORE, premises considered, the CAs Decision dated 26 April 2007 is
REVERSED and SET ASIDE. In lieu thereof, another is entered NULLYING
the assailed orders dated 17 November 2003 and 31 May 2004 and directing
the Regional Trial Court of Iloilo City, Branch 38 to resolve the case in
compliance with Section 14, Article VIII of the Constitution and in accordance
with the evidence on record.
SO ORDERED.

EN BANC
[ G.R. Nos. 184379-80, April 24, 2012 ]
RODOLFO NOEL LOZADA, JR., VIOLETA LOZADA AND
ARTURO LOZADA, PETITIONERS, VS. PRESIDENT
GLORIA MACAPAGAL ARROYO, EDUARDO ERMITA,
AVELINO RAZON, ANGEL ATUTUBO AND SPO4 ROGER
VALEROSO,* RESPONDENTS.
DECISION
SERENO, J.:
What the Court decides today has nothing to do with the substance or merits
surrounding the aborted deal of the Philippine government with the National
Broadband Network and ZTE Corporation, or any allegation of petitioner
Rodolfo Noel June Lozada, Jr., (Lozada) regarding the same. There is only
one issue that we decide today whether circumstances are adequately
alleged and proven by petitioner Lozada to entitle him to the protection of
the writ of amparo. Before us is a Petition for Review on Certiorari of the
Decision dated 12 September 2008 of the Court of Appeals (CA), dismissing
the Petition for the Issuance of a Writ of Amparo.[1]

Petitioner Lozada was the former President and Chief Executive Officer of the
Philippine Forest Corporation (PFC), a government-owned- and -controlled
corporation under the Department of Environment and Natural Resources
(DENR).[2] Petitioner Violeta Lozada (Violeta) is his wife, while petitioner
Arturo Lozada (Arturo) is his brother.
At the time the Petition for the Writ of Amparo was filed, respondent former
President Gloria Macapagal Arroyo (former President Arroyo) was the
incumbent President of the Philippines. Meanwhile, Eduardo Ermita (ES
Ermita) was then the Executive Secretary; Avelino Razon (Razon), the
Director General of the Philippine National Police (PNP); Angel Atutubo
(Atutubo), the Assistant General Manager for Security and Emergency
Services of the Manila International Airport Authority; and Rodolfo Valeroso
(Valeroso), an agent of the Aviation Security Group (ASG) of the PNP.
Antecedent Facts
The instant Petition stems from the alleged corruption scandal precipitated by
a transaction between the Philippine government, represented by the
National Broadband Network (NBN), and ZTE Corporation (ZTE), a Chinese
manufacturer of telecommunications equipment. [3] Former National Economic
Development Authority (NEDA) Secretary Romulo Neri (Sec. Neri) sought the
services of Lozada as an unofficial consultant in the ZTE-NBN deal.[4] The
latter avers that during the course of his engagement, he discovered several
anomalies in the said transaction involving certain public officials. [5] These
events impelled the Senate of the Philippines Blue Ribbon Committee (Blue
Ribbon Committee) to conduct an investigation thereon,[6] for which it issued
a subpoena directing Lozada to appear and testify on 30 January 2008.[7]
On that date, instead of appearing before the Blue Ribbon Committee,
Lozada left the country for a purported official trip to London, as announced
by then DENR Secretary Lito Atienza (Sec. Atienza). [8] In the Petition, Lozada
alleged that his failure to appear at the scheduled hearing was upon the
instructions of then Executive Assistant Undersecretary Manuel Gaite (Usec.
Gaite).[9] Consequently, the Senate issued an Order dated 30 January 2008:
(a) citing Lozada for contempt; (b) ordering his arrest and detention; and (c)
directing the Senate Sergeant-at-Arms to implement the Order and make a
return thereon.[10]
While overseas, Lozada asked Sec. Atienza whether the former could be
allowed to go back to the Philippines.[11] Upon the approval of Sec. Atienza,
Lozada informed his family that he was returning from Hong Kong on 5
February 2008 on board Cathay Pacific Flight No. 919, bound to arrive in
Manila at 4:40 p.m. on the same day.[12]
In the Petition, Lozada claims that, upon disembarking from the aircraft,
several men held his arms and took his bag. Although he allegedly insisted
on meeting with his family, he later realized that it was wiser to just follow

them, especially when he overheard from their handheld radio: [H]wag

kayong dumaan diyan sir nandyan ang mga taga senado.[13]
Lozada asked if he could go to the comfort room, an opportunity he used to
call up his brother, petitioner Arturo, and inform him of his situation. [14] The
men thereafter led him through the departure area of the airport and into a
car waiting for them.[15] They made him sit alone at the back of the vehicle,
while a man, whom he later discovered to be respondent Valeroso, took the
passenger seat and was always in contact with other individuals. [16] Lozada
observed that other cars tailed their vehicle.[17]
Sec. Atienza then phoned Lozada, assuring the latter that he was with
people from the government, and that the former was going to confer with
ES and Ma[a]m. Lozada surmised that these individuals referred to ES
Ermita and former President Arroyo, respectively.[18] Sec. Atienza also
purportedly instructed Lozada to pacify his wife, petitioner Violeta, who was
making public statements asking for her husbands return.[19]
The vehicle traversed the South Luzon Expressway and drove towards the
direction of Laguna.[20] Along the way, the men asked Lozada to draft an
antedated letter requesting police protection.[21]
Lozada requested that he be brought home to Pasig, but the men were
allegedly compelled to deny his request on account of unidentified security
risks.[22] Eventually, however, the vehicle turned around and drove to Libis,
Quezon City. The group stopped at The Outback restaurant to meet with
certain individuals, who turned out to be Atty. Antonio Bautista (Atty.
Bautista) and Colonel Paul Mascarinas (Col. Mascarinas) of the Police Special
Protection Office (PSPO). At the restaurant, Lozada claimed that he was
made to fill in the blanks of a prepared affidavit. [23]
After the meeting, the men informed Lozada that they were going to billet
him in a hotel for a night, but he suggested that they take him to La Salle
Green Hills instead. The men acquiesced.[24]
Upon arriving in La Salle Green Hills, Lozada was met by Violeta and his
sister, Carmen Lozada (Carmen).[25] He observed that the perimeter was
guarded by policemen, purportedly restraining his liberty and threatening not
only his security, but also that of his family and the De La Salle brothers. [26]
On 6 February 2008, at around 10:00 a.m., Col. Mascarinas supposedly
brought Lozada to the office of Atty. Bautista to finalize and sign an affidavit.
[27]

At about 1:00 p.m., Violeta filed before this Court a Petition for Habeas
Corpus, docketed as G.R. No. 181342 (the Habeas Corpus case). [28] Arturo
likewise filed before this Court a Petition for a Writ of Amparo, docketed as
G.R. No. 181356 (the Amparo case), and prayed for the issuance of (a) the

writ of amparo; (b) a Temporary Protection Order (TPO); and (c) Inspection
and Production Orders as regards documents related to the authority
ordering custody over Lozada, as well as any other document that would
show responsibility for his alleged abduction. [29]
At around the same time that Arturo filed the Petition for a Writ of Amparo,
Col. Mascarinas drove Lozada back to La Salle Green Hills.[30] Lozada was
then made to sign a typewritten, antedated letter requesting police
protection.[31] Thereafter, former Presidential Spokesperson Michael Defensor
(Sec. Defensor) supposedly came and requested Lozada to refute reports
that the latter was kidnapped and to deny knowledge of alleged anomalies in
the NBN-ZTE deal. Sec. Defensor then purportedly gave Lozada P50,000 for
the latters expenses.[32]
On 7 February 2008, Lozada decided to hold a press conference and contact
the Senate Sergeant-at-Arms, who served the warrant of arrest on him. [33]
Lozada claimed that after his press conference and testimony in the Senate,
he and his family were since then harassed, stalked and threatened. [34]
On the same day, this Court issued a Resolution (a) consolidating the Habeas
Corpus case and the Amparo case; (b) requiring respondents in the Habeas
Corpus case to comment on the Petition; (c) issuing a Writ of Amparo; (d)
ordering respondents in the Amparo case to file their verified Return; (e)
referring the consolidated Petitions to the CA; and (f) directing the CA to set
the cases for hearing on 14 February 2008.[35] Accordingly, the court a quo
set both cases for hearing on 14 February 2008. [36]
On 12 February 2008, respondents filed before the CA a Manifestation and
Motion, praying for the dismissal of the Habeas Corpus case.[37] They
asserted that Lozada was never illegally deprived of his liberty and was, at
that time, no longer in their custody. They likewise averred that, beginning 8
February 2008, Lozada had already been under the supervision of the Senate
and, from then on, had been testifying before it.[38]
In their verified Return, respondents claimed that Sec. Atienza had arranged
for the provision of a security team to be assigned to Lozada, who was then
fearful for his safety.[39] In effect, respondents asserted that Lozada had
knowledge and control of the events that took place on 5 February 2008,
voluntarily entrusted himself to their company, and was never deprived of his
liberty. Hence, respondents prayed for the denial of the interim reliefs and
the dismissal of the Petition.[40]
During the initial hearing on 14 February 2008, Lozada and Violeta ratified
the Petition in the Amparo case[41] to comply with Section 2 of the Rule on the
Writ of Amparo,[42] which imposes an order to be followed by those who can
sue for the writ.[43] The CA also dismissed the Habeas Corpus case in open
court for being moot and academic, as Lozada was physically present and
was not confined or detained by any of the respondents. [44] Considering that

petitioners failed to question the dismissal of the Habeas Corpus case, the
said dismissal had lapsed into finality, leaving only the Amparo case open for
disposition.
Thereafter, Lozada filed a Motion for Temporary Protection Order and
Production of Documents,[45] while Arturo filed a Motion for Production of
Documents.[46] Additionally, Arturo also filed a Motion for the Issuance of
Subpoena Ad Testificandum and Presentation of Hostile Witnesses and
Adverse Parties Romulo Neri, Benjamin Abalos, [Sr.], Rodolfo Valeroso,
Jaime the Driver and Other Respondents. Respondents opposed these
motions.[47] The CA denied the Motion for the Issuance of Subpoena on the
ground that the alleged acts and statements attributed to Sec. Neri and
Benjamin Abalos (Abalos) were irrelevant to the Amparo case, and that to
require them to testify would only result in a fishing expedition. [48] The CA
likewise denied Arturos subsequent Motion for Reconsideration. [49]
In its Resolution dated 5 March 2008, the CA dropped former President
Arroyo as a respondent on the ground that at the time the Petition in the
Amparo case was filed, she was still the incumbent President enjoying
immunity from suit.[50] Arturo filed a Motion for Reconsideration,[51] which the
CA denied in its Resolution dated 25 March 2008.[52]
On 12 September 2008, the CA rendered its Decision denying petitioners the
privilege of the Writ of Amparo and dismissing the Petition.[53] The CA found
that petitioners were unable to prove through substantial evidence that
respondents violated, or threatened with violation, the right to life, liberty
and security of Lozada.
Petitioners thus filed the instant Petition, praying for: (a) the reversal of the
assailed CA Decision; (b) the issuance of the TPO; and (c) the accreditation
of the Association of Major Religious Superiors of the Philippines and the De
La Salle Brothers as the sanctuaries of Lozada and his family.[54] In the
alternative, petitioners pray that this Court remand the case to the CA for
further hearings and reverse the latters Orders: (a) denying the Motion to
Issue a Subpoena Ad Testificandum and (b) dropping former President
Arroyo as a respondent. Petitioners raise the following issues:
(1) Whether the Court a [q]uo erred in ruling to dismiss the petition for a
writ of amparo and deny Petitioners prayer for a Temporary Protection Order,
inter alia, because there is no substantial evidence to prove that the right to
life, liberty or security of Jun Lozada was violated or threatened with
violation. This rule is not in accord with the rule on the writ of amparo and
Supreme Court jurisprudence on substantial evidence[.]
(2) Whether the Ponencia erred and gravely abused its discretion by
prematurely ruling that the testimony of witnesses which Petitioners sought
to present and who are subject of the Motion for Issuance of Subpoena ad
testificandum were irrelevant to the Petition for a Writ of Amparo in a way

not in accord with the Rules of Court and Supreme Court decisions.
(3) Whether the Court a quo erred in using and considering the affidavits of
respondents in coming up with the questioned decision when these were not
offered as evidence and were not subjected to cross-examination. This ruling
is not in accord with the Rules of Court and jurisprudence.
(4) Whether the Court a [q]uo erred in dropping as respondent Pres. Gloria
Arroyo despite her failure to submit a verified return and personally claim
presidential immunity in a way not in accord with the Rule on the Writ of
Amparo.[55]
The Office of the Solicitor General (OSG) asserts that petitioners failed to
adduce substantial evidence, as the allegations they propounded in support
of their Petition were largely hearsay.[56] The OSG also maintains that it was
proper for the CA to have dropped former President Arroyo as respondent on
account of her presidential immunity from suit.[57]
Respondent Atutubo also alleges, among others, that: (a) Lozada voluntarily
asked for security and protection; (b) Lozada willingly submitted himself to
the company of the police escorts; (c) Atutubo merely accompanied him to
pass through the contingency route customarily provided to VIP passengers,
public figures, foreign dignitaries, and the like; and (d) Atutubo only
performed his job to ensure security and maintain order at the airport upon
the arrival of Lozada.[58]
In the face of these assertions by respondents, petitioners nevertheless insist
that while they have sufficiently established that Lozada was taken against
his will and was put under restraint, respondents have failed to discharge
their own burden to prove that they exercised extraordinary diligence as
public officials.[59] Petitioners also maintain that it was erroneous for the CA
to have denied their motion for subpoena ad testificandum for being
irrelevant, given that the relevancy of evidence must be examined after it is
offered, and not before.[60] Finally, petitioners contend that the presidential
immunity from suit cannot be invoked in amparo actions.[61]
Issues
In ruling on whether the CA committed reversible error in issuing its assailed
Decision, three issues must be discussed:
I.

Whether the CA committed an error in dropping former President

Arroyo as a respondent in the Amparo case.

II.

Whether the CA committed an error in denying petitioners Motion

for the Issuance of a Subpoena Ad Testificandum.
Whether petitioners should be granted the privilege of the writ of
amparo.

III.

Discussion
The writ of amparo is an independent and summary remedy that provides
rapid judicial relief to protect the peoples right to life, liberty and security.[62]
Having been originally intended as a response to the alarming cases of
extrajudicial killings and enforced disappearances in the country, it serves
both preventive and curative roles to address the said human rights
violations. It is preventive in that it breaks the expectation of impunity in the
commission of these offenses, and it is curative in that it facilitates the
subsequent punishment of perpetrators by inevitably leading to subsequent
investigation and action.[63]
As it stands, the writ of amparo is confined only to cases of extrajudicial
killings and enforced disappearances, or to threats thereof.[64] Considering
that this remedy is aimed at addressing these serious violations of or threats
to the right to life, liberty and security, it cannot be issued on amorphous and
uncertain grounds,[65] or in cases where the alleged threat has ceased and is
no longer imminent or continuing.[66] Instead, it must be granted
judiciously so as not to dilute the extraordinary and remedial character of the
writ, thus:
The privilege of the writ of amparo is envisioned basically to protect and
guarantee the rights to life, liberty, and security of persons, free from fears
and threats that vitiate the quality of this life. It is an extraordinary writ
conceptualized and adopted in light of and in response to the prevalence of
extra-legal killings and enforced disappearances. Accordingly, the remedy
ought to be resorted to and granted judiciously, lest the ideal sought
by the Amparo Rule be diluted and undermined by the indiscriminate
filing of amparo petitions for purposes less than the desire to secure
amparo reliefs and protection and/or on the basis of unsubstantiated
allegations.[67] (Emphasis supplied.)
Using this perspective as the working framework for evaluating the assailed
CA decision and the evidence adduced by the parties, this Court denies the
Petition.
First issue: Presidential immunity from suit
It is settled in jurisprudence that the President enjoys immunity from suit
during his or her tenure of office or actual incumbency.[68] Conversely, this
presidential privilege of immunity cannot be invoked by a non-sitting
president even for acts committed during his or her tenure. [69]
In the case at bar, the events that gave rise to the present action, as well as
the filing of the original Petition and the issuance of the CA Decision,
occurred during the incumbency of former President Arroyo. In that respect,
it was proper for the court a quo to have dropped her as a respondent on

account of her presidential immunity from suit.

It must be underscored, however, that since her tenure of office has already
ended, former President Arroyo can no longer invoke the privilege of
presidential immunity as a defense to evade judicial determination of her
responsibility or accountability for the alleged violation or threatened
violation of the right to life, liberty and security of Lozada.
Nonetheless, examining the merits of the case still results in the denial of the
Petition on the issue of former President Arroyos alleged responsibility or
accountability. A thorough examination of the allegations postulated and the
evidence adduced by petitioners reveals their failure to sufficiently establish
any unlawful act or omission on her part that violated, or threatened with
violation, the right to life, liberty and security of Lozada. Except for the bare
claims that: (a) Sec. Atienza mentioned a certain Ma[a]m,[70] whom Lozada
speculated to have referred to her, and (b) Sec. Defensor told Lozada that
the President was hurting from all the media frenzy,[71] there is nothing in
the records that would sufficiently establish the link of former President
Arroyo to the events that transpired on 5-6 February 2010, as well as to the
subsequent threats that Lozada and his family purportedly received.
Second issue: Denial of the issuance of a subpoena ad testificandum
This Court, in Roco v. Contreras,[72] ruled that for a subpoena to issue, it
must first appear that the person or documents sought to be presented are
prima facie relevant to the issue subject of the controversy, to wit:
A subpoena is a process directed to a person requiring him to attend and to
testify at the hearing or trial of an action or at any investigation conducted
under the laws of the Philippines, or for the taking of his deposition.
In this jurisdiction, there are two (2) kinds of subpoena, to wit: subpoena ad
testificandum and subpoena duces tecum. The first is used to compel a
person to testify, while the second is used to compel the production of books,
records, things or documents therein specified. As characterized in H.C.
Liebenow vs. The Philippine Vegetable Oil Company:
The subpoena duces tecum is, in all respects, like the ordinary
subpoena ad testificandum with the exception that it concludes with an
injunction that the witness shall bring with him and produce at the
examination the books, documents, or things described in the subpoena.
Well-settled is the rule that before a subpoena duces tecum may issue, the
court must first be satisfied that the following requisites are present: (1) the
books, documents or other things requested must appear prima facie
relevant to the issue subject of the controversy (test of relevancy);
and (2) such books must be reasonably described by the parties to be readily
identified (test of definiteness).[73] (Emphasis supplied.)

In the present case, the CA correctly denied petitioners Motion for the
Issuance of Subpoena Ad Testificandum on the ground that the testimonies
of the witnesses sought to be presented during trial were prima facie
irrelevant to the issues of the case. The court a quo aptly ruled in this
manner:
The alleged acts and statements attributed by the petitioner to Neri and
Abalos are not relevant to the instant Amparo Petition where the issue
involved is whether or not Lozadas right to life, liberty and security was
threatened or continues to be threatened with violation by the unlawful act/s
of the respondents. Evidence, to be relevant, must have such a relation to
the fact in issue as to induce belief in its existence or nonexistence. Further,
Neri, Abalos and a certain driver Jaime are not respondents in this Amparo
Petition and the vague allegations averred in the Motion with respect to them
do not pass the test of relevancy. To Our mind, petitioner appears to be
embarking on a fishing expedition. Petitioner should present the aggrieved
party [Lozada], who has been regularly attending the hearings, to prove the
allegations in the Amparo Petition, instead of dragging the names of other
people into the picture. We have repeatedly reminded the parties, in
the course of the proceedings, that the instant Amparo Petition does
not involve the investigation of the ZTE-[NBN] contract. Petitioner
should focus on the fact in issue and not embroil this Court into said ZTENBN contract, which is now being investigated by the Senate Blue Ribbon
Committee and the Office of the Ombudsman.[74] (Emphasis supplied.)
All the references of petitioners to either Sec. Neri or Abalos were solely with
respect to the ZTE-NBN deal, and not to the events that transpired on 5-6
February 2008, or to the ensuing threats that petitioners purportedly
received. Although the present action is rooted from the involvement of
Lozada in the said government transaction, the testimonies of Sec. Neri or
Abalos are nevertheless not prima facie relevant to the main issue of whether
there was an unlawful act or omission on the part of respondents that
violated the right to life, liberty and security of Lozada. Thus, the CA did not
commit any reversible error in denying the Motion for the Issuance of
Subpoena Ad Testificandum.
Third issue: Grant of the privilege of the writ of amparo
A. Alleged violation of or threat to the right to life, liberty and
security of Lozada
Sections 17 and 18 of the Rule on the Writ of Amparo requires the parties to
establish their claims by substantial evidence,[75] or such relevant evidence as
a reasonable mind might accept as adequate to support a conclusion. [76] The
use of this evidentiary threshold reveals the clear intent of the framers of the
Rule on the Writ of Amparo to have the equivalent of an administrative
proceeding, albeit judicially conducted, in addressing amparo situations.[77]

In cases where the violation of the right to life, liberty or security has already
ceased, it is necessary for the petitioner in an amparo action to prove the
existence of a continuing threat.[78] Thus, this Court held in its Resolution in
Razon v. Tagitis:[79]
Manalo is different from Tagitis in terms of their factual settings, as
enforced disappearance was no longer a problem in that case. The
enforced disappearance of the brothers Raymond and Reynaldo
Manalo effectively ended when they escaped from captivity and
surfaced, while Tagitis is still nowhere to be found and remains missing
more than two years after his reported disappearance. An Amparo
situation subsisted in Manalo, however, because of the continuing
threat to the brothers right to security; the brothers claimed that since
the persons responsible for their enforced disappearance were still at large
and had not been held accountable, the former were still under the threat of
being once again abducted, kept captive or even killed, which threat
constituted a direct violation of their right to security of person. [80] (Emphasis
supplied.)
In the present case, the totality of the evidence adduced by petitioners failed
to meet the threshold of substantial evidence. Sifting through all the
evidence and allegations presented, the crux of the case boils down to
assessing the veracity and credibility of the parties diverging claims as to
what actually transpired on 5-6 February 2008. In this regard, this Court is in
agreement with the factual findings of the CA to the extent that Lozada was
not illegally deprived of his liberty from the point when he disembarked from
the aircraft up to the time he was led to the departure area of the airport, [81]
as he voluntarily submitted himself to the custody of respondents:
[Lozada] was one of the first few passengers to get off the plane because he
was instructed by Secretary Atienza, th[r]ough a phone call on the night of
04 February 2008, while he was still in Hong Kong, to proceed directly to
the Bureau of Immigration so that few people would notice him and
he could be facilitated in going out of the airport without any hassle
from the people of the Senate Sergeant-at-Arms. Again, [Lozada] stated that
he wanted to get away from the Senate people. [Lozada] even went to the
mens room of the airport, after he was allegedly grabbed, where he made
a call to his brother Arturo, using his Globe phone, and he was not prevented
from making said call, and was simply advised by the person who met him at
the tube to (sic) sir, bilisan mo na. When they proceeded out of the tube
and while walking, [Lozada] heard from the radio track down, wag kayo
dyan, sir, nandyan yong mga taga Senado, so they took a detour and went
up to the departure area, did not go out of the normal arrival area, and
proceeded towards the elevator near the Duty Free Shop and then down
towards the tarmac. Since [Lozada] was avoiding the people from the
Office of the Senate Sergeant-at-Arms, said detour appears to
explain why they did not get out at the arrival area, where [Lozada]

could have passed through immigration so that his passport could be

properly stamped.
This Court does not find any evidence on record that [Lozada]
struggled or made an outcry for help when he was allegedly
grabbed or abducted at the airport. [Lozada] even testified that
nobody held him, and they were not hostile to him nor shouted at
him. With noon day clarity, this Court finds that the reason why [Lozada]
was fetched at the airport was to help him avoid the Senate contingent, who
would arrest and detain him at the Office of the Senate Sergeant-at-Arms,
until such time that he would appear and give his testimony, pursuant to the
Order of the Senate on the NBN-ZTE Project. [Lozada] clearly knew this
because at that time, it was still his decision not to testify before the
Senate. He agreed with that plan.[82] (Emphases supplied.)
The foregoing statements show that Lozada personally sought the help of
Sec. Atienza to avoid the Senate personnel, and thus knew that the men who
met him at the airport were there to aid him in such objective. Surely, the
actions of Lozada evinced knowledge and voluntariness, uncharacteristic of
someone who claims to have been forcibly abducted.
However, these mens subsequent acts of directing Lozada to board the
vehicle and driving him around, without disclosing the exact purpose thereof,
appear to be beyond what he had consented to and requested from Sec.
Atienza. These men neither informed him of where he was being transported
nor provided him complete liberty to contact his family members to assure
them of his safety. These acts demonstrated that he lacked absolute control
over the situation, as well as an effective capacity to challenge their
instructions.
Nevertheless, it must be emphasized that if Lozada had in fact been illegally
restrained, so much so that his right to liberty and security had been
violated, the acts that manifested this restraint had already ceased and
has consequently rendered the grant of the privilege of the writ of amparo
moot. Whether or not Lozada was deprived of his liberty from the point
when he was led inside the vehicle waiting for him at the airport up to the
time he was taken to La Salle Green Hills, petitioners assertions that Lozada
and his family continue to suffer various threats from respondents remain
unproven. The CA correctly found as follows:
The supposed announcement of General Razon over the radio that
[Lozada] was in the custody of the PNP can neither be construed as a
threat to [Lozadas] life, liberty and security. Certainly, no person in his
right mind would make that kind of media announcement if his intent
was indeed to threaten somebodys life, liberty and security.
xxx

xxx

xxx

He claims that he is threatened by the alleged presence of armed men

riding in motorcycle passing outside the De La Salle premises where he
and his family are staying and by alleged threats of armed men around him
at places where he went to. Again, these alleged threats were not proven
by any evidence at all, as having originated from any of the
respondents.
[Lozada] also considers the installation of the surveillance camera at
the De La Salle and at St. Scholastica as indirect threat to his right to life,
liberty and security. He claims that these are spy cameras. However, save for
[Lozadas] self-serving claim, he simply failed to prove that they were
installed or ordered installed by the respondents for the purpose of
threatening his right to life, liberty and security.
[Lozada] further maintains that there is an alleged trend, i.e., wherever he
goes, there is a bomb threat. There were bomb threats in the places
where he went to like in [the Polytechnic University of the Philippines],
Dagupan, Cebu and Bohol. However, [Lozada] himself testified that he did
not try to ascertain where the bomb threats emanated. Plainly, there is no
evidence on record that the bomb threats were made by the
respondents or done upon their instigation.
Moreover, [Lozada] views the pronouncement of the Secretary of Justice that
he was put on the watch list of the Bureau of Immigration as a threat to his
life, liberty and security. This alleged threat is again unsupported by
evidence, as in fact, [Lozada] testified that he did not ascertain from the
Bureau of Immigration whether his name was actually in the official
watch list of the Bureau. At any rate, the Secretary of Justice is not one of
the respondents in the amparo petition, and there is no showing in the record
that it was the respondents who ordered the same for the purpose of
threatening him.
[Lozada] harps on the filing of alleged frivolous cases against him and his
family as threat to his life, liberty and security. xxx However, [Lozada]
himself testified that he does not know whether the respondents or
any of the respondents ordered the filing of these cases against him.
In any event, said purported cases are to be determined based on
their own merits and are clearly beyond the realm of the instant
amparo petition filed against the respondents.[83] (Emphasis supplied.)
Finally, petitioners insist that while they were able to sufficiently establish
their case by the required evidentiary standard, respondents failed to
discharge their burden to prove their defenses by substantial evidence and to
show that respondents exercised extraordinary diligence as required by the
Rule on the Writ of Amparo.[84] This Court has squarely passed upon this
contention in Yano v. Sanchez,[85] to wit:

The failure to establish that the public official observed extraordinary

diligence in the performance of duty does not result in the automatic grant of
the privilege of the amparo writ. It does not relieve the petitioner from
establishing his or her claim by substantial evidence.
Thus, in amparo actions, petitioners must establish their claims by
substantial evidence, and they cannot merely rely on the supposed failure of
respondents to prove either their defenses or their exercise of extraordinary
diligence. In this case, the totality of the evidence presented by petitioners
fails to meet the requisite evidentiary threshold, and the privilege of the writ
of amparo has already been rendered moot and academic by the cessation of
the restraint to Lozadas liberty.
B. Propriety of the privilege of the writ of amparo and its interim
reliefs
As previously discussed, there is no basis to grant Lozada the privilege of the
writ of amparo, considering that the illegal restraint alleged in this case had
already ceased and there is no imminent or continuing restriction on his
liberty. In Castillo v. Cruz,[86] this Court held as follows:
Although respondents release from confinement does not necessarily hinder
supplication for the writ of amparo, absent any evidence or even an
allegation in the petition that there is undue and continuing restraint
on their liberty, and/or that there exists threat or intimidation that destroys
the efficacy of their right to be secure in their persons, the issuance of the
writ cannot be justified. (Emphasis supplied.)
Further, it appears that Lozada had already filed before the Department of
Justice (DOJ) a Complaint charging respondents with kidnapping and
attempted murder, docketed as I.S. No. 2008-467.[87] In this regard, this
Courts ruling in Rubrico v. Arroyo[88] is worth considering:
First, a criminal complaint for kidnapping and, alternatively, for arbitrary
detention rooted in the same acts and incidents leading to the filing of the
subject amparo petition has been instituted with the OMB, docketed as OMBP-C-O7-0602-E. The usual initial steps to determine the existence of a prima
facie case against the five (5) impleaded individuals suspected to be actually
involved in the detention of Lourdes have been set in motion. It must be
pointed out, though, that the filing of the OMB complaint came before the
effectivity of the Amparo Rule on October 24, 2007.
Second, Sec. 22 of the Amparo Rule proscribes the filing of an amparo
petition should a criminal action have, in the meanwhile, been commenced.
The succeeding Sec. 23, on the other hand, provides that when the criminal
suit is filed subsequent to a petition for amparo, the petition shall be
consolidated with the criminal action where the Amparo Rule shall
nonetheless govern the disposition of the relief under the Rule. Under the

terms of said Sec. 22, the present petition ought to have been dismissed at
the outset. But as things stand, the outright dismissal of the petition by force
of that section is no longer technically feasible in light of the interplay of the
following factual mix: (1) the Court has, pursuant to Sec. 6 of the Rule,
already issued ex parte the writ of amparo; (2) the CA, after a summary
hearing, has dismissed the petition, but not on the basis of Sec. 22; and (3)
the complaint in OMB-P-C-O7-0602-E named as respondents only those
believed to be the actual abductors of Lourdes, while the instant petition
impleaded, in addition, those tasked to investigate the kidnapping and
detention incidents and their superiors at the top. Yet, the acts and/or
omissions subject of the criminal complaint and the amparo petition are so
linked as to call for the consolidation of both proceedings to obviate the
mischief inherent in a multiplicity-of-suits situation.
Given the above perspective and to fully apply the beneficial nature of the
writ of amparo as an inexpensive and effective tool to protect certain rights
violated or threatened to be violated, the Court hereby adjusts to a degree
the literal application of Secs. 22 and 23 of the Amparo Rule to fittingly
address the situation obtaining under the premises. Towards this end, two
things are at once indicated: (1) the consolidation of the probe and factfinding aspects of the instant petition with the investigation of the criminal
complaint before the OMB; and (2) the incorporation in the same criminal
complaint of the allegations in this petition bearing on the threats to the right
to security. Withal, the OMB should be furnished copies of the investigation
reports to aid that body in its own investigation and eventual resolution of
OMB-P-C-O7-0602-E. Then, too, the OMB shall be given easy access to all
pertinent documents and evidence, if any, adduced before the CA.
Necessarily, Lourdes, as complainant in OMB-P-C-O7-0602-E, should be
allowed, if so minded, to amend her basic criminal complaint if the
consolidation of cases is to be fully effective. (Emphasis supplied.)
Thus, if the Complaint filed before the DOJ had already progressed into a
criminal case, then the latter action can more adequately dispose of the
allegations made by petitioners. After all, one of the ultimate objectives of
the writ of amparo as a curative remedy is to facilitate the subsequent
punishment of perpetrators.[89] On the other hand, if there is no actual
criminal case lodged before the courts, then the denial of the Petition is
without prejudice to the filing of the appropriate administrative, civil or
criminal case, if applicable, against those individuals whom Lozada deems to
have unduly restrained his liberty.
Finally, with respect to the interim reliefs sought by petitioners, this Court, in
Yano v. Sanchez,[90] declined to grant the prayer for the issuance of a TPO, as
well as Inspection and Production Orders, upon a finding that the implicated
public officials were not accountable for the disappearance subject of that
case. Analogously, it would be incongruous to grant herein petitioners prayer
for a TPO and Inspection and Production Orders and at the same time rule
that there no longer exists any imminent or continuing threat to Lozadas

right to life, liberty and security. Thus, there is no basis on which a prayer for
the issuance of these interim reliefs can be anchored.
WHEREFORE, the instant petition is DENIED for being moot and academic.
The Court of Appeals denial of the privilege of the writ of amparo is hereby
AFFIRMED.
SO ORDERED.

SECOND DIVISION
[ G. R. No. 197788, February 29, 2012 ]
RODEL LUZ Y ONG, PETITIONER, VS. PEOPLE OF THE
PHILIPPINES,[1] RESPONDENT.
DECISION
SERENO, J.:
This is a Petition for Review on Certiorari under Rule 45 seeking to set aside
the Court of Appeals (CA) Decision in CA-G.R. CR No. 32516 dated 18
February 2011[2] and Resolution dated 8 July 2011.
Statement of the Facts and of the Case
The facts, as found by the Regional Trial Court (RTC), which sustained the
version of the prosecution, are as follows:
PO2 Emmanuel L. Alteza, who was then assigned at the Sub-Station 1 of the
Naga City Police Station as a traffic enforcer, substantially testified that on
March 10, 2003 at around 3:00 oclock in the morning, he saw the accused,
who was coming from the direction of Panganiban Drive and going to
Diversion Road, Naga City, driving a motorcycle without a helmet; that this
prompted him to flag down the accused for violating a municipal ordinance
which requires all motorcycle drivers to wear helmet (sic) while driving said
motor vehicle; that he invited the accused to come inside their sub-station
since the place where he flagged down the accused is almost in front of the
said sub-station; that while he and SPO1 Rayford Brillante were issuing a
citation ticket for violation of municipal ordinance, he noticed that the
accused was uneasy and kept on getting something from his jacket; that he
was alerted and so, he told the accused to take out the contents of the
pocket of his jacket as the latter may have a weapon inside it; that the
accused obliged and slowly put out the contents of the pocket of his jacket

which was a nickel-like tin or metal container about two (2) to three (3)
inches in size, including two (2) cellphones, one (1) pair of scissors and one
(1) Swiss knife; that upon seeing the said container, he asked the accused to
open it; that after the accused opened the container, he noticed a cartoon
cover and something beneath it; and that upon his instruction, the accused
spilled out the contents of the container on the table which turned out to be
four (4) plastic sachets, the two (2) of which were empty while the other two
(2) contained suspected shabu.[3]
Arraigned on 2 July 2003, petitioner, assisted by counsel, entered a plea of
Not guilty to the charge of illegal possession of dangerous drugs. Pretrial
was terminated on 24 September 2003, after which, trial ensued.
During trial, Police Officer 3 (PO3) Emmanuel Alteza and a forensic chemist
testified for the prosecution. On the other hand, petitioner testified for
himself and raised the defense of planting of evidence and extortion.
In its 19 February 2009 Decision,[4] the RTC convicted petitioner of illegal
possession of dangerous drugs[5] committed on 10 March 2003. It found the
prosecution evidence sufficient to show that he had been lawfully arrested for
a traffic violation and then subjected to a valid search, which led to the
discovery on his person of two plastic sachets later found to contain shabu.
The RTC also found his defense of frame-up and extortion to be weak, selfserving and unsubstantiated. The dispositive portion of its Decision held:
WHEREFORE, judgment is hereby rendered, finding accused RODEL LUZ y
ONG GUILTY beyond reasonable doubt for the crime of violation of Section
11, Article II of Republic Act No. 9165 and sentencing him to suffer the
indeterminate penalty of imprisonment ranging from twelve (12) years and
(1) day, as minimum, to thirteen (13) years, as maximum, and to pay a fine
of Three Hundred Thousand Pesos (?300,000.00).
The subject shabu is hereby confiscated for turn over to the Philippine Drug
Enforcement Agency for its proper disposition and destruction in accordance
with law.
SO ORDERED.[6]
Upon review, the CA affirmed the RTCs Decision.
On 12 September 2011, petitioner filed under Rule 45 the instant Petition for
Review on Certiorari dated 1 September 2011. In a Resolution dated 12
October 2011, this Court required respondent to file a comment on the
Petition. On 4 January 2012, the latter filed its Comment dated 3 January
2012.
Petitioner raised the following grounds in support of his Petition:

(i) THE SEARCH AND SEIZURE OF THE ALLEGED SUBJECT SHABU IS

INVALID.
(ii) THE PRESUMPTION OF REGULARITY IN THE PERFORMANCE OF
DUTY OF THE POLICE OFFICER CANNOT BE RELIED UPON IN THIS
CASE.
(iii) THE INTEGRITY AND EVIDENTIARY VALUE OF THE ALLEGED
SUBJECT SPECIMEN HAS BEEN COMPROMISED.
(iv) THE GUILT OF THE ACCUSED-PETITIONER WAS NOT PROVEN
BEYOND THE REASONABLE DOUBT (sic).[7]
Petitioner claims that there was no lawful search and seizure, because there
was no lawful arrest. He claims that the finding that there was a lawful arrest
was erroneous, since he was not even issued a citation ticket or charged with
violation of the city ordinance. Even assuming there was a valid arrest, he
claims that he had never consented to the search conducted upon him.
On the other hand, finding that petitioner had been lawfully arrested, the RTC
held thus:
It is beyond dispute that the accused was flagged down and apprehended in
this case by Police Officers Alteza and Brillante for violation of City Ordinance
No. 98-012, an ordinance requiring the use of crash helmet by motorcycle
drivers and riders thereon in the City of Naga and prescribing penalties for
violation thereof. The accused himself admitted that he was not wearing a
helmet at the time when he was flagged down by the said police officers,
albeit he had a helmet in his possession. Obviously, there is legal basis on
the part of the apprehending officers to flag down and arrest the accused
because the latter was actually committing a crime in their presence, that is,
a violation of City Ordinance No. 98-012. In other words, the accused, being
caught in flagrante delicto violating the said Ordinance, he could therefore be
lawfully stopped or arrested by the apprehending officers. x x x. [8]
We find the Petition to be impressed with merit, but not for the particular
reasons alleged. In criminal cases, an appeal throws the entire case wide
open for review and the reviewing tribunal can correct errors, though
unassigned in the appealed judgment, or even reverse the trial courts
decision based on grounds other than those that the parties raised as errors.
[9]

First, there was no valid arrest of petitioner. When he was flagged down
for committing a traffic violation, he was not, ipso facto and solely for this
reason, arrested.
Arrest is the taking of a person into custody in order that he or she may be
bound to answer for the commission of an offense. [10] It is effected by an

actual restraint of the person to be arrested or by that persons voluntary

submission to the custody of the one making the arrest. Neither the
application of actual force, manual touching of the body, or physical restraint,
nor a formal declaration of arrest, is required. It is enough that there be an
intention on the part of one of the parties to arrest the other, and that there
be an intent on the part of the other to submit, under the belief and
impression that submission is necessary.[11]
Under R.A. 4136, or the Land Transportation and Traffic Code, the general
procedure for dealing with a traffic violation is not the arrest of the offender,
but the confiscation of the drivers license of the latter:
SECTION 29. Confiscation of Driver's License. Law enforcement and peace
officers of other agencies duly deputized by the Director shall, in
apprehending a driver for any violation of this Act or any regulations issued
pursuant thereto, or of local traffic rules and regulations not contrary to any
provisions of this Act, confiscate the license of the driver concerned and issue
a receipt prescribed and issued by the Bureau therefor which shall authorize
the driver to operate a motor vehicle for a period not exceeding seventy-two
hours from the time and date of issue of said receipt. The period so fixed in
the receipt shall not be extended, and shall become invalid thereafter. Failure
of the driver to settle his case within fifteen days from the date of
apprehension will be a ground for the suspension and/or revocation of his
license.
Similarly, the Philippine National Police (PNP) Operations Manual [12] provides
the following procedure for flagging down vehicles during the conduct of
checkpoints:
SECTION 7. Procedure in Flagging Down or Accosting Vehicles While in
Mobile Car. This rule is a general concept and will not apply in hot pursuit
operations. The mobile car crew shall undertake the following, when
applicable: x x x
m. If it concerns traffic violations, immediately issue a Traffic Citation Ticket
(TCT) or Traffic Violation Report (TVR). Never indulge in prolonged,
unnecessary conversation or argument with the driver or any of the vehicles
occupants;
At the time that he was waiting for PO3 Alteza to write his citation ticket,
petitioner could not be said to have been under arrest. There was no
intention on the part of PO3 Alteza to arrest him, deprive him of his liberty,
or take him into custody. Prior to the issuance of the ticket, the period during
which petitioner was at the police station may be characterized merely as
waiting time. In fact, as found by the trial court, PO3 Alteza himself testified
that the only reason they went to the police sub-station was that petitioner
had been flagged down almost in front of that place. Hence, it was only for
the sake of convenience that they were waiting there. There was no intention

to take petitioner into custody.

In Berkemer v. McCarty,[13] the United States (U.S.) Supreme Court
discussed at length whether the roadside questioning of a motorist detained
pursuant to a routine traffic stop should be considered custodial
interrogation. The Court held that, such questioning does not fall under
custodial interrogation, nor can it be considered a formal arrest, by virtue of
the nature of the questioning, the expectations of the motorist and the
officer, and the length of time the procedure is conducted. It ruled as follows:
It must be acknowledged at the outset that a traffic stop significantly curtails
the freedom of action of the driver and the passengers, if any, of the
detained vehicle. Under the law of most States, it is a crime either to ignore
a policemans signal to stop ones car or, once having stopped, to drive away
without permission. x x x
However, we decline to accord talismanic power to the phrase in the Miranda
opinion emphasized by respondent. Fidelity to the doctrine announced in
Miranda requires that it be enforced strictly, but only in those types of
situations in which the concerns that powered the decision are implicated.
Thus, we must decide whether a traffic stop exerts upon a detained person
pressures that sufficiently impair his free exercise of his privilege against
self-incrimination to require that he be warned of his constitutional rights.
Two features of an ordinary traffic stop mitigate the danger that a person
questioned will be induced to speak where he would not otherwise do so
freely, Miranda v. Arizona, 384 U. S., at 467. First, detention of a
motorist pursuant to a traffic stop is presumptively temporary and
brief. The vast majority of roadside detentions last only a few minutes. A
motorists expectations, when he sees a policemans light flashing behind
him, are that he will be obliged to spend a short period of time answering
questions and waiting while the officer checks his license and registration,
that he may then be given a citation, but that in the end he most likely will
be allowed to continue on his way. In this respect, questioning incident to an
ordinary traffic stop is quite different from stationhouse interrogation, which
frequently is prolonged, and in which the detainee often is aware that
questioning will continue until he provides his interrogators the answers they
seek. See id., at 451.
Second, circumstances associated with the typical traffic stop are not
such that the motorist feels completely at the mercy of the police. To
be sure, the aura of authority surrounding an armed, uniformed officer and
the knowledge that the officer has some discretion in deciding whether to
issue a citation, in combination, exert some pressure on the detainee to
respond to questions. But other aspects of the situation substantially offset
these forces. Perhaps most importantly, the typical traffic stop is public, at
least to some degree. x x x

In both of these respects, the usual traffic stop is more analogous to a

so-called Terry stop, see Terry v. Ohio, 392 U. S. 1 (1968), than to
a formal arrest. x x x The comparatively nonthreatening character of
detentions of this sort explains the absence of any suggestion in our opinions
that Terry stops are subject to the dictates of Miranda. The similarly
noncoercive aspect of ordinary traffic stops prompts us to hold that persons
temporarily detained pursuant to such stops are not in custody for the
purposes of Miranda.
xxx

xxx

xxx

We are confident that the state of affairs projected by respondent will not
come to pass. It is settled that the safeguards prescribed by Miranda become
applicable as soon as a suspects freedom of action is curtailed to a degree
associated with formal arrest. California v. Beheler, 463 U. S. 1121, 1125
(1983) (per curiam). If a motorist who has been detained pursuant to a
traffic stop thereafter is subjected to treatment that renders him in custody
for practical purposes, he will be entitled to the full panoply of protections
prescribed by Miranda. See Oregon v. Mathiason, 429 U. S. 492, 495 (1977)
(per curiam). (Emphasis supplied.)
The U.S. Court in Berkemer thus ruled that, since the motorist therein was
only subjected to modest questions while still at the scene of the traffic stop,
he was not at that moment placed under custody (such that he should have
been apprised of his Miranda rights), and neither can treatment of this sort
be fairly characterized as the functional equivalent of a formal arrest.
Similarly, neither can petitioner here be considered under arrest at the time
that his traffic citation was being made.
It also appears that, according to City Ordinance No. 98-012, which was
violated by petitioner, the failure to wear a crash helmet while riding a
motorcycle is penalized by a fine only. Under the Rules of Court, a warrant of
arrest need not be issued if the information or charge was filed for an offense
penalized by a fine only. It may be stated as a corollary that neither can a
warrantless arrest be made for such an offense.
This ruling does not imply that there can be no arrest for a traffic violation.
Certainly, when there is an intent on the part of the police officer to deprive
the motorist of liberty, or to take the latter into custody, the former may be
deemed to have arrested the motorist. In this case, however, the officers
issuance (or intent to issue) a traffic citation ticket negates the possibility of
an arrest for the same violation.
Even if one were to work under the assumption that petitioner was
deemed arrested upon being flagged down for a traffic violation
and while awaiting the issuance of his ticket, then the requirements
for a valid arrest were not complied with.

This Court has held that at the time a person is arrested, it shall be the duty
of the arresting officer to inform the latter of the reason for the arrest and
must show that person the warrant of arrest, if any. Persons shall be
informed of their constitutional rights to remain silent and to counsel, and
that any statement they might make could be used against them. [14] It may
also be noted that in this case, these constitutional requirements were
complied with by the police officers only after petitioner had been arrested
for illegal possession of dangerous drugs.
In Berkemer, the U.S. Court also noted that the Miranda warnings must also
be given to a person apprehended due to a traffic violation:
The purposes of the safeguards prescribed by Miranda are to ensure that the
police do not coerce or trick captive suspects into confessing, to relieve the
inherently compelling pressures generated by the custodial setting itself,
which work to undermine the individuals will to resist, and as much as
possible to free courts from the task of scrutinizing individual cases to try to
determine, after the fact, whether particular confessions were voluntary.
Those purposes are implicated as much by in-custody questioning of persons
suspected of misdemeanors as they are by questioning of persons suspected
of felonies.
If it were true that petitioner was already deemed arrested when he was
flagged down for a traffic violation and while he waiting for his ticket, then
there would have been no need for him to be arrested for a second time
after the police officers allegedly discovered the drugsas he was already in
their custody.
Second, there being no valid arrest, the warrantless search that
resulted from it was likewise illegal.
The following are the instances when a warrantless search is allowed: (i) a
warrantless search incidental to a lawful arrest; (ii) search of evidence in
plain view; (iii) search of a moving vehicle; (iv) consented warrantless
search; (v) customs search; (vi) a stop and frisk search; and (vii) exigent
and emergency circumstances.[15] None of the above-mentioned instances,
especially a search incident to a lawful arrest, are applicable to this case.
It must be noted that the evidence seized, although alleged to be
inadvertently discovered, was not in plain view. It was actually concealed
inside a metal container inside petitioners pocket. Clearly, the evidence was
not immediately apparent.[16]
Neither was there a consented warrantless search. Consent to a search is not
to be lightly inferred, but shown by clear and convincing evidence. [17] It must
be voluntary in order to validate an otherwise illegal search; that is, the
consent must be unequivocal, specific, intelligently given and
uncontaminated by any duress or coercion. While the prosecution claims that

petitioner acceded to the instruction of PO3 Alteza, this alleged accession

does not suffice to prove valid and intelligent consent. In fact, the RTC found
that petitioner was merely told to take out the contents of his pocket. [18]
Whether consent to the search was in fact voluntary is a question of fact to
be determined from the totality of all the circumstances. Relevant to this
determination are the following characteristics of the person giving consent
and the environment in which consent is given: (1) the age of the defendant;
(2) whether the defendant was in a public or a secluded location; (3)
whether the defendant objected to the search or passively looked on; (4) the
education and intelligence of the defendant; (5) the presence of coercive
police procedures; (6) the defendants belief that no incriminating evidence
would be found; (7) the nature of the police questioning; (8) the
environment in which the questioning took place; and (9) the possibly
vulnerable subjective state of the person consenting. It is the State that has
the burden of proving, by clear and positive testimony, that the necessary
consent was obtained, and was freely and voluntarily given. [19] In this case,
all that was alleged was that petitioner was alone at the police station at
three in the morning, accompanied by several police officers. These
circumstances weigh heavily against a finding of valid consent to a
warrantless search.
Neither does the search qualify under the stop and frisk rule. While the rule
normally applies when a police officer observes suspicious or unusual
conduct, which may lead him to believe that a criminal act may be afoot, the
stop and frisk is merely a limited protective search of outer clothing for
weapons.[20]
In Knowles v. Iowa,[21] the U.S. Supreme Court held that when a police officer
stops a person for speeding and correspondingly issues a citation instead of
arresting the latter, this procedure does not authorize the officer to conduct a
full search of the car. The Court therein held that there was no justification
for a full-blown search when the officer does not arrest the motorist. Instead,
police officers may only conduct minimal intrusions, such as ordering the
motorist to alight from the car or doing a patdown:
In Robinson, supra, we noted the two historical rationales for the search
incident to arrest exception: (1) the need to disarm the suspect in order to
take him into custody, and (2) the need to preserve evidence for later use at
trial. x x x But neither of these underlying rationales for the search incident
to arrest exception is sufficient to justify the search in the present case.
We have recognized that the first rationaleofficer safetyis both
legitimate and weighty, x x x The threat to officer safety from issuing a
traffic citation, however, is a good deal less than in the case of a custodial
arrest. In Robinson, we stated that a custodial arrest involves danger to an
officer because of the extended exposure which follows the taking of a
suspect into custody and transporting him to the police station. 414 U. S., at

234-235. We recognized that [t]he danger to the police officer flows from
the fact of the arrest, and its attendant proximity, stress, and uncertainty,
and not from the grounds for arrest. Id., at 234, n. 5. A routine traffic
stop, on the other hand, is a relatively brief encounter and is more
analogous to a so-called Terry stop . . . than to a formal arrest.
Berkemer v. McCarty, 468 U. S. 420, 439 (1984). See also Cupp v. Murphy,
412 U. S. 291, 296 (1973) (Where there is no formal arrest . . . a person
might well be less hostile to the police and less likely to take conspicuous,
immediate steps to destroy incriminating evidence).
This is not to say that the concern for officer safety is absent in the
case of a routine traffic stop. It plainly is not. See Mimms, supra, at 110;
Wilson, supra, at 413-414. But while the concern for officer safety in
this context may justify the minimal additional intrusion of
ordering a driver and passengers out of the car, it does not by itself
justify the often considerably greater intrusion attending a full
fieldtype search. Even without the search authority Iowa urges, officers
have other, independent bases to search for weapons and protect themselves
from danger. For example, they may order out of a vehicle both the driver,
Mimms, supra, at 111, and any passengers, Wilson, supra, at 414; perform a
patdown of a driver and any passengers upon reasonable suspicion that
they may be armed and dangerous, Terry v. Ohio, 392 U. S. 1 (1968);
conduct a Terry patdown of the passenger compartment of a vehicle upon
reasonable suspicion that an occupant is dangerous and may gain immediate
control of a weapon, Michigan v. Long, 463 U. S. 1032, 1049 (1983); and
even conduct a full search of the passenger compartment, including any
containers therein, pursuant to a custodial arrest, New York v. Belton, 453 U.
S. 454, 460 (1981).
Nor has Iowa shown the second justification for the authority to search
incident to arrestthe need to discover and preserve evidence. Once
Knowles was stopped for speeding and issued a citation, all the evidence
necessary to prosecute that offense had been obtained. No further evidence
of excessive speed was going to be found either on the person of the
offender or in the passenger compartment of the car. (Emphasis supplied.)
The foregoing considered, petitioner must be acquitted. While he may have
failed to object to the illegality of his arrest at the earliest opportunity, a
waiver of an illegal warrantless arrest does not, however, mean a waiver of
the inadmissibility of evidence seized during the illegal warrantless arrest. [22]
The Constitution guarantees the right of the people to be secure in their
persons, houses, papers and effects against unreasonable searches and
seizures.[23] Any evidence obtained in violation of said right shall be
inadmissible for any purpose in any proceeding. While the power to search
and seize may at times be necessary to the public welfare, still it must be
exercised and the law implemented without contravening the constitutional
rights of citizens, for the enforcement of no statute is of sufficient importance
to justify indifference to the basic principles of government. [24]

The subject items seized during the illegal arrest are inadmissible. [25] The
drugs are the very corpus delicti of the crime of illegal possession of
dangerous drugs. Thus, their inadmissibility precludes conviction and calls for
the acquittal of the accused.[26]
WHEREFORE, the Petition is GRANTED. The 18 February 2011 Decision of
the Court of Appeals in CA-G.R. CR No. 32516 affirming the judgment of
conviction dated 19 February 2009 of the Regional Trial Court, 5th Judicial
Region, Naga City, Branch 21, in Criminal Case No. RTC 2003-0087, is hereby
REVERSED and SET ASIDE. Petitioner Rodel Luz y Ong is hereby
ACQUITTED and ordered immediately released from detention, unless his
continued confinement is warranted by some other cause or ground.

EN BANC
[ G.R. Nos. 162335 & 162605, March 06,
2012 ]
SEVERINO M. MANOTOK IV, FROILAN M. MANOTOK,
FERNANDO M. MANOTOK III, MA. MAMERTA M.
MANOTOK, PATRICIA L. TIONGSON, PACITA L. GO,
ROBERTO LAPERAL III, MICHAEL MARSHALL V.
MANOTOK, MARYANN MANOTOK, FELISA MYLENE V.
MANOTOK, IGNACIO V. MANOTOK, JR., MILAGROS V.
MANOTOK, SEVERINO MANOTOK III, ROSA R.
MANOTOK, MIGUEL A.B. SISON, GEORGE M.
BOCANEGRA, MA. CRISTINA E. SISON, PHILIPP L.
MANOTOK, JOSE CLEMENTE L. MANOTOK, RAMON
SEVERINO L. MANOTOK, THELMA R. MANOTOK, JOSE
MARIA MANOTOK, JESUS JUDE MANOTOK, JR. AND MA.
THERESA L. MANOTOK, REPRESENTED BY THEIR
ATTORNEY- IN-FACT, ROSA R. MANOTOK, PETITIONERS,
VS. HEIRS OF HOMER L. BARQUE, REPRESENTED BY
TERESITA BARQUE HERNANDEZ, RESPONDENTS.
RESOLUTION
VILLARAMA, JR., J.:

At bar are the motions for reconsideration separately filed by the Manotoks,
Barques and Manahans of our Decision promulgated on August 24, 2010, the
dispositive portion of which reads:
WHEREFORE, the petitions filed by the Manotoks under Rule 45 of the 1997
Rules of Civil Procedure, as amended, as well as the petition-in-intervention
of the Manahans, are DENIED. The petition for reconstitution of title filed by
the Barques is likewise DENIED. TCT No. RT-22481 (372302) in the name of
Severino Manotok IV, et al., TCT No. 210177 in the name of Homer L. Barque
and Deed of Conveyance No. V-200022 issued to Felicitas B. Manahan, are all
hereby declared NULL and VOID. The Register of Deeds of Caloocan City
and/or Quezon City are hereby ordered to CANCEL the said titles. The Court
hereby DECLARES that Lot 823 of the Piedad Estate, Quezon City legally
belongs to the NATIONAL GOVERNMENT OF THE REPUBLIC OF THE
PHILIPPINES, without prejudice to the institution of REVERSION proceedings
by the State through the Office of the Solicitor General.
With costs against the petitioners.
SO ORDERED.
The Manotoks raised the following grounds in their motion for reconsideration
with motion for oral arguments:
1. It is unjust and oppressive to deprive the Manotoks of property they have
long held and acquired from the State, on consideration fully paid and
received, and under registered title issued by the State itself, on nothing
more than the assumed failure of the States agents to inscribe a ministerial
approval on the transaction deeds.
2. The annulment of Friar Land sales, simply because physical evidence of
the Secretarys ministerial approval can no longer be found, may void
transactions involving thousands of hectares of land, and affect possibly
millions of people to whom the lands may have since been parceled out, sold
and resold.
3. The Manotoks were given no due notice of the issue of reversion, which
this case on appeal did not include, and which was thrust upon the Manotoks
only in the final resolution disposing of the appeal.
It would be error for the Honorable Court to let this matter go without a
serious and full re-examination. This can be accomplished, among others, by
allowing this motion for reconsideration to be heard on oral argument, to try
to permit all pertinent considerations to be aired before the Court and taken
into account.
4. These G.R. Nos. 162335 and 162605 were an appeal from administrative
reconstitution proceedings before LRA Reconstitution officer Benjamin

Bustos. But the Resolution dated 18 December 2008 which finally reversed
the CAs rulings, affirmed the denial by Bustos of the application for
administrative reconstitution of the Barques purported transfer certificate of
title, and terminated the appeal introduced a new case on the Manotok
property. It ordered evidence-taking at the CA, on which the Supreme Court
proposed itself to decide, in the first instance, an alleged ownership
controversy over the Manotok property.
5. The Manotoks objected to the remand on jurisdictional and due process
grounds. The original and exclusive jurisdiction over the subject matter of
the case is vested by law on the regional trial courts.
6. The Honorable Court erred in proceeding to judgment divesting the
Manotoks of their title to Lot 823 of the Piedad Estate, without a trial in the
courts of original and exclusive jurisdiction, and in disregard of process which
the law accords to all owners-in-possession.
7. The Honorable Court erred in concluding that the Manotoks, despite being
owners in possession under a registered title, may be compelled to produce
the deeds by which the Government had transferred the property to them,
and failing which can be divested of their ownership in favor of the
Government, even if the latter has not demanded a reversion or brought suit
for that purpose.
8. The Honorable Court erred in imposing on the Manotoks, contrary to Art.
541 of the Civil Code, the obligation to prove their ownership of the subject
property, and in awarding their title to the Government who has not even
sued to contest that ownership.
9. The Honorable Court erred in finding that Sale Certificate No. 1054,
which Severino Manotok acquired by assignment in 1923, was not approved
by the Director of Lands and the Secretary of Agriculture and Natural
Resources, and in finding that a Sale Certificate without the Secretarys
approval is void.
10. The Honorable Court erred in concluding that the Manotoks had no valid
Deed of Conveyance of Lot 823 from the Government The original of Deed
of Conveyance No. 29204 gave the register of deeds the authority to issue
the transfer certificate of title in the name of the buyer Severino Manotok,
which is required by law to be filed with and retained in the custody of the
register of deeds.We presume that the copy thereof actually transmitted to
and received by the register of deeds did contain the Secretarys signature
because he in fact issued the TCT. And we rely on this presumption because
the document itself can no longer be found.
11. Assuming arguendo that the original Deed of Conveyance No. 29204 the
register of deeds received did not bear the Department Secretarys signature,
DENR Memorandum Order No. 16-05 dated October 27, 2005 cured the

defect. To deny the Manotoks the benefit of ratification under said MO, on
the erroneous interpretation that it covered only those found in the records
of the field offices of the DENR and LMB, would be discriminatory. The
Department Secretarys (assumed) failure to affix his signature on the deed
of conveyance could not defeat the Manotoks right to the lot after they had
fully paid for it.
Republic Act No. 9443 must be applied, mutatis mutandis, to the Manotoks
and the Piedad Estate.
12. The Honorable Court erred in denying their right to be informed of the
CAs report and be heard thereon prior to judgment, as basic requirements of
due process.
The Barques anchor their motion for reconsideration on the following:
I
THE HONORABLE SUPREME COURT GRAVELY ERRED IN DENYING THE
PETITION FOR RECONSTITUTION FILED BY RESPONDENTS HEIRS OF
BARQUE WITHOUT STATING THE GROUNDS FOR SUCH DENIAL.
II
THE HONORABLE SUPREME COURT GRAVELY ERRED IN INSTANTLY
DECLARING IN THE DISPOSITIVE PORTION OF THE DECISION THAT ALONG
WITH FELICITAS B. MANAHANS TITLE, RESPONDENTS HEIRS OF BARQUES
TITLE TCT NO. 210177 IS LIKEWISE NULL AND VOID, WITHOUT STATING A
CLEAR AND DEFINITE BASIS THEREFOR.
III
THE HONORABLE SUPREME COURT GRAVELY ERRED IN DECLARING
TRANSFER CERTIFICATE OF TITLE NO. 210177 IN THE NAME OF HOMER L.
BARQUE NULL AND VOID.
IV
THE HONORABLE COURT OF APPEALS FACTUAL FINDINGS, ADOPTED BY THE
HONORABLE SUPREME COURT IN THE DECISION DATED 24 AUGUST 2010,
ARE CONTRARY TO THE EVIDENCE PRESENTED.
V
THE HONORABLE SUPREME COURTS FINDINGS IN THE DECISION DATED 24
AUGUST 2010 ARE CONTRARY TO LAW.

As to the Manahans, they seek a partial reconsideration and to allow further

reception of evidence, stating the following grounds:
I.

As the original of Sale Certificate No. 511 could not be found in the
files of the LMB or the DENR-NCR at the time of the hearings before
the Commissioners, the existence of the certificate was proven by
secondary evidence. The Commissioners erred in ignoring
secondary evidence of the contents of Sale Certificate No. 511
because of mere doubt and suspicion as to its authenticity and in
the absence of contradicting evidence.

II.

The OSG which has been tasked by the Honorable Court to obtain
documents from the LMB and DENR-NCR relative to the conveyance
of Lot 823, Piedad Estate, furnished intevenors with a certified true
copy of Sale Certificate No. 511 which it obtained from the DENRNCR on September 11, 2010, together with the explanation of
DENR-NCR why the document is available only now. (Certified true
copy of Sale Certificate No. 511 and Sworn Explanation of Evelyn G.
Celzo attached as Annexes I and II.
When Valentin Manahan offered to purchase Lot 823, Piedad Estate,
being the actual settler and occupant who under the law enjoyed
preference to buy the lot, his status as actual settler and
occupant must have been verified by the Bureau of Public Lands
because the presumption is that official duty has been regularly
performed. The administrative determination of the status of
Valentin Manahan as actual settler and occupant can not now be
reviewed after the lapse of about eight (8) decades when parties,
witnesses, documents and other evidence are hardly or no longer
available.
Abundant evidence was submitted by intervenors that they and
their predecessors-in-interest occupied and possessed Lot 823 up
to 1948 when they were dispossessed by armed men. It was error
for the Commissioners to ignore the evidence of the intervenors,
there being no contradicting proof.
The Commissioners committed palpable error in not according
evidentiary value to the Investigation Report of Evelyn dela Rosa
because it is allegedly practically a replica or summation of
Felicitas B. Manahans allegations embodied in her petition.
Examination of the dates of the documents will show that the
Investigation Report preceded the Petition. The Petition, therefore,
is based on the Investigation Report, and not the other way around.
The pronouncement of the Commissioners that Sale Certificate No.
511 is stale is incorrect. Intervenors made continuing efforts to
secure a deed of conveyance based on Sale Certificate No. 511.
Defense of staleness or laches belongs to the party against whom
the claim is asserted; it is only that party who can raise it. It can
also be waived, as in this case when the LMB which had the sole

III.

IV.

V.

VI.

VII.

VIII.

authority under Act No. 1120 to convey friar lands, issued to

intervenor Felicitas B. Manahan Deed of Conveyance No. V-200022.
The requirement of Act No. 1120 that a deed of conveyance of friar
land must be signed by the Secretary of Interior was dispensed
with pursuant to law and Presidential issuances which have the
force of law.
Deeds of conveyance lacking the signature of the Department
Secretary were ratified by President Joseph Estrada and DENR
Secretary Michael T. Defensor.

The motions are bereft of merit.

Upon the theory that this Court had no power to cancel their certificate of
title over Lot 823, Piedad Estate in the resolution of the present controversy,
the Manotoks contend that our Resolution of December 18, 2008 terminated
the appeal from the Land Registration Authority (LRA) administrative
reconstitution proceedings by reversing the CAs rulings and affirming the
denial by LRA Reconstitution Officer Benjamin M. Bustos of the application for
administrative reconstitution of the Barques Transfer Certificate of Title (TCT)
No. 210177. The appeal having been terminated, the Manotoks argued that
the remand to the CA for evidence-taking had introduced a new case in
which this Court will decide, in the first instance, an alleged ownership
issue over the property. Such action is legally infirm since the law has vested
exclusive original jurisdiction over civil actions involving title to real property
on the trial courts.
The argument is untenable.
In our December 18, 2008 Resolution, we set aside the December 12, 2005
Decision rendered by the First Division and recalled the entry of judgment.
We ruled that neither the CA nor the LRA had jurisdiction to cancel the
Manotok title, a relief sought by the Barques in the administrative
reconstitution proceedings. The Court En Banc proceeded with the
reevaluation of the cases on a pro hac vice basis. During the oral arguments,
there were controversial factual matters which emerged as the parties fully
ventilated their respective claims, in the course of which the Barques claim
of ownership was found to be exceedingly weak. Indeed, both the LRA and
CA erred in ruling that the Barques had the right to seek reconstitution of
their purported title. Reevaluation of the evidence on record likewise
indicated that the Manotoks claim to title is just as flawed as that of the
Barques. Following the approach in Alonso v. Cebu Country Club, Inc.[1]
also involving a Friar Land, Republic v. Court of Appeals[2] and Manotok
Realty Inc. v. CLT Realty Development Corporation,[3] the majority resolved
to remand this case for reception of evidence on the parties competing
claims of ownership over Lot 823 of the Piedad Estate. Given the contentious
factual issues, it was necessary for this Court to resolve the same for the

complete determination of the present controversy involving a huge tract of

friar land. It was thus not the first time the Court had actually resorted to
referring a factual matter pending before it to the CA.
Maintaining their objection to the order for reception of evidence on remand,
the Manotoks argue that as owners in possession, they had no further duty
to defend their title pursuant to Article 541 of the Civil Code which states
that: [a] possessor in the concept of owner has in his favor the legal
presumption that he possesses with a just title and he cannot be obliged to
show or prove it. But such presumption is prima facie, and therefore it
prevails until the contrary is proved.[4]In the light of serious flaws in the title
of Severino Manotok which were brought to light during the reconstitution
proceedings, the Court deemed it proper to give all the parties full
opportunity to adduce further evidence, and in particular, for the Manotoks to
prove their presumed just title over the property also claimed by the Barques
and the Manahans. As it turned out, none of the parties were able to
establish by clear and convincing evidence a valid alienation from the
Government of the subject friar land. The declaration of ownership in favor
of the Government was but the logical consequence of such finding.
We have ruled that the existence of Sale Certificate No. 1054 in the records
of the DENR-LMB was not duly established. No officer of the DENR-NCR or
LMB having official custody of sale certificates covering friar lands testified as
to the issuance and authenticity of Exh. 10 submitted by the Manotoks. And
even assuming that Exh. 10 was actually sourced from the DENR-LMB, there
was no showing that it was duly issued by the Director of Lands and
approved by the Secretary of Agriculture and Natural Resources (DENR). On
this point, the Manotoks hinted that the LMBs certifying the document (Exh.
10) at the Manotoks request was a deliberate fraud in order to give them
either a false document, the usual unsigned copy of the signed original, or a
fake copy.
The Manotoks further assert that this would imply that the LMB either did not
produce the genuine article, or could not produce it. This could only mean
that the document which the NBI found to be fake or spurious, if this Court
accepts that finding, was planted evidenceor evidence inserted in the LMB
files to discredit the Manotok title. Nonetheless, the Manotoks insist there
were independent evidence which supposedly established the prior existence
of Sale Certificate No. 1054. These documents are: (a) photocopy of
Assignment of Sale Certificate No. 1054 dated 1929; (b) official receipt of
payment for said certified copy; (c) photocopies of the other assignment
deeds dated 1923; (d) official receipts of installment payments on Lot 823
issued to Severino Manotok; (e) file copies in the National Archives of the
Deed of Conveyance No. 29204; and (f) the notarial registers in which the
said Deed of Conveyance, as well as the assignment documents, were
entered.
The contentions have no merit, and at best speculative. As this Court

categorically ruled in Alonso v. Cebu Country Club, Inc.,[5] approval by the

Secretary of Agriculture and Commerce of the sale of friar lands is
indispensable for its validity, hence, the absence of such approval made the
sale null and void ab initio. In that case, the majority declared that no valid
titles can be issued on the basis of the sale or assignment made in favor of
petitioners father due to the absence of signature of the Director of Lands
and the Secretary of the Interior, and the approval of the Secretary of
Natural Resources in the Sale Certificate and Assignment of Sale Certificate.
Applying the Alonso ruling to these cases, we thus held that no legal right
over the subject friar land can be recognized in favor of the Manotoks under
the assignment documents in the absence of the certificate of sale duly
signed by the Director of Lands and approved by the Secretary of Agriculture
and Natural Resources.
That a valid certificate of sale was issued to Severino Manotoks assignors
cannot simply be presumed from the execution of assignment documents in
his favor. Neither can it be deduced from the alleged issuance of the halftorn TCT No. 22813, itself a doubtful document as its authenticity was not
established, much less the veracity of its recitals because the name of the
registered owner and date of issuance do not appear at all. The Manotoks
until now has not offered any explanation as to such condition of the alleged
title of Severino Manotok; they assert that it is the Register of Deeds himself
who should be in a position to explain that condition of the TCT in his
custody. But then, no Register of Deeds had testified and attested to the
fact that the original of TCT No. 22813 was under his/her custody, nor that
said certificate of title in the name of Severino Manotok existed in the files of
the Registry of Deeds of Caloocan or Quezon City. The Manotoks consistently
evaded having to explain the circumstances as to how and where TCT No.
22813 came about. Instead, they urge this Court to validate their alleged
title on the basis of the disputable presumption of regularity in the
performance of official duty. Such stance hardly satisfies the standard of
clear and convincing evidence in these cases. Even the existence of the
official receipts showing payment of the price to the land by Severino
Manotok does not prove that the land was legally conveyed to him without
any contract of sale having been executed by the government in his favor.
Neither did the alleged issuance of TCT No. 22183 in his favor vest ownership
upon him over the land nor did it validate the alleged purchase of Lot 283,
which is null and void. The absence of the Secretarys approval in Certificate
of Sale No. 1054 made the supposed sale null and void ab initio.[6]
In the light of the foregoing, the claim of the Barques who, just like the
Manahans, were unable to produce an authentic and genuine sale certificate,
must likewise fail. The Decision discussed extensively the findings of the CA
that the Barques documentary evidence were either spurious or irregularly
procured, which even buttressed the earlier findings mentioned in the
December 18, 2008 Resolution. The CAs findings and recommendations
with respect to the claims of all parties, have been fully adopted by this
Court, as evident in our disquisitions on the indispensable requirement of a

validly issued Certificate of Sale over Lot 823, Piedad Estate.

As to the motion of the Manahans to admit an alleged certified true copy of
Sale Certificate No. 511 dated June 23, 1913 in the name of Valentin
Manahan which, as alleged in the attached Sworn Explanation of Evelyn G.
Celzo, the latter hadinadvertently failed to attach to her Investigation Report
forwarded to the CENRO, this Court cannot grant said motion.
This belatedly submitted copy of Sale Certificate No. 511 was not among
those official documents which the Office of the Solicitor General (OSG)
offered as evidence, as in fact no copy thereof can be found in the records of
either the DENR-NCR or LMB. Moreover, the sudden emergence of this
unauthenticated document is suspicious, considering that Celzo who testified,
as witness for both the OSG and the Manahans, categorically admitted that
she never actually saw the application to purchase and alleged Sale
Certificate No. 511 of the Manahans. The relevant portions of the transcript
of stenographic notes of the cross- examination of said witness during the
hearing before the CA are herein quoted:
ATTY. SAN JUAN:
How about this part concerning Valentin Manahan having applied for the
purchase of the land? Did you get this from the neighbors or from Felicitas
Manahan?
xxxx
WITNESS:
No, sir. Only the Records Section, sir, that Valentin Manahan applied, sir.
ATTY. SAN JUAN:
You did not see Valentin Manahans application but only the Records Section
saw it?
WITNESS:
Yes, sir.
ATTY. SAN JUAN:
Did they tell you that they saw the application?
WITNESS:
I did not go further, sir.
xxxx

ATTY. SAN JUAN:

And this report of yours says that Valentin Manahan was issued Sale
Certificate No. 511 after completing the payment of the price of P2,140?
WITNESS:
Yes, sir.
ATTY. SAN JUAN:
You also got this from the records of the LMB, is that correct?
WITNESS:
Yes, sir.
ATTY. SAN JUAN:
You actually saw the sale certificate that was issued to Valentin
Manahan after he paid the price of P2,140?
WITNESS:
No, sir. I did not go further.
ATTY. SAN JUAN:
You did not see the sale certificate?
WITNESS:
Yes, Sir, but I asked only.
ATTY. SAN JUAN:
Who did you ask?
WITNESS:
The records officer, sir.
ATTY. SAN JUAN:
Whose name you can no longer recall, correct?
WITNESS:

I can no longer recall, sir.

ATTY. SAN JUAN:
And the information to you was the Sale Certificate No. 511 was issued
after the price was fully paid?
WITNESS:
Yes, sir.
ATTY. SAN JUAN:
And it was only after he applied for the purchase of the lot sometime after
the survey of 1939 that he was issued sale certificate No. 511?
WITNESS:
I am not aware of the issuance of sale certificate. I am aware only of
the deed of assignment, Sir.
x x x x[7] (Emphasis supplied.)
In view of the above admission, Celzos explanation that the copy of Sale
Certificate No. 511 signed by the Director of Lands and Secretary of the
Interior was originally attached to her Investigation Report, cannot be given
credence. Even her testimony regarding the conduct of her investigation of
Lot 823, Piedad Estate and the Investigation Report she submitted thereafter,
failed to impress the CA on the validity of the Manahans claim. Indeed,
records showed that Celzos findings in her report were merely based on
what Felicitas Manahan told her about the alleged occupation and possession
by Valentin Manahan of the subject land.
In their Offer of Additional Evidence, the Manahans submitted a photocopy of
a letter dated December 21, 2010 allegedly sent by Atty. Allan V. Barcena
(OIC, Director) to their counsel, Atty. Romeo C. dela Cruz, which reads:
This has reference to your letter dated August 20, 2010 addressed to the
Secretary of the Department of Environment and Natural Resources (DENR)
requesting that Deed of Conveyance No. V-200022 issued on October 30,
2000 over Lot 823 of the Piedad Estate in favor of Felicitas B. Manahan be
ratified or confirmed for reasons stated therein. The Office of the DENR
Secretary in turn referred the letter to us for appropriate action.
Records of this Office on Lot 823 of the Piedad Estate, show that the
Deed of Conveyance No. V-200022 covering said lot in favor of
Felicitas Manahan was issued by then Director of the Land
Management Bureau (LMB), now Undersecretary Ernesto D. Adobo,

Jr., on October 30, 2000. The Deed was issued based on General
Memorandum Order (GMO) No. 1 issued by then Secretary Jose J. Leido, Jr.
of the Department of Natural Resources on January 17, 1977, which
authorized the Director of Lands, now Director of LMB, to approve contracts
of sale and deeds of conveyance affecting Friar Lands.
It is stressed that the confirmation of the Deed by this office is only as to the
execution and issuance based on the authority of LMB Director under GMO
No. 1. This is without prejudice to the final decision of the Supreme Court as
to its validity in the case of Severino Manotok IV, et al. versus Heirs of
Homer L, Barque (G.R. No. 162335 & 162605).
Please be guided accordingly.[8] (Emphasis supplied.)
However, in the absence of a valid certificate of sale duly signed by the
Secretary of Interior or Agriculture and Natural Resources, such alleged
confirmation of the execution and issuance by the DENR-LMB of Deed of
Conveyance No V-00022 in favor of Felicitas Manahan on October 30, 2000 is
still insufficient to prove the Manahans claim over the subject land.
In a Supplemental Manifestation dated November 18, 2010, the Manotoks
submitted an affidavit supposedlyexecuted on November 11, 2010 by former
DENR Secretary Michael T. Defensor(Defensor Affidavit) clarifying that MO
16-05 applies to all Deeds of Conveyance that do not bear the signature of
the Secretary of Natural Resources, contrary to the CA and this Courts
statement that said issuance refers only to those deeds of conveyance on file
with the records of the DENR field offices.
By its express terms, however, MO 16-05 covered only deeds of conveyances
and not unsigned certificates of sale. The explanation of Secretary Defensor
stated theavowed purpose behind the issuance, which is to remove doubts
or dispel objections as to the validity of all Torrens transfer certificates of title
issued over friar lands thereby ratifying the deeds of conveyance to the
friar land buyers who have fully paid the purchase price, and are otherwise
not shown to have committed any wrong or illegality in acquiring such lands.
The Manahans propounded the same theory that contracts of sale over friar
lands without the approval of the Secretary of Natural Resources may be
subsequently ratified, but pointed out that unlike the Manotoks Deed of
Conveyance No. 29204 (1932), their Deed of Conveyance No. V-2000-22
(2000) was issued and approved by the Director of Lands upon prior
authority granted by the Secretary.
In their Consolidated Memorandum dated December 19, 2010, the Manahans
reiterated their earlier argument that the LMB Director himself had the
authority to approve contracts of sale and deeds of conveyance over friar
lands on the basis of General Memorandum Order No. 1 issued in 1977 by
then Secretary of Natural Resources Jose J. Leido, Jr. delegating such

function to the Director of Lands. This delegated power can also be gleaned
from Sec. 15, Chapter 1, Title XIV of the Administrative Code of 1987 which
provides that the Director of Lands shall perform such other functions as
may be provided by law or assigned by the Secretary. Moreover, former
President Corazon C. Aquino issued Executive Order No. 131 dated January
20, 1987 reorganizing the LMB and providing that the LMB Director shall,
among others, perform other functions as may be assigned by the Minister of
Natural Resources.
On the basis of Art. 1317[9] of the Civil Code, the Manahans contend that
deeds of conveyance not bearing the signature of the Secretary can also be
ratified. Further, they cite Proclamation No. 172 issued by former President
Joseph Ejercito Estrada which declared that there should be no legal
impediment for the LMB to issue such deeds of conveyance since the
applicants/purchasers have already paid the purchase price of the lot, and as
sellers in good faith, it is the obligation of the Government to deliver to said
applicants/purchasers the friar lands sold free of any lien or encumbrance
whatsoever. Eventually, when MO 16-05 was issued by Secretary Defensor,
all these deeds of conveyance lacking the signature of the Secretary of
Natural Resources are thus deemed signed or otherwise ratified. The CA
accordingly erred in holding that MO 16-05 cannot override Act No. 1120
which requires that a deed of conveyance must be signed by the Secretary,
considering that MO 16-05 is based on law and presidential issuances,
particularly EO 131, which have the force of law.
Meanwhile, in compliance with our directive, the Solicitor General filed his
Comment on the Defensor Affidavit submitted by the Manotoks. The Solicitor
General contends that said document is hearsay evidence, hence
inadmissible and without probative value. He points out that former DENR
Secretary Defensor was not presented as a witness during the hearings at
the CA, thus depriving the parties including the government of the right to
cross-examine him regarding his allegations therein. And even assuming
arguendo that such affidavit is admissible as evidence, the Solicitor General
is of the view that the Manotoks, Barques and Manahans still cannot benefit
from the remedial effect of MO 16-05 in view of the decision rendered by
this Court which ruled that none of the parties in this case has established a
valid alienation from the Government of Lot 823 of the Piedad Estate, and
also because the curative effect of MO 16-05 is intended only for friar land
buyers whose deeds of conveyance lack the signature of the Secretary of the
Interior or Agriculture and Natural Resources, have fully paid the purchase
price and are otherwise not shown to have committed any wrong or illegality
in acquiring the friar lands. He then emphasizes that this Court has ruled
that it is not only the deed of conveyance which must be signed by the
Secretary but also the certificate of sale itself. Since none of the parties has
shown a valid disposition to any of them of Lot 823 of the Piedad Estate, this
Court therefore correctly held that said friar land is still part of the
patrimonial property of the national government.

The Court is not persuaded by the ratification theory espoused by the

Manotoks and Manahans.
The argument that the Director of Lands had delegated authority to approve
contracts of sale and deeds of conveyances over friar landsignores the
consistent ruling of this Court in controversies involving friar lands. The
aforementioned presidential/executive issuances notwithstanding, this
Court held in Solid State Multi-Products Corporation v. CA,[10] Liao v. Court
of Appeals,[11]and Alonso v. Cebu Country Club[12] that approval of the
Secretary of Agriculture and Commerce (later the Natural Resources) is
indispensable to the validity of sale of friar land pursuant to Sec. 18 of Act
No. 1120 and that the procedure laid down by said law must be strictly
complied with.
As to the applicability of Art. 1317 of the Civil Code, we maintain that
contracts of sale lacking the approval of the Secretary fall under the class of
void and inexistent contracts enumerated in Art. 1409[13] which cannot be
ratified. Section 18 of Act No. 1120 mandated the approval by the Secretary
for a sale of friar land to be valid.
In his dissenting opinion, Justice Antonio T. Carpio disagreed with the
majoritys interpretation of Section 18 of Act No. 1120, and proposed that
based on Section 12 of the same Act, it is the Deed of Conveyance that must
bear the signature of the Secretary of Interior/Agriculture and Natural
Resources because it is only when the final installment is paid that the
Secretary can approve the sale, the purchase price having been fully paid.
It was pointed out that the majority itself expressly admit that it is only a
ministerial duty on the part of the Secretary to sign the Deed of Conveyance
once the applicant had made full payment on the purchase price of the land,
citing jurisprudence to the effect that notwithstanding the failure of the
government to issue the proper instrument of conveyance when the
purchaser finally pays the final installment of the purchase price, the
purchase of the friar land still acquired ownership.
We are unable to agree with the view that it is only the Director of Lands who
signs the Certificate of Sale.
The official document denominated as Sale Certificate clearly required both
the signatures of the Director of Lands who issued such sale certificate to an
applicant settler/occupant and the Secretary of the Interior/Agriculture and
Natural Resources indicating his approval of the sale. These forms had been
prepared and issued by the Chief of the Bureau of Public Lands under the
supervision of the Secretary of the Interior, consistent with Act No. 1120 as
may be necessary x x x to carry into effect all the provisions [thereof] that
are to be administered by or under [his] direction, and for the conduct of all
proceedings arising under such provisions.[14]

We reiterate that Section 18 of Act No. 1120, as amended, is plain and

categorical in stating that:
SECTION 18. No lease or sale made by the Chief of the Bureau of Public
Lands under the provisions of this Act shall be valid until approved by the
Secretary of the Interior.
Section 12 did not mention the requirement of signature or approval of the
Secretary in the sale certificate and deed of conveyance.
SECTION 12. It shall be the duty of the Chief of the Bureau of Public Lands
by proper investigation to ascertain what is the actual value of the parcel of
land held by each settler and occupant, taking into consideration the location
and quality of each holding of land, and any other circumstances giving [it]
value. The basis of valuation shall likewise be, so far as practicable, such [as]
the aggregate of the values of all the holdings included in each particular
tract shall be equal to the cost to the Government to the entire tract,
including the cost of surveys, administration and interest upon the purchase
money to the time of sale. When the cost thereof shall have been thus
ascertained, the Chief of the Bureau of Public Lands shall give the said settler
and occupant a certificate which shall set forth in detail that the Government
has agreed to sell to such settler and occupant the amount of land so held by
him, at the price so fixed, payable as provided in this Act at the office of the
Chief of Bureau of Public Lands, in gold coin of the United States or its
equivalent in Philippine currency, and that upon the payment of the final
installment together with [the] accrued interest the Government will convey
to such settler and occupant the said land so held by him by proper
instrument of conveyance, which shall be issued and become effective in the
manner provided in section one hundred and twenty-two of the Land
Registration Act. The Chief of the Bureau of Public Lands shall, in each
instance where a certificate is given to the settler and occupant of any
holding, take his formal receipt showing the delivery of such certificate,
signed by said settler and occupant.
On the other hand, the first paragraph of Section 15 provides for the
reservation of title in the Government only for the purpose of ensuring
payment of the purchase price, which means that the sale was subject only
to the resolutory condition of non-payment, while the second paragraph
states that the purchaser thereby acquires the right of possession and
purchase by virtue of a certificate of sale signed under the provisions
[thereof]. The certificate of sale evidences the meeting of the minds
between the Government and the applicant regarding the price, the specific
parcel of friar land, and terms of payment. In Dela Torre v. Court of Appeals,
[15]
we explained that the non-payment of the full purchase price is the only
recognized resolutory condition in the case of sale of friar lands. We have
also held that it is the execution of the contract to sell and delivery of the
certificate of sale that vests title and ownership to the purchaser of friar land.
[16]
Where there is no certificate of sale issued, the purchaser does not

acquire any right of possession and purchase, as implied from Section 15.
By the mandatory language of Section 18, the absence of approval of the
Secretary of Interior/Agriculture and Natural Resources in the lease or sale of
friar land would invalidate the sale. These provisions read together indicate
that the approval of the Secretary is required in both the certificate of sale
and deed of conveyance, although the lack of signature of the Secretary in
the latter may not defeat the rights of the applicant who had fully paid the
purchase price.
Justice Conchita Carpio Morales dissent asserted that case law does not
categorically state that the required approval must be in the form of a
signature on the Certificate of Sale, and that there is no statutory basis for
the requirement of the Secretarys signature on the Certificate of Sale apart
from a strained deduction of Section 18.
As already stated, the official forms being used by the Government for this
purpose clearly show that the Director of Lands signs every certificate of sale
issued covering a specific parcel of friar land in favor of the
applicant/purchaser while the Secretary of Interior/Natural Resources signs
the document indicating that the sale was approved by him. To approve is to
be satisfied with; to confirm, ratify, sanction, or consent to some act or thing
done by another; to sanction officially.[17] The Secretary of Interior/Natural
Resources signs and approves the Certificate of Sale to confirm and officially
sanction the conveyance of friar lands executed by the Chief of the Bureau of
Public Lands (later Director of Lands). It is worth mentioning thatSale
Certificate No. 651 in the name of one Ambrosio Berones dated June 23,
1913,[18]also covering Lot 823 of the Piedad Estate and forming part of the
official documents on file with the DENR-LMB which was formally offered by
the OSG as part of the official records on file with the DENR and LMB
pertaining to Lot 823, contains the signature of both the Director of Lands
and Secretary of the Interior. The Assignment of Sale Certificate No. 651
dated April 19, 1930 was also signed by the Director of Lands. [19]
Following the dissents interpretation that the Secretary is not required to
sign the certificate of sale while his signature in the Deed of Conveyance may
also appear although merely a ministerial act, it would result in the absurd
situation wherein thecertificate of sale and deed of conveyance both lacked
the signature and approval of the Secretary, and yet the purchasers
ownership is ratified, courtesy of DENR Memorandum Order (MO) No. 16-05.
It is also not farfetched that greater chaos will arise from conflicting claims
over friar lands, which could not be definitively settled until the genuine and
official manifestation of the Secretarys approval of the sale is discerned from
the records and documents presented. This state of things is simply not
envisioned under the orderly and proper distribution of friar lands to bona
fide occupants and settlers whom the Chief of the Bureau of Public Lands was
tasked to identify.[20]
The existence of a valid certificate of sale therefore must first be established

with clear and convincing evidence before a purchaser is deemed to have

acquired ownership over a friar land notwithstanding the non-issuance by the
Government, for some reason or another, of a deed of conveyance after
completing the installment payments. In the absence of such certificate of
sale duly signed by the Secretary, no right can be recognized in favor of the
applicant. Neither would any assignee or transferee acquire any right over
the subject land.
In Alonso v. Cebu Country Club, Inc.,[21] the Court categorically ruled that the
absence of approval by the Secretary of Agriculture and Commerce in the
sale certificate and assignment of sale certificate made the sale null and void
ab initio. Necessarily, there can be no valid titles issued on the basis of such
sale or assignment.[22]
Justice Carpio, however, opined that the ruling in Alonso was superseded
with the issuance by then Department of [Environment] and Natural
Resources (DENR) Secretary Michael T. Defensor of DENR Memorandum
Order No. 16-05. It was argued that the majority had construed a limited
application when it declared that the Manotoks could not benefit from said
memorandum order because the latter refers only to deeds of conveyance
on file with the records of the DENR field offices.
We disagree with the view that Alonso is no longer applicable to this
controversy after the issuance of DENR MO No. 16-05 which supposedly
cured the defect in the Manotoks title.
First, DENR MO No. 16-05 explicitly makes reference only to Deeds of
Conveyances, not to Sale Certificates by which, under the express language
of Section 15, the purchaser of friar land acquires the right of possession and
purchase pending final payment and the issuance of title, such certificate
being duly signed under the provisions of Act No. 1120. Although the
whereas clause of MO No. 16-05 correctly stated that it was only a ministerial
duty on the part of the Secretary to sign the Deed of Conveyance once the
applicant had made full payment on the purchase price of the land, it must
be stressed that in those instances where the formality of the Secretarys
approval and signature is dispensed with, there was a valid certificate of sale
issued to the purchaser or transferor. In this case, there is no indication in
the records that a certificate of sale was actually issued to the assignors of
Severino Manotok, allegedly the original claimants of Lot 823, Piedad Estate.
Second, it is basic that an administrative issuance like DENR Memorandum
Order No. 16-05 must conform to and not contravene existing laws. In the
interpretation and construction of the statutes entrusted to them for
implementation, administrative agencies may not make rules and regulations
which are inconsistent with the statute it is administering, or which are in
derogation of, or defeat its purpose. In case of conflict between a statute
and an administrative order, the former must prevail.[23] DENR Memorandum
Order No. 16-05 cannot supersede or amend the clear mandate of Section

18, Act No. 1120 as to dispense with the requirement of approval by the
Secretary of the Interior/Agriculture and Natural Resources of every lease or
sale of friar lands.
But what is worse, as the dissent suggests, is that MO 16-05 would apply
even to those deeds of conveyances not found in the records of DENR or its
field offices, such as the Manotoks Deed of Conveyance No. 29204 sourced
from the National Archives. It would then cover cases of claimants who have
not been issued any certificate of sale but were able to produce a deed of
conveyance in their names. The Bureau of Lands was originally charged with
the administration of all laws relative to friar lands, pursuant to Act No. 2657
and Act No. 2711. Under Executive Order No. 192,[24] the functions and
powers previously held by the Bureau of Lands were absorbed by the Lands
Management Bureau (LMB) of the DENR, while those functions and powers
not absorbed by the LMB were transferred to the regional field offices. [25] As
pointed out by the Solicitor General in the Memorandum submitted to the CA,
since the LMB and DENR-NCR exercise sole authority over friar lands, they
are naturally the sole repository of documents and records relative to Lot
No. 823 of the Piedad Estate.[26]
Third, the perceived disquieting effects on titles over friar lands long held by
generations of landowners cannot be invoked as justification for legitimizing
any claim or acquisition of these lands obtained through fraud or without
strict compliance with the procedure laid down in Act No. 1120. This Court,
in denying with finality the motion for reconsideration filed by petitioner in
Alonso v. Cebu Country Club, Inc.[27] reiterated the settled rule that
[a]pproval by the Secretary of the Interior cannot simply be presumed or
inferred from certain acts since the law is explicit in its mandate.[28]
Petitioners failed to discharge their burden of proving their acquisition of title
by clear and convincing evidence, considering the nature of the land
involved.
As consistently held by this Court, friar lands can be alienated only upon
proper compliance with the requirements of Act No. 1120. The issuance of
a valid certificate of sale is a condition sine qua non for acquisition of
ownership under the Friar Lands Act. Otherwise, DENR Memorandum Order
No. 16-05 would serve as administrative imprimatur to holders of deeds of
conveyance whose acquisition may have been obtained through irregularity
or fraud.
Contrary to the dissent of Justice Maria Lourdes P. A. Sereno that our
decision has created dangers for the system of property rights in the
Philippines, the Court simply adhered strictly to the letter and spirit of the
Friar Lands Act and jurisprudence interpreting its provisions. Such imagined
scenario of instability and chaos in the established property regime,
suggesting several other owners of lands formerly comprising the Piedad
Estate who are supposedly similarly situated, remains in the realm of
speculation. Apart from their bare allegations, petitioners (Manotoks) failed

to demonstrate how the awardees or present owners of around more than

2,000 hectares of land in the Piedad Estate can be embroiled in legal disputes
arising from unsigned certificates of sale.
On the other hand, this Court must take on the task of scrutinizing even
certificates of title held for decades involving lands of the public domain and
those lands which form part of the Governments patrimonial property,
whenever necessary in the complete adjudication of the controversy before it
or where apparent irregularities and anomalies are shown by the evidence on
record. There is nothing sacrosanct about the landholdings in the Piedad
Estate as even prior to the years when Lot 823 could have been possibly
sold or disposed by the Bureau of Lands, there were already reported
anomalies in the distribution of friar lands in general.[29]
Significantly, subsequent to the promulgation of our decision in Alonso,
Republic Act No. (RA) 9443 was passed by Congress confirming and
declaring, subject to certain exceptions, the validity of existing TCTs and
reconstituted certificates of title covering the Banilad Friar Lands Estate
situated in Cebu. Alonso involved a friar land already titled but without a
sale certificate, and upon that ground we declared the registered owner as
not having acquired ownership of the land. RA 9443 validated the titles
notwithstanding the lack of signatures and/or approval of the then Secretary
of Interior (later Secretary of Agriculture and Natural Resources) and/or the
then Chief of the Bureau of Public lands (later Director of Public Lands) in the
copies of the duly executed Sale Certificate and Assignments of Sale
Certificates, as the case may be, now on file with the Community
Environment and Natural Resources Office (CENRO), Cebu City.
The enactment of RA 9443 signifies the legislatures recognition of the
statutory basis of the Alonso ruling to the effect that in the absence of
signature and/or approval of the Secretary of Interior/Natural Resources in
the Certificates of Sale on file with the CENRO, the sale is not valid and the
purchaser has not acquired ownership of the friar land. Indeed, Congress
found it imperative to pass a new law in order to exempt the already titled
portions of the Banilad Friar Lands Estate from the operation of Section 18.
This runs counter to the dissents main thesis that a mere administrative
issuance (DENR MO No. 16-05) would be sufficient to cure the lack of
signature and approval by the Secretary in Certificate of Sale No. 1054
covering Lot 823 of the Piedad Estate.
In any event, the Manotoks now seek the application of RA 9443 to the
Piedad Estate, arguing that for said law to be constitutionally valid, its
continued operation must be interpreted in a manner that does not collide
with the equal protection clause. Considering that the facts in Alonso from
which RA 9443 sprung are similar to those in this case, it is contended that
there is no reason to exclude the Piedad Estate from the ambit of RA 9443.
Justice Carpios dissent concurs with this view, stating that to limit its

application to the Banilad Friar Lands Estate will result in class legislation.
RA 9443 supposedly should be extended to lands similarly situated, citing
the case of Central Bank Employees Association, Inc. v. Bangko Sentral ng
Pilipinas.[30]
In the aforesaid case, the Court extended the benefits of subsequent laws
exempting all rank-and-file employees of other government financing
institutions (GFIs) from the Salary Standardization Law (SSL) to the rankand-file employees of the BSP. We upheld the position of petitioner
association that the continued operation of Section 15 (c), Article II of RA
7653 (the New Central Bank Act), which provides that the compensation and
wage structure of employees whose position fall under salary grade 19 and
below shall be in accordance with the rates prescribed under RA 6758 (SSL),
constitutes invidious discrimination on the 2,994 rank-and-file employees of
the [BSP]. Thus, as regards the exemption from the SSL, we declared that
there were no characteristics peculiar only to the seven GFIs or their rankand-file so as to justify the exemption from the SSL which BSP rank-and-file
employees were denied. The distinction made by the law is superficial,
arbitrary and not based on substantial distinctions that make real differences
between BSP rank-and-file and the seven other GFIs. [31]
We are of the opinion that the provisions of RA 9443 may not be applied to
the present case as to cure the lack of signature of the Director of Lands and
approval by the Secretary of Agriculture and Natural Resources in Sale
Certificate No. 1054.
The Court has explained the nature of equal protection guarantee in this
manner:
The equal protection of the law clause is against undue favor and individual
or class privilege, as well as hostile discrimination or the oppression of
inequality. It is not intended to prohibit legislation which is limited
either in the object to which it is directed or by territory within which
it is to operate. It does not demand absolute equality among
residents; it merely requires that all persons shall be treated alike,
under like circumstances and conditions both as to privileges
conferred and liabilities enforced. The equal protection clause is not
infringed by legislation which applies only to those persons falling within a
specified class, if it applies alike to all persons within such class, and
reasonable grounds exist for making a distinction between those who fall
within such class and those who do not.[32] (Emphasis and underscoring
supplied.)
Section 1 of RA 9443 provides:
Section 1. All existing Transfer Certificates of Title and Reconstituted
Certificates of Title duly issued by the Register of Deeds of Cebu
Province and/or Cebu City covering any portion of the Banilad Friar Lands

Estate, notwithstanding the lack of signatures and/or approval of the then

Secretary of the Interior (later Secretary of Agriculture and Natural
Resources) and/or the then Chief of the Bureau of Public Lands (later
Director of Public Lands) in the copies of the duly executed Sale
Certificates and Assignments of Sales Certificates, as the case may
be, now on file with the Community Environment and Natural
Resources Office (CENRO), Cebu City, are hereby confirmed and declared
as valid titles and the registered owners recognized as absolute owners
thereof.
This confirmation and declaration of validity shall in all respects be entitled to
like effect and credit as a decree of registration, binding the land and
quieting the title thereto and shall be conclusive upon and against all
persons, including the national government and al1 branches thereof;
except when, in a given case involving a certificate of title or
areconstituted certificate of title, there is clear evidence that such
certificate of title or reconstituted certificate of title was obtained
through fraud, in which case the solicitor general or his duly designated
representative shall institute the necessary judicial proceeding to cancel the
certificate of title or reconstituted certificate of title as the case may be,
obtained through such fraud.(Emphasis supplied.)
Without ruling on the issue of violation of equal protection guarantee if the
curative effect of RA 9443 is not made applicable to all titled lands of the
Piedad Estate, it is clear that the Manotoks cannot invoke this law to
confirm and validate their alleged title over Lot 823. It must be stressed
that the existence and due issuance of TCT No. 22813 in the name of
Severino Manotok was not established by the evidence on record. There is
likewise no copy of a duly executed certificate of sale on file with the
DENR regional office. In the absence of an existing certificate of title in the
name of the predecessor-in-interest of the Manotoks and certificate of sale
on file with the DENR/CENRO, there is nothing to confirm and validate
through the application of RA 9443.
Moreover, RA 9443 expressly excludes from its coverage those cases
involving certificates of title which were shown to have been fraudulently or
irregularly issued. As the reconstitution and remand proceedings in these
cases revealed, the Manotoks title to the subject friar land, just like the
Barques and Manahans, is seriously flawed. The Court cannot allow them
now to invoke the benefit of confirmation and validation of ownership of friar
lands under duly executed documents, which they never had in the first
place. Strict application by the courts of the mandatory provisions of the
Friar Lands Act is justified by the laudable policy behind its enactment -- to
ensure that the lands acquired by the government would go to the actual
occupants and settlers who were given preference in their distribution. [33]
The dissent reiterates that the existence of Sale Certificate No. 1054 was
clearly and convincingly established by the original of Assignment of Sale

Certificate No. 1054 dated May 4, 1923 between M. Teodoro and Severino
Manotok as assignors and Severino Manotok as assignee (approved by the
Director of Lands on June 23, 1923), which is on file with the LMB, as well as
the Deed of Conveyance No. 29204 secured from the National Archives which
is the repository of government and official documents, the original of Official
Receipt No. 675257 dated 20 February 1920 for certified copy of Assignment
of Sale Certificate No. 1054 on Lot 823 and the original of the Provincial
Assessors declaration of title in Severino Manotoks name for tax purposes
on August 9, 1933 assessing him beginning with the year 1933. The dissent
further listed some of those alleged sale certificates, assignment deeds and
deeds of conveyance either signed by the Director of Lands only or unsigned
by both Director of Lands and Secretary of Interior/Natural Resources,
gathered by the Manotoks from the LMB. It was stressed that if MO 16-05 is
not applied to these huge tracts of land within and outside Metro Manila,
[H]undreds of thousands, if not millions, of landowners would surely be
dispossessed of their lands in these areas, a blow to the integrity of our
Torrens system and the stability of land titles in this country.
The Court has thoroughly examined the evidence on record and exhaustively
discussed the merits of the Manotoks ownership claim over Lot 823, in the
light of established precedents interpreting the provisions of the Friar Lands
Act. The dissent even accused the majority of mistakenly denigrating the
records of the National Archives which, under R.A. No. 9470 enacted on May
21, 2007, is mandated to store and preserve any public archive transferred
to the National Archives and tasked with issuing certified true copies or
certifications on public archives and for extracts thereof.
The Friar Lands Act mandated a system of recording all sale contracts to be
implemented by the Director of Lands, which has come to be known as the
Friar Lands Sales Registry.
SEC. 6. The title, deeds and instruments of conveyance pertaining to the
lands in each province, when executed and delivered by said grantors to the
Government and placed in the keeping of the Chief of the Bureau of Public
Lands, as above provided, shall be by him transmitted to the register of
deeds of each province in which any part of said lands lies, for registration in
accordance with law. But before transmitting the title, deeds, and
instruments of conveyance in this section mentioned to the register
of deeds of each province for registration, the Chief of the Bureau of
Public Lands shall record all such deeds and instruments at length in
one or more books to be provided by him for that purpose and
retained in the Bureau of Public Lands, when duly certified by him shall
be received in all courts of the Philippine Islands as sufficient evidence of the
contents of the instrument so recorded whenever it is not practicable to
produce the originals in court. (Section 1, Act No. 1287).
It is thus the primary duty of the Chief of the Bureau of Public Lands to
record all these deeds and instruments in sales registry books which shall be

retained in the Bureau of Public Lands. Unfortunately, the LMB failed to

produce the sales registry book in court, which could have clearly shown the
names of claimants, the particular lots and areas applied for, the sale
certificates issued and other pertinent information on the sale of friar lands
within the Piedad Estate. Witness Teresita J. Reyes, a retired Assistant Chief
of the Records Management Division (RMD), LMB who was presented by the
Manahans, testified that when the LMB was decentralized, the sales registry
books pertaining to friar lands were supposedly turned over to the regional
offices. These consisted of copies of the appropriate pages of the sales
registry books in the LMB RMD main office which has an inventory of lots
subject of deeds of conveyance and sales certificates. However, Reyes said
that the sales registry book itself is no longer with the RMD. On the other
hand, the alleged affidavit of Secretary Defensor dated November 11, 2010
states that MO 16-05 was intended to address situations when deeds of
conveyance lacked the signature of the Secretary of Agriculture and
Commerce, or such deeds or records from which the Secretarys signature or
approval may be verified were lost or unavailable.
Whether the friar lands registry book is still available in the LMB or properly
turned over to the regional offices remains unclear. With the statutorily
prescribed record-keeping of sales of friar lands apparently in disarray, it
behooves on the courts to be more judicious in settling conflicting claims
over friar lands. Titles with serious flaws must still be carefully scrutinized in
each case. Thus, we find that the approach in Alonso remains as the more
rational and prudent course than the wholesale ratification introduced by MO
16-05.
The prospect of litigants losing friar lands they have possessed for years or
decades had never deterred courts from upholding the stringent
requirements of the law for a valid acquisition of these lands. The courts
duty is to apply the law. Petitioners concern for other landowners which may
be similarly affected by our ruling is, without doubt, a legitimate one. The
remedy though lies elsewhere -- in the legislature, as what R.A. 9443 sought
to rectify.
WHEREFORE, the present motions for reconsideration are all hereby
DENIED with FINALITY. The motions for oral arguments and further
reception of evidence are likewise DENIED.
Let entry of judgment be made in due course.
SO ORDERED.
Corona, C.J., Leonardo-De Castro, Peralta, Bersamin, Abad, Perez, and
Mendoza

SECOND DIVISION
[ G.R. No. 185463, February 22, 2012 ]
TEEKAY SHIPPING PHILS., INC., AND/OR TEEKAY
SHIPPING CANADA, PETITIONERS, VS. RAMIER C.
CONCHA RESPONDENT.
DECISION
PEREZ, J.:
Petitioners Teekay Shipping Philippines, Inc., and/or Teekay Shipping Canada,
Ltd. (hereinafter referred to as petitioners) seek the reversal of the 3 July
2008 Decision[1] and 20 November 2008 Resolution [2] of the Court of Appeals
(CA) in CA-G.R. Sp. No. 98667. The CA ruled that the NLRC acted without
grave abuse of discretion in ordering the remand of the case to the
Arbitration Branch for further proceedings as the case has not yet
prescribed.[3]
Culled from the records are the following undisputed facts:
On 9 November 2000, Ramier C. Concha (hereinafter referred to as private
respondent) was hired as an Able Seaman by petitioners under an
employment contract[4] for a period of eight (8) months with a monthly salary
of $535.00. He was deployed to Canada on 22 November 2000.
On a windy morning of 23 November 2000, while he was removing rusty
fragments during his deck assignment, a foreign particle accidentally entered
his left eye. When his eye became reddish and his vision became blurred,
the designated medical officer on board administered first aid treatment.
Since there was no sign of improvement, respondent requested for medical
check-up in a hospital.
On 3 December 2000, private respondent was initially admitted at Karanatha
Hospital in Australia and was diagnosed with Left Eye Acute Iritis. He was
thereafter referred to the Royal Perth Hospital, West Australia and was
diagnosed to be suffering from Left Eye Iritis (Granulomatous).
On 6 December 2000, after being deployed only for less than a month,
private respondent was repatriated to the Philippines. Upon his arrival,
private respondent was referred to the Metropolitan Hospital. He underwent
medical treatment until February 2001. As he had not been assessed
whether he was fit to work as a seafarer, he filed a complaint for illegal

dismissal with money claims with the Arbitration Branch of the National Labor
Relations Commission (NLRC) on 28 May 2001.[5] The complaint, however,
was dismissed without prejudice by the Labor Arbiter on same date.
On 13 December 2004, private respondent filed another complaint [6] for
illegal dismissal before the Arbitration Branch of the NLRC. In his complaint,
he sought to recover disability benefits, damages and attorneys fees. He
likewise prayed for the payment of wages pertaining to the unexpired portion
of his contract.
Petitioners moved to dismiss the complaint for being time-barred. Relying
on Article 291 of the Labor Code, they maintained that all money claims
premised on, or arising from ones employment should be brought within
three (3) years from the time the cause of action accrued.
In an Order[7] dated 28 February 2005, the Labor Arbiter dismissed the
complaint on the ground of prescription.
Aggrieved, private respondent on 11 April 2005 filed an appeal [8] to the NLRC
arguing that the Labor Arbiter erred in dismissing his complaint and in
denying him due process by not giving him the opportunity to present
evidence against petitioners.
On 28 November 2006, the NLRC issued a Resolution [9] setting aside the 28
February 2005 Order of the Labor Arbiter. The NLRC, in effect, reinstated the
case and ordered the Labor Arbiter of origin to conduct further proceedings.
Petitioners filed a Motion for Reconsideration but this was denied by the NLRC
in an Order[10] dated 31 January 2007.
Petitioners assailed the 28 November 2006 and 31 January 2007 Resolutions
of the NLRC before the CA.
On 3 July 2008, the CA promulgated a decision dismissing their petition. The
motion for reconsideration filed by petitioners on 25 July 2008 was denied in
a Resolution dated 20 November 2008.
Hence, this petition.
ISSUE
Whether or not the CA erred in ruling that private respondents claims have
not yet prescribed.
OUR RULING
The appellate court is correct.

We find the instant petition bereft of merit.

Petitioners contend that the CA unjustifiably turned a blind eye to pertinent
existing laws, contract and prevailing jurisprudence. They insist that
seafarers are contractual employees whose rights and obligations are
governed primarily by the POEA Standard Employment Contract for Filipino
Seamen, the Rules and Regulations Governing Overseas Employment, and
more importantly, Republic Act No. 8042 or the Migrant Workers and
Overseas Filipinos Act of 1995.
Citing Section 30 of the POEA Standard Employment Contract, they
maintained that all claims arising therefrom prescribes in three (3) years. [11]
Petitioners argue that since the aforesaid provision specifically set the
prescription to three (3) years, the period provided under Article 1146 of the
Civil Code cannot be made to apply. They insist that private respondents
cause of action even if principally anchored on his alleged illegal dismissal
clearly prescribed in three (3) years under the aforesaid provision.
Petitioners contend that even if private respondents claims are well-founded,
the latters cause of action accrued on or before 6 December 2000. Thus,
his complaint should have been instituted within three (3) years from 6
December 2000 or before 6 December 2003. They further contend that even
assuming that the running of the period of prescription began only on 28 May
2001, the date when private respondents first complaint was dismissed
without prejudice, his claims would have prescribed on 28 May 2004. Since
private respondent filed his complaint only on 13 December 2004, the same
had clearly prescribed.[12]
The dispute is the period of prescription of action for illegal dismissal. It will
be noticed that in their Motion to Dismiss before the NLRC, petitioners allege
that the prescriptive period to be applied should be three (3) years from the
time the cause of action accrued in accordance with the Labor Code.
However, in their petition before this Court, they changed their stand and
alleged that the applicable provision should be that which is stated in the
POEA Standard Employment Contract for Filipino Seamen because seafarers
are not regular employees and as such, are not covered by the Labor Code.
In Callanta v. Carnation Philippines, Inc.,[13] this Court ruled that actions
based on injury to rights prescribe in four (4) years under Article 1146 of the
Civil Code rather than three (3) years as provided for the Labor Code. An
action for damages involving a plaintiff separated from his employment for
alleged unjustifiable causes is one for injury to the rights of the plaintiff, and
must be brought within four (4) years.[14] Private respondent had gone to
the Labor Arbiter on a charge, fundamentally, of illegal dismissal, of which his
money claims form but an incidental part. Essentially, his complaint is one
for injury to rights arising from his forced disembarkation. [15] Thus, Article
1146 is the applicable provision. It provides:

Art. 1146. The following actions must be instituted within four years:
(1) Upon an injury to the rights of the plaintiff;
(2) Upon a quasi-delict;
It is a principle in American jurisprudence which, undoubtedly, is wellrecognized in this jurisdiction that ones employment, profession, trade or
calling is a property right, and the wrongful interference therewith is an
actionable wrong.[16] The right is considered to be property within the
protection of a constitutional guaranty of due process of law. [17] Clearly then,
when one is arbitrarily and unjustly deprived of his job or means of
livelihood, the action instituted to contest the legality of ones dismissal from
employment constitutes, in essence, an action predicated upon an injury to
the rights of the plaintiff, as contemplated under Art. 1146 of the New Civil
Code, which must be brought within four (4) years. [18]
As in other causes of action, the prescriptive period for money claims is
subject to interruption, and in view of the absence of an equivalent Labor
Code provision for determining when said period may be interrupted, Article
1155 of the Civil Code is applicable. It states that:
Article 1155. The prescription of actions is interrupted when they are filed
before the Court, when there is written extra-judicial demand by the
creditors, and when there is any written acknowledgment of the debt by the
debtor.
Records reveal that after his disembarkation from the vessel MV Kyushu
Spirit on 6 December 2000, private respondent filed on 28 May 2001 a
complaint for illegal dismissal before the Arbitration Branch of the NLRC. His
complaint was dismissed by the Labor Arbiter on the same date. In
accordance with Section 16, Rule V of the NLRC Rules of Procedure [19],
private respondent can re-file a case in the Arbitration Branch of origin.
Since the filing of his first complaint on 28 May 2001 tolled the running of the
period of prescription, both the NLRC and the CA were correct in ruling that
the filing of respondents second complaint with money claims on 13
December 2004 was clearly filed on time.
The determination of the amount of claims or benefits to which private
respondent may be entitled requires factual inquiry that devolves upon the
Labor Arbiter. Considering that the case was dismissed through a minute
resolution, the case, as correctly ruled by the NLRC and affirmed by the CA,
should be referred back to the Arbitration Branch of NLRC for the reception of
evidence.
WHEREFORE, the instant petition for review is DENIED and the assailed
Decision dated 3 July 2008 of the Court of Appeals is AFFIRMED in toto.
Costs against petitioner.

SECOND DIVISION
[ G.R. No. 171513, February 06, 2012 ]
ARNOLD JAMES M. YSIDORO, PETITIONER, VS. HON.
TERESITA J. LEONARDO- DE CASTRO, HON. DIOSDADO
M. PERALTA AND HON. EFREN N. DE LA CRUZ, IN THEIR
OFFICIAL CAPACITIES AS PRESIDING JUSTICE AND
ASSOCIATE JUSTICES, RESPECTIVELY, OF THE FIRST
DIVISION OF THE SANDIGANBAYAN, AND NIERNA S.
DOLLER, RESPONDENTS.
[G.R. NO. 190963]
PEOPLE OF THE PHILIPPINES, PETITIONER, VS. FIRST
DIVISION OF THE SANDIGANBAYAN AND ARNOLD
JAMES M. YSIDORO, RESPONDENTS.
DECISION
BRION, J.:
Before us are consolidated petitions assailing the rulings of the
Sandiganbayan in Criminal Case No. 27963, entitled People of the
Philippines v. Arnold James M. Ysidoro.
G.R. No. 171513 is a petition for certiorari and prohibition under Rule 65 of
the Rules of Court (Rules) filed by petitioner Arnold James M. Ysidoro to
annul the resolutions, dated July 6, 2005[1] and January 25, 2006,[2] of the
Sandiganbayan granting the Motion to Suspend Accused Pendente Lite.
G.R. No. 190963, on the other hand, is a petition for certiorari under Rule 65
filed by the People of the Philippines through the Office of the Special
Prosecutor (People) to annul and set aside the decision,[3] dated October 1,
2009, and the resolution,[4] dated December 9, 2009, of the Sandiganbayan
which acquitted Ysidoro for violation of Section 3(e) of Republic Act (R.A.)
No. 3019 (Anti-Graft and Corrupt Practices Acts), as amended.
The Antecedents
Ysidoro, as Municipal Mayor of Leyte, Leyte, was charged before the
Sandiganbayan, with the following information:

That during the period from June 2001 to December 2001 or for sometime
prior or subsequent thereto, at the Municipality of Leyte, Province of Leyte,
Philippines, and within the jurisdiction of [the] Honorable Court, abovenamed accused, ARNOLD JAMES M. YSIDORO, a public officer, being the
Municipal Mayor of Leyte, Leyte, in such capacity and committing the offense
in relation to office, with deliberate intent, with manifest partiality and
evident bad faith, did then and there willfully, unlawfully and criminally,
withhold and fail to give to Nierna S. Doller, Municipal Social Welfare and
Development Officer (MSWDO) of Leyte, Leyte, without any legal basis, her
RATA for the months of August, September, October, November and
December, all in the year 2001, in the total amount of TWENTY-TWO
THOUSAND ONE HUNDRED TWENTY-FIVE PESOS (P22,125.00), Philippine
Currency, and her Productivity Pay in the year 2000, in the amount of TWO
THOUSAND PESOS (P2,000.00), Philippine Currency, and despite demands
made upon accused to release and pay her the amount of P22,125.00 and
P2,000.00, accused failed to do so, thus accused in the course of the
performance of his official functions had deprived the complainant of her
RATA and Productivity Pay, to the damage and injury of Nierna S. Doller and
detriment of public service.[5]
Ysidoro filed an omnibus motion to quash the information and, in the
alternative, for judicial determination of probable cause,[6] which were both
denied by the Sandiganbayan. In due course, Ysidoro was arraigned and he
pleaded not guilty.
The Sandiganbayan Preventively Suspends Ysidoro
On motion of the prosecution,[7] the Sandiganbayan preventively suspended
Ysidoro for ninety (90) days in accordance with Section 13 of R.A. No. 3019,
which states:
Any incumbent public officer against whom any criminal prosecution under a
valid information under this Act or under Title 7, Book II of the Revised Penal
Code or for any offense involving fraud upon government or public funds or
property whether as a simple or as complex offense and in whatever stage of
execution and mode of participation, is pending in court, shall be suspended
from office.
Ysidoro filed a motion for reconsideration, and questioned the necessity and
the duration of the preventive suspension. However, the Sandiganbayan
denied the motion for reconsideration, ruling that Clearly, by well established jurisprudence, the provision of Section 13,
Republic Act 3019 make[s] it mandatory for the Sandiganbayan to suspend,
for a period not exceeding ninety (90) days, any public officer who has been
validly charged with a violation of Republic Act 3019, as amended or Title 7,
Book II of the Revised Penal Code or any offense involving fraud upon
government of public funds or property.[8]

Ysidoro assailed the validity of these Sandiganbayan rulings in his petition

(G.R. No. 171513) before the Court. Meanwhile, trial on the merits in the
principal case continued before the Sandiganbayan. The prosecution and the
defense presented their respective evidence.
The prosecution presented Nierna S. Doller as its sole witness. According to
Doller, she is the Municipal Social Welfare Development Officer of Leyte. She
claimed that Ysidoro ordered her name to be deleted in the payroll because
her husband transferred his political affiliation and sided with Ysidoros
opponent. After her name was deleted from the payroll, Doller did not
receive her representation and transportation allowance (RATA) for the period
of August 2001 to December 2001. Doller also related that she failed to
receive her productivity bonus for the year 2000 (notwithstanding her
performance rating of VS) because Ysidoro failed to sign her Performance
Evaluation Report. Doller asserted that she made several attempts to claim
her RATA and productivity bonus, and made representations with Ysidoro, but
he did not act on her requests. Doller related that her family failed to meet
their financial obligations as a result of Ysidoros actions.
To corroborate Dollers testimony, the prosecution presented documentary
evidence in the form of disbursement vouchers, request for obligation of
allotment, letters, excerpts from the police blotter, memorandum, telegram,
certification, order, resolution, and the decision of the Office of the Deputy
Ombudsman absolving her of the charges.[9]
On the other hand, the defense presented seven (7) witnesses, [10] including
Ysidoro, and documentary evidence. The defense showed that the
withholding of Dollers RATA was due to the investigation conducted by the
Office of the Mayor on the anomalies allegedly committed by Doller. For this
reason, Ysidoro ordered the padlocking of Dollers office, and ordered Doller
and her staff to hold office at the Office of the Mayor for the close monitoring
and evaluation of their functions. Doller was also prohibited from outside
travel without Ysidoros approval.
The Sandiganbayan Acquits Ysidoro
In a decision dated October 1, 2009,[11] the Sandiganbayan acquitted Ysidoro
and held that the second element of the offense that there be malice, illmotive or bad faith was not present. The Sandiganbayan pronounced:
This Court acknowledges the fact that Doller was entitled to RATA. However,
the antecedent facts and circumstances did not show any indicia of bad faith
on the part of [Ysidoro] in withholding the release of Dollers RATA.
In fact, this Court believes that [Ysidoro] acted in good faith and in honest
belief that Doller was not entitled to her RATA based on the opinion of the
COA resident Auditor and Section 317 of the Government Accounting and

Auditing Manual.
It may be an erroneous interpretation of the law, nonetheless, [Ysidoros]
reliance to the same was a clear basis of good faith on his part in withholding
Dollers RATA.
With regard to the Productivity Incentive Bonus, Doller was aware that the
non-submission of the Performance Evaluation Form is a ground for an
employees non-eligibility to receive the Productivity Incentive Bonus:
a) Employees disqualification for performance-based personnel actions which
would require the rating for the given period such as promotion, training or
scholarship grants, and productivity incentive bonus if the failure of the
submission of the report form is the fault of the employees.
Doller even admitted in her testimonies that she failed to submit her
Performance Evaluation Report to [Ysidoro] for signature.
There being no malice, ill-motive or taint of bad faith, [Ysidoro] had the legal
basis to withhold Dollers RATA and Productivity pay.[12] (italics supplied)
In a resolution dated December 9, 2009,[13] the Sandiganbayan denied the
prosecutions motion for reconsideration, reasoning that It must be stressed that this Court acquitted [Ysidoro] for two reasons:
firstly, the prosecution failed to discharge its burden of proving that accused
Ysidoro acted in bad faith as stated in paragraph 1 above; and secondly, the
exculpatory proof of good faith xxx.
Needless to state, paragraph 1 alone would be enough ground for the
acquittal of accused Ysidoro. Hence, the COA Resident Auditor need not be
presented in court to prove that [Ysidoro] acted in good faith. This is based
on the legal precept that when the prosecution fails to discharge its burden,
an accused need not even offer evidence in his behalf. [14] (italics supplied)
Supervening events occurred after the filing of Ysidoros petition which
rendered the issue in G.R. No. 171513 i.e., the propriety of his preventive
suspension moot and academic. First, Ysidoro is no longer the incumbent
Municipal Mayor of Leyte, Leyte as his term of office expired in 2007. Second,
the prosecution completed its presentation of evidence and had rested its
case before the Sandiganbayan. And third, the Sandiganbayan issued its
decision acquitting Ysidoro of the crime charged.
In light of these events, what is left to resolve is the petition for certiorari
filed by the People on the validity of the judgment acquitting Ysidoro of the
criminal charge.
The Peoples Petition

The People posits that the elements of Section 3(e) of R.A. No. 3019 have
been duly established by the evidence, in that:
First. [Ysidoro] was the Municipal Mayor of Leyte, Leyte when he ordered the
deletion of private complainants name in the payroll for RATA and
productivity pay.
Second. He caused undue injury to [Doller] when he ordered the withholding
of her RATA and productivity pay. It is noteworthy that complainant was the
only official in the municipality who did not receive her RATA and productivity
pay even if the same were already included in the budget for that year. x x x
Consequently, [Doller] testified that her family suffered actual and moral
damages due to the withholding of her benefits namely: a) the disconnection
of electricity in their residence; x x x b) demand letters from their creditors;
x x x c) her son was dropped from school because they were not able to pay
for his final exams; x x x d) [h]er children did not want to go to school
anymore because they were embarrassed that collectors were running after
them.
Third. Accused clearly acted in evident bad faith as he used his position to
deprive [Doller] of her RATA and productivity pay for the period mentioned to
harass her due to the transfer of political affiliation of her husband. [15]
(emphasis supplied)
The People argues[16] that the Sandiganbayan gravely abused its discretion,
and exceeded its, or acted without, jurisdiction in not finding Ysidoro in bad
faith when he withheld Dollers RATA and deprived her of her productivity
bonus. The Sandiganbayan failed to take into account that: first, the
Commission on Audit (COA) resident auditor was never presented in court;
second, the documentary evidence showed that Doller continuously
discharged the functions of her office even if she had been prevented from
outside travel by Ysidoro; third, Ysidoro refused to release Dollers RATA and
productivity bonus notwithstanding the dismissal by the Ombudsman of the
cases against her for alleged anomalies committed in office; and fourth,
Ysidoro caused Dollers name to be dropped from the payroll without
justifiable cause, and he refused to sign the disbursement vouchers and the
request for obligation of allotment so that Doller could claim her RATA and
her productivity bonus.
In the same manner, the People asserts that the Sandiganbayan gravely
abused its discretion when it ruled that Doller was not eligible to receive the
productivity bonus for her failure to submit her Performance Evaluation
Report. The Sandiganbayan disregarded the evidence showing the strained
relationship and the maneuverings made by Ysidoro so that he could deny
her this incentive.

In his Comment,[17] Ysidoro prays for the dismissal of the petition for
procedural and substantive infirmities. First, he claims that the petition was
filed out of time considering the belated filing of the Peoples motion for
reconsideration before the Sandiganbayan. He argues that by reason of the
late filing of the motion for reconsideration, the present petition was filed
beyond the 60-day reglementary period. Ysidoro also argues that the 60-day
reglementary period should have been counted from the Peoples receipt of
the Sandiganbayans decision since no motion for reconsideration was
seasonably filed. Second, Ysidoro claims that the Sandiganbayans ruling was
in accord with the evidence and the prosecution was not denied due process
to properly avail of the remedy of a writ of certiorari. And third, Ysidoro
insists that he can no longer be prosecuted for the same criminal charge
without violating the rule against double jeopardy.
The Issue Raised
The ultimate issue to be resolved is whether the Sandiganbayan gravely
abused its discretion and exceeded its, or acted without, jurisdiction when it
acquitted Ysidoro of the crime charged.
The Courts Ruling
We first resolve the preliminary issue raised by Ysidoro on the timeliness of
the Peoples petition for certiorari. The records show that the motion for
reconsideration was filed by the People before the Sandiganbayan on the last
day of the 15-day reglementary period to file the motion which fell on
October 16, 2009, a Friday. Although the date originally appearing in the
notice of hearing on the motion was September 22, 2009 (which later on was
corrected to October 22, 2009), the error in designating the month was
unmistakably obvious considering the date when the motion was filed. In any
case, the error cannot detract from the circumstance that the motion for
reconsideration was filed within the 15-day reglementary period. We
consider, too, that Ysidoro was not deprived of due process and was given the
opportunity to be heard on the motion. Accordingly, the above error cannot
be considered fatal to the right of the People to file its motion for
reconsideration. The counting of the 60-day reglementary period within
which to file the petition for certiorari will be reckoned from the receipt of the
People of the denial of its motion for reconsideration, or on December 10,
2009. As the last day of the 60-day reglementary period fell on February 8,
2010, the petition which was filed on February 5, 2010 was filed on
time.
Nevertheless, we dismiss the petitions for being procedurally and
substantially infirm.
A Review of a Judgment of Acquittal
Generally, the Rules provides three (3) procedural remedies in order for a

party to appeal a decision of a trial court in a criminal case before this

Court. The first is by ordinary appeal under Section 3, Rule 122 of the 2000
Revised Rules on Criminal Procedure. The second is by a petition for review
on certiorari under Rule 45 of the Rules. And the third is by filing a special
civil action for certiorari under Rule 65. Each procedural remedy is unique
and provides for a different mode of review. In addition, each procedural
remedy may only be availed of depending on the nature of the judgment
sought to be reviewed.
A review by ordinary appeal resolves factual and legal issues. Issues which
have not been properly raised by the parties but are, nevertheless, material
in the resolution of the case are also resolved in this mode of review. In
contrast, a review on certiorari under a Rule 45 petition is generally limited to
the review of legal issues; the Court only resolves questions of law which
have been properly raised by the parties during the appeal and in the
petition. Under this mode, the Court determines whether a proper application
of the law was made in a given set of facts. A Rule 65 review, on the other
hand, is strictly confined to the determination of the propriety of the trial
courts jurisdiction whether it has jurisdiction over the case and if so,
whether the exercise of its jurisdiction has or has not been attended by grave
abuse of discretion amounting to lack or excess of jurisdiction.
While an assailed judgment elevated by way of ordinary appeal or a Rule 45
petition is considered an intrinsically valid, albeit erroneous, judgment, a
judgment assailed under Rule 65 is characterized as an invalid judgment
because of defect in the trial courts authority to rule. Also, an ordinary
appeal and a Rule 45 petition tackle errors committed by the trial court in the
appreciation of the evidence and/or the application of law. In contrast, a Rule
65 petition resolves jurisdictional errors committed in the proceedings in the
principal case. In other words, errors of judgment are the proper subjects of
an ordinary appeal and in a Rule 45 petition; errors of jurisdiction are
addressed in a Rule 65 petition.
As applied to judgments rendered in criminal cases, unlike a review via a
Rule 65 petition, only judgments of conviction can be reviewed in an ordinary
appeal or a Rule 45 petition. As we explained in People v. Nazareno,[18] the
constitutional right of the accused against double jeopardy proscribes appeals
of judgments of acquittal through the remedies of ordinary appeal and a Rule
45 petition, thus:
The Constitution has expressly adopted the double jeopardy policy and thus
bars multiple criminal trials, thereby conclusively presuming that a
second trial would be unfair if the innocence of the accused has been
confirmed by a previous final judgment. Further prosecution via an appeal
from a judgment of acquittal is likewise barred because the government has
already been afforded a complete opportunity to prove the criminal
defendants culpability; after failing to persuade the court to enter a final
judgment of conviction, the underlying reasons supporting the constitutional

ban on multiple trials applies and becomes compelling. The reason is not only
the defendants already established innocence at the first trial where he had
been placed in peril of conviction, but also the same untoward and prejudicial
consequences of a second trial initiated by a government who has at its
disposal all the powers and resources of the State. Unfairness and prejudice
would necessarily result, as the government would then be allowed another
opportunity to persuade a second trier of the defendants guilt while
strengthening any weaknesses that had attended the first trial, all in a
process where the governments power and resources are once again
employed against the defendants individual means. That the second
opportunity comes via an appeal does not make the effects any less
prejudicial by the standards of reason, justice and conscience. [19] (emphases
supplied)
However, the rule against double jeopardy cannot be properly invoked in a
Rule 65 petition, predicated on two (2) exceptional grounds, namely: in a
judgment of acquittal rendered with grave abuse of discretion by the court;
and where the prosecution had been deprived of due process. [20] The rule
against double jeopardy does not apply in these instances because a Rule 65
petition does not involve a review of facts and law on the merits in the
manner done in an appeal. In certiorari proceedings, judicial review does not
examine and assess the evidence of the parties nor weigh the probative
value of the evidence.[21] It does not include an inquiry on the correctness of
the evaluation of the evidence.[22] A review under Rule 65 only asks the
question of whether there has been a validly rendered decision, not the
question of whether the decision is legally correct. [23] In other words, the
focus of the review is to determine whether the judgment is per se void on
jurisdictional grounds.[24]
Applying these legal concepts to this case, we find that while the People was
procedurally correct in filing its petition for certiorari under Rule 65, the
petition does not raise any jurisdictional error committed by the
Sandiganbayan. On the contrary, what is clear is the obvious attempt by the
People to have the evidence in the case reviewed by the Court under the
guise of a Rule 65 petition. This much can be deduced by examining the
petition itself which does not allege any bias, partiality or bad faith
committed by the Sandiganbayan in its proceedings. The petition does not
also raise any denial of the Peoples due process in the proceedings before
the Sandiganbayan.
We observe, too, that the grounds relied in the petition relate to factual
errors of judgment which are more appropriate in an ordinary appeal rather
than in a Rule 65 petition. The grounds cited in the petition call for the
Courts own appreciation of the factual findings of the Sandiganbayan on the
sufficiency of the Peoples evidence in proving the element of bad faith, and
the sufficiency of the evidence denying productivity bonus to Doller.
The Merits of the Case

Our consideration of the imputed errors fails to establish grave abuse of

discretion amounting to lack or excess of jurisdiction committed by the
Sandiganbayan. As a rule, misapplication of facts and evidence, and
erroneous conclusions based on evidence do not, by the mere fact that errors
were committed, rise to the level of grave abuse of discretion. [25] That an
abuse itself must be grave must be amply demonstrated since the
jurisdiction of the court, no less, will be affected.[26] We have previously held
that the mere fact, too, that a court erroneously decides a case does not
necessarily deprive it of jurisdiction.[27]
Jurisprudence has defined grave abuse of discretion amounting to lack or
excess of jurisdiction in this wise:
Grave abuse of discretion is defined as capricious or whimsical exercise of
judgment as is equivalent to lack of jurisdiction. The abuse of discretion must
be patent and gross as to amount to an evasion of a positive duty or a virtual
refusal to perform a duty enjoined by law, or to act at all in contemplation of
law, as where the power is exercised in an arbitrary and despotic manner by
reason of passion and hostility.[28]
Under this definition, the People bears the burden of convincingly
demonstrating that the Sandiganbayan gravely abused its discretion in the
appreciation of the evidence. We find that the People failed in this regard.
We find no indication from the records that the Sandiganbayan acted
arbitrarily, capriciously and whimsically in arriving at its verdict of acquittal.
The settled rule is that conviction ensues only if every element of the crime
was alleged and proved.[29] In this case, Ysidoro was acquitted by the
Sandiganbayan for two reasons: first, his bad faith (an element of the crime
charged) was not sufficiently proven by the prosecution evidence; and
second, there was exculpatory evidence of his good faith.
As bad faith is a state of mind, the prosecution must present evidence of the
overt acts or omissions committed by Ysidoro showing that he deliberately
intended to do wrong or cause damage to Doller by withholding her RATA.
However, save from the testimony of Doller of the strained relationship
between her and Ysidoro, no other evidence was presented to support
Ysidoros bad faith against her. We note that Doller even disproved Ysidoros
bad faith when she admitted that several cases had been actually filed
against her before the Office of the Ombudsman. It bears stressing that
these purported anomalies were allegedly committed in office which Ysidoro
cited to justify the withholding of Dollers RATA.
The records also show other acts that tend to negate Ysidoros bad faith
under the circumstances. First, the investigation of the alleged anomalies by
Ysidoro was corroborated by the physical transfer of Doller and her
subordinates to the Office of the Mayor and the prohibition against outside

travel imposed on Doller. Second, the existence of the Ombudsmans cases

against Doller. And third, Ysidoros act of seeking an opinion from the COA
Auditor on the proper interpretation of Section 317 of the Government
Accounting and Auditing Manual before he withheld the RATA. This section
provides:
An official/employee who was wrongly removed or prevented from
performing his duties is entitled to back salaries but not RATA. The rationale
for the grant of RATA is to provide the official concerned additional fund to
meet necessary expenses incidental to and connected with the exercise or
the discharge of the functions of an office. If he is out of office, [voluntarily]
or involuntarily, it necessarily follows that the functions of the office remain
undischarged (COA, Dec. 1602, October 23, 1990). And if the duties of the
office are not discharged, the official does not and is not supposed to incur
expenses. There being no expenses incurred[,] there is nothing to be
reimbursed (COA, Dec. 2121 dated June 28, 1979). [30]
Although the above provision was erroneously interpreted by Ysidoro and the
COA Auditor, the totality of the evidence, to our mind, provides sufficient
grounds to create reasonable doubt on Ysidoros bad faith. As we have held
before, bad faith does not simply connote bad judgment or negligence but
imputes a dishonest purpose or some moral obliquity and conscious doing of
a wrong or a breach of a sworn duty through some motive or intent, or ill-will
to partake the nature of fraud.[31] An erroneous interpretation of a provision
of law, absent any showing of some dishonest or wrongful purpose, does not
constitute and does not necessarily amount to bad faith.[32]
Similarly, we find no inference of bad faith when Doller failed to receive the
productivity bonus. Doller does not dispute that the receipt of the
productivity bonus was premised on the submission by the employee of
his/her Performance Evaluation Report. In this case, Doller admitted that
she did not submit her Performance Evaluation Report; hence, she could not
have reasonably expected to receive any productivity bonus. Further, we
cannot agree with her self-serving claim that it was Ysidoros refusal that led
to her failure to receive her productivity bonus given that no other hard
evidence supported this claim. We certainly cannot rely on Dollers assertion
of the alleged statement made by one Leo Apacible (Ysidoros secretary) who
was not presented in court. The alleged statement made by Leo Apacible
that the mayor will get angry with him and he might be laid off,[33] in
addition to being hearsay, did not even establish the actual existence of an
order from Ysidoro or of his alleged maneuverings to deprive Doller of her
RATA and productivity bonus.
In light of these considerations, we resolve to dismiss the Peoples petition.
We cannot review a verdict of acquittal which does not impute or show any
jurisdictional error committed by the Sandiganbayan.
WHEREFORE, premises considered, the Court hereby resolves to:

1. DISMISS the petition for certiorari and prohibition, docketed as G.R. No.
171513, filed by Arnold James M. Ysidoro for being moot and academic.
2. DISMISS the petition for certiorari, docketed as G.R. No. 190963, filed by
the People of the Philippines, through the Office of the Special Prosecutor, for
lack of merit.
SO ORDERED.
Carpio, (Chairperson), Perez, Sereno, and Reyes, JJ., conc

EN BANC
[ G.R. No. 185572, February 07, 2012 ]
CHINA NATIONAL MACHINERY & EQUIPMENT CORP.
(GROUP), PETITIONER, VS. HON. CESAR D.
SANTAMARIA, IN HIS OFFICIAL CAPACITY AS
PRESIDING JUDGE OF BRANCH 145, REGIONAL TRIAL
COURT OF MAKATI CITY, HERMINIO HARRY L. ROQUE,
JR., JOEL R. BUTUYAN, ROGER R. RAYEL, ROMEL R.
BAGARES, CHRISTOPHER FRANCISCO C. BOLASTIG,
LEAGUE OF URBAN POOR FOR ACTION (LUPA), KILUSAN
NG MARALITA SA MEYCAUAYAN (KMM-LUPA CHAPTER),
DANILO M. CALDERON, VICENTE C. ALBAN, MERLYN M.
VAAL, LOLITA S. QUINONES, RICARDO D. LANOZO, JR.,
CONCHITA G. GOZO, MA. TERESA D. ZEPEDA, JOSEFINA
A. LANOZO, AND SERGIO C. LEGASPI, JR., KALIPUNAN
NG DAMAYANG MAHIHIRAP (KADAMAY), EDY CLERIGO,
RAMMIL DINGAL, NELSON B. TERRADO, CARMEN
DEUNIDA, AND EDUARDO LEGSON, RESPONDENTS.
DECISION
SERENO, J.:
This is a Petition for Review on Certiorari with Prayer for the Issuance of a
Temporary Restraining Order (TRO) and/or Preliminary Injunction assailing

the 30 September 2008 Decision and 5 December 2008 Resolution of the

Court of Appeals (CA) in CAG.R. SP No. 103351.[1]
On 14 September 2002, petitioner China National Machinery & Equipment
Corp. (Group) (CNMEG), represented by its chairperson, Ren Hongbin,
entered into a Memorandum of Understanding with the North Luzon Railways
Corporation (Northrail), represented by its president, Jose L. Cortes, Jr. for
the conduct of a feasibility study on a possible railway line from Manila to
San Fernando, La Union (the Northrail Project). [2]
On 30 August 2003, the Export Import Bank of China (EXIM Bank) and the
Department of Finance of the Philippines (DOF) entered into a Memorandum
of Understanding (Aug 30 MOU), wherein China agreed to extend Preferential
Buyers Credit to the Philippine government to finance the Northrail Project. [3]
The Chinese government designated EXIM Bank as the lender, while the
Philippine government named the DOF as the borrower.[4] Under the Aug 30
MOU, EXIM Bank agreed to extend an amount not exceeding USD
400,000,000 in favor of the DOF, payable in 20 years, with a 5-year grace
period, and at the rate of 3% per annum.[5]
On 1 October 2003, the Chinese Ambassador to the Philippines, Wang
Chungui (Amb. Wang), wrote a letter to DOF Secretary Jose Isidro Camacho
(Sec. Camacho) informing him of CNMEGs designation as the Prime
Contractor for the Northrail Project.[6]
On 30 December 2003, Northrail and CNMEG executed a Contract Agreement
for the construction of Section I, Phase I of the North Luzon Railway System
from Caloocan to Malolos on a turnkey basis (the Contract Agreement). [7] The
contract price for the Northrail Project was pegged at USD 421,050,000. [8]
On 26 February 2004, the Philippine government and EXIM Bank entered into
a counterpart financial agreement Buyer Credit Loan Agreement No. BLA
04055 (the Loan Agreement).[9] In the Loan Agreement, EXIM Bank agreed to
extend Preferential Buyers Credit in the amount of USD 400,000,000 in favor
of the Philippine government in order to finance the construction of Phase I
of the Northrail Project.[10]
On 13 February 2006, respondents filed a Complaint for Annulment of
Contract and Injunction with Urgent Motion for Summary Hearing to
Determine the Existence of Facts and Circumstances Justifying the Issuance
of Writs of Preliminary Prohibitory and Mandatory Injunction and/or TRO
against CNMEG, the Office of the Executive Secretary, the DOF, the
Department of Budget and Management, the National Economic Development
Authority and Northrail.[11] The case was docketed as Civil Case No. 06-203
before the Regional Trial Court, National Capital Judicial Region, Makati City,
Branch 145 (RTC Br. 145). In the Complaint, respondents alleged that the
Contract Agreement and the Loan Agreement were void for being contrary to
(a) the Constitution; (b) Republic Act No. 9184 (R.A. No. 9184), otherwise

known as the Government Procurement Reform Act; (c) Presidential Decree

No. 1445, otherwise known as the Government Auditing Code; and (d)
Executive Order No. 292, otherwise known as the Administrative Code. [12]
RTC Br. 145 issued an Order dated 17 March 2006 setting the case for
hearing on the issuance of injunctive reliefs. [13] On 29 March 2006, CNMEG
filed an Urgent Motion for Reconsideration of this Order.[14] Before RTC Br. 145
could rule thereon, CNMEG filed a Motion to Dismiss dated 12 April 2006,
arguing that the trial court did not have jurisdiction over (a) its person, as it
was an agent of the Chinese government, making it immune from suit, and
(b) the subject matter, as the Northrail Project was a product of an executive
agreement.[15]
On 15 May 2007, RTC Br. 145 issued an Omnibus Order denying CNMEGs
Motion to Dismiss and setting the case for summary hearing to determine
whether the injunctive reliefs prayed for should be issued. [16] CNMEG then
filed a Motion for Reconsideration,[17] which was denied by the trial court in
an Order dated 10 March 2008.[18] Thus, CNMEG filed before the CA a Petition
for Certiorari with Prayer for the Issuance of TRO and/or Writ of Preliminary
Injunction dated 4 April 2008.[19]
In the assailed Decision dated 30 September 2008, the appellate court
dismissed the Petition for Certiorari.[20] Subsequently, CNMEG filed a Motion
for Reconsideration,[21] which was denied by the CA in a Resolution dated 5
December 2008.[22] Thus, CNMEG filed the instant Petition for Review on
Certiorari dated 21 January 2009, raising the following issues: [23]
Whether or not petitioner CNMEG is an agent of the sovereign Peoples
Republic of China.
Whether or not the Northrail contracts are products of an executive
agreement between two sovereign states.
Whether or not the certification from the Department of Foreign Affairs is
necessary under the foregoing circumstances.
Whether or not the act being undertaken by petitioner CNMEG is an act jure
imperii.
Whether or not the Court of Appeals failed to avoid a procedural limbo in the
lower court.
Whether or not the Northrail Project is subject to competitive public bidding.
Whether or not the Court of Appeals ignored the ruling of this Honorable
Court in the Neri case.
CNMEG prays for the dismissal of Civil Case No. 06-203 before RTC Br. 145

for lack of jurisdiction. It likewise requests this Court for the issuance of a
TRO and, later on, a writ of preliminary injunction to restrain public
respondent from proceeding with the disposition of Civil Case No. 06-203.
The crux of this case boils down to two main issues, namely:
1. Whether CNMEG is entitled to immunity, precluding it from being
sued before a local court.
2. Whether the Contract Agreement is an executive agreement, such
that it cannot be questioned by or before a local court.
First issue: Whether CNMEG is entitled to immunity
This Court explained the doctrine of sovereign immunity in Holy See v.
Rosario,[24] to wit:
There are two conflicting concepts of sovereign immunity, each widely held
and firmly established. According to the classical or absolute theory, a
sovereign cannot, without its consent, be made a respondent in the
courts of another sovereign. According to the newer or restrictive theory,
the immunity of the sovereign is recognized only with regard to
public acts or acts jure imperii of a state, but not with regard to
private acts or acts jure gestionis. (Emphasis supplied; citations
omitted.)
xxx

xxx

xxx

The restrictive theory came about because of the entry of sovereign states
into purely commercial activities remotely connected with the discharge of
governmental functions. This is particularly true with respect to the
Communist states which took control of nationalized business activities and
international trading.
In JUSMAG v. National Labor Relations Commission,[25] this Court affirmed
the Philippines adherence to the restrictive theory as follows:
The doctrine of state immunity from suit has undergone further
metamorphosis. The view evolved that the existence of a contract does not,
per se, mean that sovereign states may, at all times, be sued in local courts.
The complexity of relationships between sovereign states, brought about by
their increasing commercial activities, mothered a more restrictive
application of the doctrine.
xxx

xxx

xxx

As it stands now, the application of the doctrine of immunity from

suit has been restricted to sovereign or governmental activities (jure

imperii). The mantle of state immunity cannot be extended to commercial,
private and proprietary acts (jure gestionis). [26] (Emphasis supplied.)
Since the Philippines adheres to the restrictive theory, it is crucial to
ascertain the legal nature of the act involved whether the entity claiming
immunity performs governmental, as opposed to proprietary, functions. As
held in United States of America v. Ruiz [27]
The restrictive application of State immunity is proper only when the
proceedings arise out of commercial transactions of the foreign sovereign, its
commercial activities or economic affairs. Stated differently, a State may be
said to have descended to the level of an individual and can thus be deemed
to have tacitly given its consent to be sued only when it enters into business
contracts. It does not apply where the contract relates to the exercise of its
sovereign functions.[28]
A. CNMEG is engaged in a proprietary activity.
A threshold question that must be answered is whether CNMEG performs
governmental or proprietary functions. A thorough examination of the basic
facts of the case would show that CNMEG is engaged in a proprietary activity.
The parties executed the Contract Agreement for the purpose of constructing
the Luzon Railways, viz:[29]
WHEREAS the Employer (Northrail) desired to construct the railways form
Caloocan to Malolos, section I, Phase I of Philippine North Luzon Railways
Project (hereinafter referred to as THE PROJECT);
AND WHEREAS the Contractor has offered to provide the Project on Turnkey
basis, including design, manufacturing, supply, construction, commissioning,
and training of the Employers personnel;
AND WHEREAS the Loan Agreement of the Preferential Buyers Credit
between Export-Import Bank of China and Department of Finance of Republic
of the Philippines;
NOW, THEREFORE, the parties agree to sign this Contract for the
Implementation of the Project.
The above-cited portion of the Contract Agreement, however, does not on its
own reveal whether the construction of the Luzon railways was meant to be a
proprietary endeavor. In order to fully understand the intention behind and
the purpose of the entire undertaking, the Contract Agreement must not be
read in isolation. Instead, it must be construed in conjunction with three
other documents executed in relation to the Northrail Project, namely: (a)
the Memorandum of Understanding dated 14 September 2002 between

Northrail and CNMEG;[30] (b) the letter of Amb. Wang dated 1 October 2003
addressed to Sec. Camacho;[31] and (c) the Loan Agreement.[32]
1. Memorandum of Understanding dated 14 September 2002
The Memorandum of Understanding dated 14 September 2002 shows that
CNMEG sought the construction of the Luzon Railways as a proprietary
venture. The relevant parts thereof read:
WHEREAS, CNMEG has the financial capability, professional competence and
technical expertise to assess the state of the [Main Line North (MLN)] and
recommend implementation plans as well as undertake its rehabilitation
and/or modernization;
WHEREAS, CNMEG has expressed interest in the rehabilitation and/or
modernization of the MLN from Metro Manila to San Fernando, La Union
passing through the provinces of Bulacan, Pampanga, Tarlac, Pangasinan and
La Union (the Project);
WHEREAS, the NORTHRAIL CORP. welcomes CNMEGs proposal to undertake
a Feasibility Study (the Study) at no cost to NORTHRAIL CORP.;
WHEREAS, the NORTHRAIL CORP. also welcomes CNMEGs interest in
undertaking the Project with Suppliers Credit and intends to employ
CNMEG as the Contractor for the Project subject to compliance with
Philippine and Chinese laws, rules and regulations for the selection
of a contractor;
WHEREAS, the NORTHRAIL CORP. considers CNMEGs proposal advantageous
to the Government of the Republic of the Philippines and has therefore
agreed to assist CNMEG in the conduct of the aforesaid Study;
xxx

xxx

xxx

II. APPROVAL PROCESS

2.1 As soon as possible after completion and presentation of the Study in
accordance with Paragraphs 1.3 and 1.4 above and in compliance with
necessary governmental laws, rules, regulations and procedures required
from both parties, the parties shall commence the preparation and
negotiation of the terms and conditions of the Contract (the Contract) to be
entered into between them on the implementation of the Project. The
parties shall use their best endeavors to formulate and finalize a
Contract with a view to signing the Contract within one hundred
twenty (120) days from CNMEGs presentation of the Study.[33]
(Emphasis supplied)
Clearly, it was CNMEG that initiated the undertaking, and not the Chinese

government. The Feasibility Study was conducted not because of any

diplomatic gratuity from or exercise of sovereign functions by the Chinese
government, but was plainly a business strategy employed by CNMEG with a
view to securing this commercial enterprise.
2. Letter dated 1 October 2003
That CNMEG, and not the Chinese government, initiated the Northrail Project
was confirmed by Amb. Wang in his letter dated 1 October 2003, thus:
1. CNMEG has the proven competence and capability to undertake the
Project as evidenced by the ranking of 42 given by the ENR among 225
global construction companies.
2. CNMEG already signed an MOU with the North Luzon Railways Corporation
last September 14, 2000 during the visit of Chairman Li Peng. Such being the
case, they have already established an initial working relationship with your
North Luzon Railways Corporation. This would categorize CNMEG as the
state corporation within the Peoples Republic of China which
initiated our Governments involvement in the Project.
3. Among the various state corporations of the Peoples Republic of China,
only CNMEG has the advantage of being fully familiar with the current
requirements of the Northrail Project having already accomplished a
Feasibility Study which was used as inputs by the North Luzon Railways
Corporation in the approvals (sic) process required by the Republic of the
Philippines.[34] (Emphasis supplied.)
Thus, the desire of CNMEG to secure the Northrail Project was in the ordinary
or regular course of its business as a global construction company. The
implementation of the Northrail Project was intended to generate profit for
CNMEG, with the Contract Agreement placing a contract price of USD
421,050,000 for the venture.[35] The use of the term state corporation to
refer to CNMEG was only descriptive of its nature as a government-owned
and/or -controlled corporation, and its assignment as the Primary Contractor
did not imply that it was acting on behalf of China in the performance of the
latters sovereign functions. To imply otherwise would result in an absurd
situation, in which all Chinese corporations owned by the state would be
automatically considered as performing governmental activities, even if they
are clearly engaged in commercial or proprietary pursuits.
3. The Loan Agreement
CNMEG claims immunity on the ground that the Aug 30 MOU on the financing
of the Northrail Project was signed by the Philippine and Chinese
governments, and its assignment as the Primary Contractor meant that it
was bound to perform a governmental function on behalf of China. However,

the Loan Agreement, which originated from the same Aug 30 MOU, belies
this reasoning, viz:
Article 11. xxx (j) Commercial Activity The execution and delivery of this
Agreement by the Borrower constitute, and the Borrowers performance of
and compliance with its obligations under this Agreement will constitute,
private and commercial acts done and performed for commercial
purposes under the laws of the Republic of the Philippines and
neither the Borrower nor any of its assets is entitled to any immunity
or privilege (sovereign or otherwise) from suit, execution or any
other legal process with respect to its obligations under this
Agreement, as the case may be, in any jurisdiction. Notwithstanding
the foregoing, the Borrower does not waive any immunity with respect of its
assets which are (i) used by a diplomatic or consular mission of the Borrower
and (ii) assets of a military character and under control of a military authority
or defense agency and (iii) located in the Philippines and dedicated to public
or governmental use (as distinguished from patrimonial assets or assets
dedicated to commercial use). (Emphasis supplied.)
(k) Proceedings to Enforce Agreement In any proceeding in the Republic of
the Philippines to enforce this Agreement, the choice of the laws of the
Peoples Republic of China as the governing law hereof will be recognized and
such law will be applied. The waiver of immunity by the Borrower, the
irrevocable submissions of the Borrower to the non-exclusive jurisdiction of
the courts of the Peoples Republic of China and the appointment of the
Borrowers Chinese Process Agent is legal, valid, binding and enforceable and
any judgment obtained in the Peoples Republic of China will be if introduced,
evidence for enforcement in any proceedings against the Borrower and its
assets in the Republic of the Philippines provided that (a) the court rendering
judgment had jurisdiction over the subject matter of the action in accordance
with its jurisdictional rules, (b) the Republic had notice of the proceedings,
(c) the judgment of the court was not obtained through collusion or fraud,
and (d) such judgment was not based on a clear mistake of fact or law.[36]
Further, the Loan Agreement likewise contains this express waiver of
immunity:
15.5 Waiver of Immunity The Borrower irrevocably and unconditionally
waives, any immunity to which it or its property may at any time be or
become entitled, whether characterized as sovereign immunity or otherwise,
from any suit, judgment, service of process upon it or any agent, execution
on judgment, set-off, attachment prior to judgment, attachment in aid of
execution to which it or its assets may be entitled in any legal action or
proceedings with respect to this Agreement or any of the transactions
contemplated hereby or hereunder. Notwithstanding the foregoing, the
Borrower does not waive any immunity in respect of its assets which are (i)
used by a diplomatic or consular mission of the Borrower, (ii) assets of a
military character and under control of a military authority or defense agency

and (iii) located in the Philippines and dedicated to a public or governmental

use (as distinguished from patrimonial assets or assets dedicated to
commercial use).[37]
Thus, despite petitioners claim that the EXIM Bank extended financial
assistance to Northrail because the bank was mandated by the Chinese
government, and not because of any motivation to do business in the
Philippines,[38] it is clear from the foregoing provisions that the Northrail
Project was a purely commercial transaction.
Admittedly, the Loan Agreement was entered into between EXIM Bank and
the Philippine government, while the Contract Agreement was between
Northrail and CNMEG. Although the Contract Agreement is silent on the
classification of the legal nature of the transaction, the foregoing provisions
of the Loan Agreement, which is an inextricable part of the entire
undertaking, nonetheless reveal the intention of the parties to the Northrail
Project to classify the whole venture as commercial or proprietary in
character.
Thus, piecing together the content and tenor of the Contract Agreement, the
Memorandum of Understanding dated 14 September 2002, Amb. Wangs
letter dated 1 October 2003, and the Loan Agreement would reveal the
desire of CNMEG to construct the Luzon Railways in pursuit of a purely
commercial activity performed in the ordinary course of its business.
B. CNMEG failed to adduce evidence that
it is immune from suit under Chinese law.
Even assuming arguendo that CNMEG performs governmental functions, such
claim does not automatically vest it with immunity. This view finds support in
Malong v. Philippine National Railways, in which this Court held that
(i)mmunity from suit is determined by the character of the objects for which
the entity was organized.[39]
In this regard, this Courts ruling in Deutsche Gesellschaft Fr Technische
Zusammenarbeit (GTZ) v. CA[40] must be examined. In Deutsche
Gesellschaft, Germany and the Philippines entered into a Technical
Cooperation Agreement, pursuant to which both signed an arrangement
promoting the Social Health InsuranceNetworking and Empowerment
(SHINE) project. The two governments named their respective implementing
organizations: the Department of Health (DOH) and the Philippine Health
Insurance Corporation (PHIC) for the Philippines, and GTZ for the
implementation of Germanys contributions. In ruling that GTZ was not
immune from suit, this Court held:
The arguments raised by GTZ and the [Office of the Solicitor General (OSG)]
are rooted in several indisputable facts. The SHINE project was
implemented pursuant to the bilateral agreements between the

Philippine and German governments. GTZ was tasked, under the

1991 agreement, with the implementation of the contributions of the
German government. The activities performed by GTZ pertaining to
the SHINE project are governmental in nature, related as they are to
the promotion of health insurance in the Philippines. The fact that GTZ
entered into employment contracts with the private respondents did not
disqualify it from invoking immunity from suit, as held in cases such as Holy
See v. Rosario, Jr., which set forth what remains valid doctrine:
Certainly, the mere entering into a contract by a foreign state with a private
party cannot be the ultimate test. Such an act can only be the start of the
inquiry. The logical question is whether the foreign state is engaged in the
activity in the regular course of business. If the foreign state is not engaged
regularly in a business or trade, the particular act or transaction must then
be tested by its nature. If the act is in pursuit of a sovereign activity, or an
incident thereof, then it is an act jure imperii, especially when it is not
undertaken for gain or profit.
Beyond dispute is the tenability of the comment points (sic) raised by GTZ
and the OSG that GTZ was not performing proprietary functions
notwithstanding its entry into the particular employment contracts. Yet there
is an equally fundamental premise which GTZ and the OSG fail to address,
namely: Is GTZ, by conception, able to enjoy the Federal Republics immunity
from suit?
The principle of state immunity from suit, whether a local state or a foreign
state, is reflected in Section 9, Article XVI of the Constitution, which states
that the State may not be sued without its consent. Who or what consists
of the State? For one, the doctrine is available to foreign States insofar as
they are sought to be sued in the courts of the local State, necessary as it is
to avoid unduly vexing the peace of nations.
If the instant suit had been brought directly against the Federal Republic of
Germany, there would be no doubt that it is a suit brought against a State,
and the only necessary inquiry is whether said State had consented to be
sued. However, the present suit was brought against GTZ. It is necessary for
us to understand what precisely are the parameters of the legal personality
of GTZ.
Counsel for GTZ characterizes GTZ as the implementing agency of
the Government of the Federal Republic of Germany, a depiction
similarly adopted by the OSG. Assuming that the characterization is correct,
it does not automatically invest GTZ with the ability to invoke State
immunity from suit. The distinction lies in whether the agency is
incorporated or unincorporated.
xxx

xxx

xxx

State immunity from suit may be waived by general or special law. The
special law can take the form of the original charter of the incorporated
government agency. Jurisprudence is replete with examples of incorporated
government agencies which were ruled not entitled to invoke immunity from
suit, owing to provisions in their charters manifesting their consent to be
sued.
xxx

xxx

xxx

It is useful to note that on the part of the Philippine government, it had

designated two entities, the Department of Health and the Philippine Health
Insurance Corporation (PHIC), as the implementing agencies in behalf of the
Philippines. The PHIC was established under Republic Act No. 7875, Section
16 (g) of which grants the corporation the power to sue and be sued in
court. Applying the previously cited jurisprudence, PHIC would not enjoy
immunity from suit even in the performance of its functions connected with
SHINE, however, (sic) governmental in nature as (sic) they may be.
Is GTZ an incorporated agency of the German government? There is
some mystery surrounding that question. Neither GTZ nor the OSG go
beyond the claim that petitioner is the implementing agency of the
Government of the Federal Republic of Germany. On the other hand,
private respondents asserted before the Labor Arbiter that GTZ was a
private corporation engaged in the implementation of development projects.
The Labor Arbiter accepted that claim in his Order denying the Motion to
Dismiss, though he was silent on that point in his Decision. Nevertheless,
private respondents argue in their Comment that the finding that GTZ was a
private corporation was never controverted, and is therefore deemed
admitted. In its Reply, GTZ controverts that finding, saying that it is a
matter of public knowledge that the status of petitioner GTZ is that of the
implementing agency, and not that of a private corporation.
In truth, private respondents were unable to adduce any evidence to
substantiate their claim that GTZ was a private corporation, and the Labor
Arbiter acted rashly in accepting such claim without explanation. But neither
has GTZ supplied any evidence defining its legal nature beyond that
of the bare descriptive implementing agency. There is no doubt
that the 1991 Agreement designated GTZ as the implementing
agency in behalf of the German government. Yet the catch is that
such term has no precise definition that is responsive to our
concerns. Inherently, an agent acts in behalf of a principal, and the
GTZ can be said to act in behalf of the German state. But that is as far
as implementing agency could take us. The term by itself does not
supply whether GTZ is incorporated or unincorporated, whether it is
owned by the German state or by private interests, whether it has
juridical personality independent of the German government or none
at all.

xxx

xxx

xxx

Again, we are uncertain of the corresponding legal implications

under German law surrounding a private company owned by the
Federal Republic of Germany. Yet taking the description on face
value, the apparent equivalent under Philippine law is that of a
corporation organized under the Corporation Code but owned by the
Philippine government, or a government-owned or controlled
corporation without original charter. And it bears notice that Section
36 of the Corporate Code states that [e]very corporation
incorporated under this Code has the power and capacity x x x to sue
and be sued in its corporate name.
It is entirely possible that under German law, an entity such as GTZ or
particularly GTZ itself has not been vested or has been specifically deprived
the power and capacity to sue and/or be sued. Yet in the proceedings below
and before this Court, GTZ has failed to establish that under German
law, it has not consented to be sued despite it being owned by the
Federal Republic of Germany. We adhere to the rule that in the
absence of evidence to the contrary, foreign laws on a particular
subject are presumed to be the same as those of the Philippines, and
following the most intelligent assumption we can gather, GTZ is akin
to a governmental owned or controlled corporation without original
charter which, by virtue of the Corporation Code, has expressly
consented to be sued. At the very least, like the Labor Arbiter and the
Court of Appeals, this Court has no basis in fact to conclude or presume that
GTZ enjoys immunity from suit.[41] (Emphasis supplied.)
Applying the foregoing ruling to the case at bar, it is readily apparent that
CNMEG cannot claim immunity from suit, even if it contends that it performs
governmental functions. Its designation as the Primary Contractor does not
automatically grant it immunity, just as the term implementing agency has
no precise definition for purposes of ascertaining whether GTZ was immune
from suit. Although CNMEG claims to be a government-owned corporation, it
failed to adduce evidence that it has not consented to be sued under Chinese
law. Thus, following this Courts ruling in Deutsche Gesellschaft, in the
absence of evidence to the contrary, CNMEG is to be presumed to be a
government-owned and -controlled corporation without an original charter. As
a result, it has the capacity to sue and be sued under Section 36 of the
Corporation Code.
C. CNMEG failed to present a certification
from the Department of Foreign Affairs.
In Holy See,[42] this Court reiterated the oft-cited doctrine that the
determination by the Executive that an entity is entitled to sovereign or
diplomatic immunity is a political question conclusive upon the courts, to wit:

In Public International Law, when a state or international agency wishes to

plead sovereign or diplomatic immunity in a foreign court, it requests the
Foreign Office of the state where it is sued to convey to the court
that said defendant is entitled to immunity.
xxx

xxx

xxx

In the Philippines, the practice is for the foreign government or the

international organization to first secure an executive endorsement
of its claim of sovereign or diplomatic immunity. But how the Philippine
Foreign Office conveys its endorsement to the courts varies. In International
Catholic Migration Commission v. Calleja, 190 SCRA 130 (1990), the
Secretary of Foreign Affairs just sent a letter directly to the Secretary of
Labor and Employment, informing the latter that the respondent-employer
could not be sued because it enjoyed diplomatic immunity. In World Health
Organization v. Aquino, 48 SCRA 242 (1972), the Secretary of Foreign Affairs
sent the trial court a telegram to that effect. In Baer v. Tizon, 57 SCRA 1
(1974), the U.S. Embassy asked the Secretary of Foreign Affairs to request
the Solicitor General to make, in behalf of the Commander of the United
States Naval Base at Olongapo City, Zambales, a suggestion to respondent
Judge. The Solicitor General embodied the suggestion in a Manifestation
and Memorandum as amicus curiae.
In the case at bench, the Department of Foreign Affairs, through the Office of
Legal Affairs moved with this Court to be allowed to intervene on the side of
petitioner. The Court allowed the said Department to file its memorandum in
support of petitioners claim of sovereign immunity.
In some cases, the defense of sovereign immunity was submitted directly to
the local courts by the respondents through their private counsels (Raquiza v.
Bradford, 75 Phil. 50 [1945]; Miquiabas v. Philippine-Ryukyus Command, 80
Phil. 262 [1948]; United States of America v. Guinto, 182 SCRA 644 [1990]
and companion cases). In cases where the foreign states bypass the Foreign
Office, the courts can inquire into the facts and make their own
determination as to the nature of the acts and transactions involved. [43]
(Emphasis supplied.)
The question now is whether any agency of the Executive Branch can make a
determination of immunity from suit, which may be considered as conclusive
upon the courts. This Court, in Department of Foreign Affairs (DFA) v.
National Labor Relations Commission (NLRC),[44] emphasized the DFAs
competence and authority to provide such necessary determination, to wit:
The DFAs function includes, among its other mandates, the
determination of persons and institutions covered by diplomatic
immunities, a determination which, when challenge, (sic) entitles it
to seek relief from the court so as not to seriously impair the conduct
of the country's foreign relations. The DFA must be allowed to plead its

case whenever necessary or advisable to enable it to help keep the credibility

of the Philippine government before the international community. When
international agreements are concluded, the parties thereto are
deemed to have likewise accepted the responsibility of seeing to it
that their agreements are duly regarded. In our country, this task
falls principally of (sic) the DFA as being the highest executive
department with the competence and authority to so act in this
aspect of the international arena.[45] (Emphasis supplied.)
Further, the fact that this authority is exclusive to the DFA was also
emphasized in this Courts ruling in Deutsche Gesellschaft:
It is to be recalled that the Labor Arbiter, in both of his rulings, noted that it
was imperative for petitioners to secure from the Department of Foreign
Affairs a certification of respondents diplomatic status and entitlement to
diplomatic privileges including immunity from suits. The requirement might
not necessarily be imperative. However, had GTZ obtained such
certification from the DFA, it would have provided factual basis for its
claim of immunity that would, at the very least, establish a
disputable evidentiary presumption that the foreign party is indeed
immune which the opposing party will have to overcome with its own
factual evidence. We do not see why GTZ could not have secured
such certification or endorsement from the DFA for purposes of this
case. Certainly, it would have been highly prudential for GTZ to obtain the
same after the Labor Arbiter had denied the motion to dismiss. Still, even at
this juncture, we do not see any evidence that the DFA, the office of
the executive branch in charge of our diplomatic relations, has
indeed endorsed GTZs claim of immunity. It may be possible that GTZ
tried, but failed to secure such certification, due to the same concerns that
we have discussed herein.
Would the fact that the Solicitor General has endorsed GTZs claim of
States immunity from suit before this Court sufficiently substitute
for the DFA certification? Note that the rule in public international
law quoted in Holy See referred to endorsement by the Foreign Office
of the State where the suit is filed, such foreign office in the
Philippines being the Department of Foreign Affairs. Nowhere in the
Comment of the OSG is it manifested that the DFA has endorsed
GTZs claim, or that the OSG had solicited the DFAs views on the
issue. The arguments raised by the OSG are virtually the same as the
arguments raised by GTZ without any indication of any special and distinct
perspective maintained by the Philippine government on the issue. The
Comment filed by the OSG does not inspire the same degree of
confidence as a certification from the DFA would have elicited.[46]
(Emphasis supplied.)
In the case at bar, CNMEG offers the Certification executed by the Economic
and Commercial Office of the Embassy of the Peoples Republic of China,

stating that the Northrail Project is in pursuit of a sovereign activity.[47]

Surely, this is not the kind of certification that can establish CNMEGs
entitlement to immunity from suit, as Holy See unequivocally refers to the
determination of the Foreign Office of the state where it is sued.
Further, CNMEG also claims that its immunity from suit has the executive
endorsement of both the OSG and the Office of the Government Corporate
Counsel (OGCC), which must be respected by the courts. However, as
expressly enunciated in Deutsche Gesellschaft, this determination by the
OSG, or by the OGCC for that matter, does not inspire the same degree of
confidence as a DFA certification. Even with a DFA certification, however, it
must be remembered that this Court is not precluded from making an inquiry
into the intrinsic correctness of such certification.
D. An agreement to submit any dispute to
arbitration may be construed as an implicit
waiver of immunity from suit.
In the United States, the Foreign Sovereign Immunities Act of 1976 provides
for a waiver by implication of state immunity. In the said law, the agreement
to submit disputes to arbitration in a foreign country is construed as an
implicit waiver of immunity from suit. Although there is no similar law in the
Philippines, there is reason to apply the legal reasoning behind the waiver in
this case.
The Conditions of Contract,[48] which is an integral part of the Contract
Agreement,[49] states:
33. SETTLEMENT OF DISPUTES AND ARBITRATION
33.1. Amicable Settlement
Both parties shall attempt to amicably settle all disputes or controversies
arising from this Contract before the commencement of arbitration.
33.2. Arbitration
All disputes or controversies arising from this Contract which cannot be
settled between the Employer and the Contractor shall be submitted to
arbitration in accordance with the UNCITRAL Arbitration Rules at present in
force and as may be amended by the rest of this Clause. The appointing
authority shall be Hong Kong International Arbitration Center. The place of
arbitration shall be in Hong Kong at Hong Kong International Arbitration
Center (HKIAC).
Under the above provisions, if any dispute arises between Northrail and
CNMEG, both parties are bound to submit the matter to the HKIAC for
arbitration. In case the HKIAC makes an arbitral award in favor of Northrail,

its enforcement in the Philippines would be subject to the Special Rules on

Alternative Dispute Resolution (Special Rules). Rule 13 thereof provides for
the Recognition and Enforcement of a Foreign Arbitral Award. Under Rules
13.2 and 13.3 of the Special Rules, the party to arbitration wishing to have
an arbitral award recognized and enforced in the Philippines must petition the
proper regional trial court (a) where the assets to be attached or levied upon
is located; (b) where the acts to be enjoined are being performed; (c) in the
principal place of business in the Philippines of any of the parties; (d) if any
of the parties is an individual, where any of those individuals resides; or (e)
in the National Capital Judicial Region.
From all the foregoing, it is clear that CNMEG has agreed that it will not be
afforded immunity from suit. Thus, the courts have the competence and
jurisdiction to ascertain the validity of the Contract Agreement.
Second issue: Whether the Contract
Agreement is an executive agreement
Article 2(1) of the Vienna Convention on the Law of Treaties (Vienna
Convention) defines a treaty as follows:
[A]n international agreement concluded between States in written form and
governed by international law, whether embodied in a single instrument or in
two or more related instruments and whatever its particular designation.
In Bayan Muna v. Romulo, this Court held that an executive agreement is
similar to a treaty, except that the former (a) does not require legislative
concurrence; (b) is usually less formal; and (c) deals with a narrower range
of subject matters.[50]
Despite these differences, to be considered an executive agreement, the
following three requisites provided under the Vienna Convention must
nevertheless concur: (a) the agreement must be between states; (b) it must
be written; and (c) it must governed by international law. The first and the
third requisites do not obtain in the case at bar.
A. CNMEG is neither a government
nor a government agency.
The Contract Agreement was not concluded between the Philippines and
China, but between Northrail and CNMEG.[51] By the terms of the Contract
Agreement, Northrail is a government-owned or -controlled corporation,
while CNMEG is a corporation duly organized and created under the laws of
the Peoples Republic of China.[52] Thus, both Northrail and CNMEG entered
into the Contract Agreement as entities with personalities distinct and
separate from the Philippine and Chinese governments, respectively.
Neither can it be said that CNMEG acted as agent of the Chinese government.

As previously discussed, the fact that Amb. Wang, in his letter dated 1
October 2003,[53] described CNMEG as a state corporation and declared its
designation as the Primary Contractor in the Northrail Project did not mean it
was to perform sovereign functions on behalf of China. That label was only
descriptive of its nature as a state-owned corporation, and did not preclude it
from engaging in purely commercial or proprietary ventures.
B. The Contract Agreement is to
be governed by Philippine law.
Article 2 of the Conditions of Contract, [54] which under Article 1.1 of the
Contract Agreement is an integral part of the latter, states:
APPLICABLE LAW AND GOVERNING LANGUAGE
The contract shall in all respects be read and construed in accordance with
the laws of the Philippines.
The contract shall be written in English language. All correspondence and
other documents pertaining to the Contract which are exchanged by the
parties shall be written in English language.
Since the Contract Agreement explicitly provides that Philippine law shall be
applicable, the parties have effectively conceded that their rights and
obligations thereunder are not governed by international law.
It is therefore clear from the foregoing reasons that the Contract Agreement
does not partake of the nature of an executive agreement. It is merely an
ordinary commercial contract that can be questioned before the local courts.
WHEREFORE, the instant Petition is DENIED. Petitioner China National
Machinery & Equipment Corp. (Group) is not entitled to immunity from suit,
and the Contract Agreement is not an executive agreement. CNMEGs prayer
for the issuance of a TRO and/or Writ of Preliminary Injunction is DENIED for
being moot and academic. This case is REMANDED to the Regional Trial
Court of Makati, Branch 145, for further proceedings as regards the validity
of the contracts subject of Civil Case No. 06-203.
No pronouncement on costs of suit.
SO ORDERED.
Corona, C.J., Carpio, Velasco, Jr., Leonardo-De Castro, Brion, Peralta,
Bersamin, Abad, Villarama, Jr., Perez, Mendoza, Reyes, and Perlas-Bernabe,
JJ., concur.
Del Castillo, J., on leave.

EN BANC
[ G. R. No. 180989, February 07, 2012 ]
GUALBERTO J. DELA LLANA, PETITIONER, VS. THE
CHAIRPERSON, COMMISSION ON AUDIT, THE
EXECUTIVE SECRETARY AND THE NATIONAL
TREASURER, RESPONDENTS.
DECISION
SERENO, J.:
This is a Petition for Certiorari under Rule 65 of the Rules of Court with a
prayer for the issuance of a temporary restraining order pursuant to Section
7, Article IX-D of the 1987 Constitution, seeking to annul and set aside
Commission on Audit (COA) Circular No. 89-299, which lifted its system of
pre-audit of government financial transactions.
Statement of the Facts and the Case
On 26 October 1982, the COA issued Circular No. 82-195, lifting the system
of pre-audit of government financial transactions, albeit with certain
exceptions. The circular affirmed the state policy that all resources of the
government shall be managed, expended or utilized in accordance with law
and regulations, and safeguarded against loss or wastage through illegal or
improper disposition, with a view to ensuring efficiency, economy and
effectiveness in the operations of government. Further, the circular
emphasized that the responsibility to ensure faithful adherence to the policy
rested directly with the chief or head of the government agency concerned.
The circular was also designed to further facilitate or expedite government
transactions without impairing their integrity.
After the change in administration due to the February 1986 revolution,
grave irregularities and anomalies in the governments financial transactions
were uncovered. Hence, on 31 March 1986, the COA issued Circular No. 86257, which reinstated the pre-audit of selected government transactions. The
selective pre-audit was perceived to be an effective, although temporary,
remedy against the said anomalies.
With the normalization of the political system and the stabilization of
government operations, the COA saw it fit to issue Circular No. 89-299,
which again lifted the pre-audit of government transactions of national
government agencies (NGAs) and government-owned or -controlled

corporations (GOCCs). The rationale for the circular was, first, to reaffirm the
concept that fiscal responsibility resides in management as embodied in the
Government Auditing Code of the Philippines; and, second, to contribute to
accelerating the delivery of public services and improving government
operations by curbing undue bureaucratic red tape and ensuring facilitation
of government transactions, while continuing to preserve and protect the
integrity of these transactions. Concomitant to the lifting of the pre-audit of
government transactions of NGAs and GOCCs, Circular No. 89-299 mandated
the installation, implementation and monitoring of an adequate internal
control system, which would be the direct responsibility of the government
agency head.
Circular No. 89-299 further provided that the pre-audit activities retained by
the COA as therein outlined shall no longer be a pre-requisite to the
implementation or prosecution of projects and the payment of claims. The
COA aimed to henceforth focus its efforts on the post-audit of financial
accounts and transactions, as well as on the assessment and evaluation of
the adequacy and effectivity of the agencys fiscal control process. However,
the circular did not include the financial transactions of local government
units (LGUs) in its coverage.
The COA later issued Circular No. 94-006 on 17 February 1994 and Circular
No. 95-006 on 18 May 1995. Both circulars clarified and expanded the total
lifting of pre-audit activities on all financial transactions of NGAs, GOCCs, and
LGUs. The remaining audit activities performed by COA auditors would no
longer be pre-requisites to the implementation or prosecution of projects,
perfection of contracts, payment of claims, and/or approval of applications
filed with the agencies.[1]
It also issued COA Circular No. 89-299, as amended by Circular No. 89-299A,
which in Section 3.2 provides:
3.2 Whenever circumstances warrant, however, such as where the internal
control system of a government agency is inadequate, This Commission
may reinstitute pre-audit or adopt such other control measures,
including temporary or special pre-audit, as are necessary and
appropriate to protect the funds and property of the agency.
On 18 May 2009, COA issued Circular No. 2009-002, which reinstituted the
selective pre-audit of government transactions in view of the rising incidents
of irregular, illegal, wasteful and anomalous disbursements of huge amounts
of public funds and disposals of public property. Two years later, or on 22 July
2011, COA issued Circular No. 2011-002, which lifted the pre-audit of
government transactions implemented by Circular No. 2009-002. In its
assessment, subsequent developments had shown heightened vigilance of
government agencies in safeguarding their resources.
In the interregnum, on 3 May 2006, petitioner dela Llana wrote to the COA

regarding the recommendation of the Senate Committee on Agriculture and

Food that the Department of Agriculture set up an internal pre-audit service.
On 18 July 2006, the COA replied to petitioner, informing him of the prior
issuance of Circular No. 89-299.[2] The 18 July 2006 reply of the COA further
emphasized the required observance of Administrative Order No. 278 dated 8
June 1992, which directed the strengthening of internal control systems of
government offices through the installation of an internal audit service (IAS).
On 15 January 2008, petitioner filed this Petition for Certiorari under Rule 65.
He alleges that the pre-audit duty on the part of the COA cannot be lifted by
a mere circular, considering that pre-audit is a constitutional mandate
enshrined in Section 2 of Article IX-D of the 1987 Constitution. [3] He further
claims that, because of the lack of pre-audit by COA, serious irregularities in
government transactions have been committed, such as the P728-million
fertilizer fund scam, irregularities in the P550-million call center laboratory
project of the Commission on Higher Education, and many others.
On 22 February 2008, public respondents filed their Comment [4] on the
Petition. They argue therein that the Petition must be dismissed, as it is not
proper for a petition for certiorari, considering that (1) there is no allegation
showing that the COA exercised judicial or quasi-judicial functions when it
promulgated Circular No. 89-299; and (2) there is no convincing explanation
showing how the promulgation of the circular was done with grave abuse of
discretion. Further, the Petition is allegedly defective in form, in that there is
no discussion of material dates as to when petitioner received a copy of the
circular; there is no factual background of the case; and petitioner failed to
attach a certified true copy of the circular. In any case, public respondents
aver that the circular is valid, as the COA has the power under the 1987
Constitution to promulgate it.
On 9 May 2008, petitioner filed his Reply [5] to the Comment.
On 17 June 2008, this Court resolved to require the parties to submit their
respective memoranda. On 12 September 2008, public respondents
submitted their Memorandum.[6] On 15 September 2008, Amethya dela
Llana-Koval, daughter of petitioner, manifested to the Court his demise on 8
July 2008 and moved that she be allowed to continue with the Petition and
substitute for him. Her motion for substitution was granted by this Court in a
Resolution dated 7 October 2008. On 5 January 2009, petitioner, substituted
by his daughter,[7] filed his Memorandum.[8]
The main issue for our resolution in this Petition is whether or not petitioner
is entitled to the extraordinary writ of certiorari.
Procedural Issues
Technical Defects of the Petition

Public respondents correctly allege that petitioner failed to attach a certified

true copy of the assailed Order, and that the Petition lacked a statement of
material dates. In view, however, of the serious matters dealt with in this
Petition, this Court opts to tackle the merits thereof with least regard to
technicalities. A perusal of the Petition shows that the factual background of
the case, although brief, has been sufficiently alleged by petitioner.
Standing
This Petition has been filed as a taxpayers suit.
A taxpayer is deemed to have the standing to raise a constitutional issue
when it is established that public funds from taxation have been disbursed in
alleged contravention of the law or the Constitution.[9] Petitioner claims that
the issuance of Circular No. 89-299 has led to the dissipation of public funds
through numerous irregularities in government financial transactions. These
transactions have allegedly been left unchecked by the lifting of the pre-audit
performed by COA, which, petitioner argues, is its Constitutional duty. Thus,
petitioner has standing to file this suit as a taxpayer, since he would be
adversely affected by the illegal use of public money.
Propriety of Certiorari
Public respondents aver that a petition for certiorari is not proper in this case,
as there is no indication that the writ is directed against a tribunal, a board,
or an officer exercising judicial or quasi-judicial functions, as required in
certiorari proceedings.[10] Conversely, petitioner for his part claims that
certiorari is proper under Section 7, Article IX-A of the 1987 Constitution,
which provides in part:
Section 7. x x x. Unless otherwise provided by this Constitution or by law,
any decision, order, or ruling of each Commission may be brought to the
Supreme Court on certiorari by the aggrieved party within thirty days from
receipt of a copy thereof.
Petitioner is correct in that decisions and orders of the COA are reviewable by
the court via a petition for certiorari. However, these refer to decisions and
orders which were rendered by the COA in its quasi-judicial capacity. Circular
No. 89-299 was promulgated by the COA under its quasi-legislative or rulemaking powers. Hence, Circular No. 89-299 is not reviewable by certiorari.
Neither is a petition for prohibition appropriate in this case. A petition for
prohibition is filed against any tribunal, corporation, board, or person
whether exercising judicial, quasi-judicial, or ministerial functions who has
acted without or in excess of jurisdiction or with grave abuse of discretion,
and the petitioner prays that judgment be rendered, commanding the
respondent to desist from further proceeding in the action or matter specified
in the petition.[11] However, prohibition only lies against judicial or ministerial

functions, but not against legislative or quasi-legislative functions. [12]

Nonetheless, this Court has in the past seen fit to step in and resolve
petitions despite their being the subject of an improper remedy, in view of
the public importance of the issues raised therein.[13] In this case, petitioner
avers that the conduct of pre-audit by the COA could have prevented the
occurrence of the numerous alleged irregularities in government transactions
that involved substantial amounts of public money. This is a serious
allegation of a grave deficiency in observing a constitutional duty if proven
correct.
This Court can use its authority to set aside errors of practice or technicalities
of procedure, including the aforementioned technical defects of the Petition,
and resolve the merits of a case with such serious allegations of
constitutional breach. Rules of procedure were promulgated to provide
guidelines for the orderly administration of justice, not to shackle the hand
that dispenses it.[14]
Substantive Issues
The 1987 Constitution has made the COA the guardian of public funds,
vesting it with broad powers over all accounts pertaining to government
revenues and expenditures and the use of public funds and property,
including the exclusive authority to define the scope of its audit and
examination; to establish the techniques and methods for the review; and to
promulgate accounting and auditing rules and regulations. [15] Its exercise of
its general audit power is among the constitutional mechanisms that give life
to the check and balance system inherent in our form of government. [16]
Petitioner claims that the constitutional duty of COA includes the duty to
conduct pre-audit. A pre-audit is an examination of financial transactions
before their consumption or payment.[17] It seeks to determine whether the
following conditions are present: (1) the proposed expenditure complies with
an appropriation law or other specific statutory authority; (2) sufficient funds
are available for the purpose; (3) the proposed expenditure is not
unreasonable or extravagant, and the unexpended balance of appropriations
to which it will be charged is sufficient to cover the entire amount of the
expenditure; and (4) the transaction is approved by the proper authority and
the claim is duly supported by authentic underlying evidence. [18] It could,
among others, identify government agency transactions that are suspicious
on their face prior to their implementation and prior to the disbursement of
funds.
Petitioner anchors his argument on Section 2 of Article IX-D of the 1987
Constitution, which reads as follows:
Section 2.

1. The Commission on Audit shall have the power, authority, and duty
to examine, audit, and settle all accounts pertaining to the revenue
and receipts of, and expenditures or uses of funds and property,
owned or held in trust by, or pertaining to, the Government, or any of
its subdivisions, agencies, or instrumentalities, including government-owned
or controlled corporations with original charters, and on a post- audit
basis:
a. constitutional bodies, commissions and offices that have been
granted fiscal autonomy under this Constitution;
b. autonomous state colleges and universities;
c. other government-owned or controlled corporations and their
subsidiaries; and
d. such non-governmental entities receiving subsidy or equity, directly
or indirectly, from or through the Government, which are required
by law or the granting institution to submit to such audit as a
condition of subsidy or equity. However, where the internal
control system of the audited agencies is inadequate, the
Commission may adopt such measures, including temporary
or special pre-audit, as are necessary and appropriate to
correct the deficiencies. It shall keep the general accounts of the
Government and, for such period as may be provided by law,
preserve the vouchers and other supporting papers pertaining
thereto.
2. The Commission shall have exclusive authority, subject to the
limitations in this Article, to define the scope of its audit and
examination, establish the techniques and methods required therefor, and
promulgate accounting and auditing rules and regulations, including those for
the prevention and disallowance of irregular, unnecessary, excessive,
extravagant, or unconscionable expenditures or uses of government funds
and properties. (Emphasis supplied)
He claims that under the first paragraph quoted above, government
transactions must undergo a pre-audit, which is a COA duty that cannot be
lifted by a mere circular.
We find for public respondents.
Petitioners allegations find no support in the aforequoted Constitutional
provision. There is nothing in the said provision that requires the COA to
conduct a pre-audit of all government transactions and for all government
agencies. The only clear reference to a pre-audit requirement is found in
Section 2, paragraph 1, which provides that a post-audit is mandated for
certain government or private entities with state subsidy or equity and only
when the internal control system of an audited entity is inadequate. In such a
situation, the COA may adopt measures, including a temporary or special

pre-audit, to correct the deficiencies.

Hence, the conduct of a pre-audit is not a mandatory duty that this Court
may compel the COA to perform. This discretion on its part is in line with the
constitutional pronouncement that the COA has the exclusive authority to
define the scope of its audit and examination. When the language of the law
is clear and explicit, there is no room for interpretation, only application. [19]
Neither can the scope of the provision be unduly enlarged by this Court.
WHEREFORE, premises considered, the Petition is DISMISSED.
SO ORDERED.
Corona, C.J., Carpio, Velasco, Jr., Leonardo-De Castro, Brion, Peralta,
Bersamin, Abad, Villarama, Jr., Perez, Mendoza, Reyes, and Perlas-Bern