RULE 66 – QUO WARRANTO

EN BANC FERDINAND S. TOPACIO,Petitioner, 

    - versus -

      ASSOCIATE JUSTICE OF THE SANDIGANBAYAN GREGORYSANTOS ONG and THE OFFICE OF THE SOLICITOR GENERAL,Respondents. 

G.R. No. 179895Present: PUNO, C.J.,QUISUMBING,YNARES-SANTIAGO,CARPIO,AUSTRIA-MARTINEZ,CORONA,CARPIO MORALES,AZCUNA,TINGA,CHICO-NAZARIO,VELASCO, JR.,NACHURA, cralaw

REYES,LEONARDO-DE CASTRO, andBRION, JJ.Promulgated: December 18, 2008

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D E C I S I O NCARPIO MORALES, J.: 

Ferdinand Topacio (petitioner) via the present petition for certiorari and prohibition

seeks, in the main, to prevent Justice Gregory Ong (Ong) from further exercising the

powers, duties and responsibilities of a Sandiganbayan Associate Justice. 

cralawIt will be recalled that in Kilosbayan Foundation v. Ermita,[1] the Court, by

Decision of July 3, 2007, enjoined Ong from accepting an appointment to the

position of Associate Justice of the Supreme Court or assuming the position and

discharging the functions of that office, until he shall have successfully completed

all necessary steps, through the appropriate adversarial proceedings in court, to

show that he is a natural-born Filipino citizen and correct the records of his birth

and citizenship.[2]

 

cralawOn July 9, 2007, Ong immediately filed with the Regional Trial Court (RTC) of

Pasig City a Petition for the amendment/ correction/ supplementation or annotation

of an entry in [his] Certificate of Birth, docketed as S.P. Proc No. 11767-SJ, Gregory

Santos Ong v. The Civil Registrar of San Juan, Metro Manila, et al.[3]

 

cralawMeanwhile, petitioner, by verified Letter-Request/Complaint[4] of September 5,

2007, implored respondent Office of the Solicitor General (OSG) to initiate post-

haste a quo warranto proceeding against Ong in the latters capacity as an

incumbent Associate Justice of the Sandiganbayan.Invoking paragraph 1, Section 7,

Article VIII of the Constitution[5] in conjunction with the Courts Decision in Kilosbayan

Foundation 

v. Ermita,[6] petitioner points out that natural-born citizenship is also a qualification

for appointment as member of the Sandiganbayan and that Ong has failed to meet

the citizenship requirement from the time of his appointment as such in October

1998.

 

cralawThe OSG, by letter of September 25, 2007, informed petitioner that it cannot

favorably act on [his] request for the filing of a quo warranto petition until the [RTC]

case shall have been terminated with finality.[7] Petitioner assails this position of the

OSG as being tainted with grave abuse of discretion, aside from Ongs continuous

discharge of judicial functions.

 

cralawHence, this petition, positing that:

 IN OCTOBER OF 1998, RESPONDENT WAS NOT DULY-QUALIFIED UNDER THE FIRST SENTENCE OF PARAGRAPH 1, SECTION 7, OF THE 1987 CONSTITUTION, TO BE APPOINTED AN ASSOCIATE JUSTICE OF THE SANDIGANBAYAN, MERELY ON THE STRENGTH OF AN IDENTIFICATION CERTIFICATE ISSUED BY THE BUREAU OF IMMIGRATION AND A 1ST INDORSEMENT DATED 22 MAY 1997 ISSUED BY THE SECRETARY OF JUSTICE, BECAUSE, AS OF OCTOBER 1998, RESPONDETS BIRTH CERTIFICATE INDICATED THAT RESPONDENT IS A CHINESE CITIZEN AND BECAUSE, AS OF OCTOBER 1998, THE RECORDS OF THIS HONORABLE COURT DECLARED THAT RESPONDENT IS A NATURALIZED FILIPINO CITIZEN.[8] (Underscoring supplied)

 

cralawPetitioner thus contends that Ong should immediately desist from holding the

position of Associate Justice of the Sandiganbayan since he is disqualified on the

basis of citizenship, whether gauged from his birth certificate which indicates him to

be a Chinese citizen or against his bar records bearing out his status as a

naturalized Filipino citizen, as declared in Kilosbayan Foundation v. Ermita.

 

cralawOng, on the other hand, states that Kilosbayan Foundation v. Ermita did not

annul or declare null his appointment as Justice of the Supreme Court, but merely

enjoined him from accepting his appointment, and that there is no definitive

pronouncement therein that he is not a natural-born Filipino. He informs that he,

nonetheless, voluntarily relinquished the appointment to the Supreme Court out of

judicial statesmanship.[9]

 

cralawBy Manifestation and Motion to Dismiss of January 3, 2008, Ong informs that

the RTC, by Decision of October 24, 2007, already granted his petition and

recognized him as a natural-born citizen. The Decision having, to him, become final,[10]he caused the corresponding annotation thereof on his Certificate of Birth.[11]

 

Invoking the curative provisions of the 1987 Constitution, Ong explains that his

status as a natural-born citizen inheres from birth and the legal effect of such

recognition retroacts to the time of his birth.

Ong thus concludes that in view of the RTC decision, there is no more legal or

factual basis for the present petition, or at the very least this petition must await

the final disposition of the RTC case which to him involves a prejudicial issue.

 

cralawThe parties to the present petition have exchanged pleadings[12] that mirror the

issues in the pending petitions for certiorari in G.R. No. 180543, Kilosbayan

Foundation, et al. v. Leoncio M. Janolo, Jr., et al, filed with this Court and in CA-G.R.

SP No. 102318, Ferdinand S. Topacio v. Leoncio M. Janolo, Jr., et al.,[13] filed with the

appellate court, both of which assail, inter alia, the RTC October 24, 2007 Decision.

 

cralawFirst, on the objection concerning the verification of the petition.

 

cralawThe OSG alleges that the petition is defectively verified, being based on

petitioners personal knowledge and belief and/or authentic records, and having

been acknowledged before a notary public who happens to be petitioners father,

contrary to the Rules of Court[14] and the Rules on Notarial Practice of 2004,[15] respectively.

 

cralawThis technicality deserves scant consideration where the question at issue, as

in this case, is one purely of law and there is no need of delving into the veracity of

the allegations in the petition, which are not disputed at all by respondents. [16]

 

cralawOne factual allegation extant from the petition is the exchange of written

communications between petitioner and the OSG, the truthfulness of which the

latter does not challenge. Moreover, petitioner also verifies such correspondence on

the basis of the thereto attached letters, the authenticity of which he warranted in

the same verification-affidavit. Other allegations in the petition are verifiable in a

similar fashion, while the rest are posed as citations of law.

 

cralawThe purpose of verification is simply to secure an assurance that the allegations

of the petition or complaint have been made in good faith; or are true and correct,

not merely speculative. This requirement is simply a condition affecting the form of

pleadings, and non-compliance therewith does not necessarily render it fatally

defective. Indeed, verification is only a formal, not a jurisdictional requirement.[17]

 

cralawIn the same vein, the Court brushes aside the defect, insofar as the petition is

concerned, of a notarial act performed by one who is disqualified by reason of

consanguinity, without prejudice to any administrative complaint that may be filed

against the notary public.

 

Certiorari with respect to the OSG

 

On the issue of whether the OSG committed grave abuse of discretion in deferring

the filing of a petition for quo warranto, the Court rules in the negative.

 

cralawGrave abuse of discretion implies such capricious and whimsical exercise of

judgment as is equivalent to lack of jurisdiction, or, in other words, where the power

is exercised in an arbitrary or despotic manner by reason of passion or personal

hostility, and it must be so patent and gross as to amount to an evasion of positive

duty or to a virtual refusal to perform the duty enjoined or to act at all in

contemplation of law.[18]

 

cralawThe Court appreciates no abuse of discretion, much less, a grave one, on the

part of the OSG in deferring action on the filing of a quo warranto case until after

the RTC case has been terminated with finality. A decision is not deemed tainted

with grave abuse of discretion simply because the affected party disagrees with it.[19]

 

cralawThe Solicitor General is the counsel of the government, its agencies and

instrumentalities, and its officials or agents. In the discharge of its task, the Solicitor

General must see to it that the best interest of the government is upheld within the

limits set by law.[20]

 

cralawThe pertinent rules of Rule 66 on quo warranto provide: 

SECTION 1. Action by Government against individuals. An action for the usurpation of a public office, position or franchise may be commenced by a verified petition brought in the name of the Republic of the Philippines against:

(a) A person who usurps, intrudes into, or unlawfully holds or exercises a public office, position or franchise;

(b) A public officer who does or suffers an act which, by the provision of law, constitutes a ground for the forfeiture of his office; or

(c) An association which acts as a corporation within the Philippines without being legally incorporated or without lawful authority so to act.

SEC. 2. When Solicitor General or public prosecutor must commence action. ─ The Solicitor General or a public prosecutor, when directed by the President of thePhilippines, or when upon complaint or otherwise he has good reason to believe that any case specified in the preceding section can be established by proof, must commence such action.

SEC. 3. When Solicitor General or public prosecutor may commence action with permission of court. ─ The Solicitor General or a public prosecutor may, with the permission of the court in which the action is to be commenced, bring such an action at the request and upon the relation of another person; but in such case the officer bringing it may first require an indemnity for the expenses and costs of the action in an amount approved by and to be deposited in the court by the person at whose request and upon whose relation the same is brought. (Italics and emphasis in the original)

 

cralawIn the exercise of sound discretion, the Solicitor General may suspend or turn

down the institution of an action for quo warranto where there are just and valid

reasons.[21] Thus, in Gonzales v. Chavez,[22] the Court ruled:

 Like the Attorney-General of the United States who has absolute discretion in choosing whether to prosecute or not to prosecute or to abandon a prosecution already started, our own Solicitor General may even dismiss, abandon, discontinue or compromise suits either with or without stipulation with the other party.Abandonment of a case, however, does not mean that the Solicitor General may just drop it without any legal and valid reasons, for the discretion given him is not unlimited. Its exercise must be, not only within the parameters get by law but with the best interest of the State as the ultimate goal.[23]

cralaw

cralawUpon receipt of a case certified to him, the Solicitor General exercises his

discretion in the management of the case. He may start the prosecution of the case

by filing the appropriate action in court or he may opt not to file the case at all. He

may do everything within his legal authority but always conformably with the

national interest and the policy of the government on the matter at hand.[24]

cralawIt appears that after studying the case, the Solicitor General saw the folly of re-

litigating the same issue of Ongs citizenship in the quo warranto case

simultaneously with the RTC case, not to mention the consequent risk of forum-

shopping. In any event, the OSG did not totally write finis to the issue as it merely

advised petitioner to await the outcome of the RTC case.  

Certiorari and Prohibition with respect to Ong 

cralawBy petitioners admission, what is at issue is Ongs title to the office of Associate

Justice of Sandiganbayan.[25] He claims to have been constrained to file the present

petition after the OSG refused to heed his request to institute a suit for quo

warranto. Averring that Ong is disqualified to be a member of any lower collegiate

court, petitioner specifically prays that, after appropriate proceedings, the Court 

. . . issue the writs of certiorari and prohibition against Respondent Ong, ordering Respondent Ong to cease and desist from further exercising the powers, duties, and responsibilities of a Justice of the Sandiganbayan due to violation of the first sentence of paragraph 1, Section 7, of the 1987 Constitution; . . . issue the writs of certiorari and prohibition against Respondent Ong and declare that he was disqualified from being appointed to the post of Associate Justice of the Sandiganbayan in October of 1998, considering that, as of October of 1998, the birth certificate of Respondent Ong declared that he is a Chinese citizen, while even the records of this Honorable Court, as of October of 1998, declared that Respondent Ong is a naturalized Filipino; x x x[26]

  

cralaw

While denominated as a petition for certiorari and prohibition, the petition partakes

of the nature of a quo warranto proceeding with respect to Ong, for it effectively

seeks to declare null and void his appointment as an Associate Justice of the

Sandiganbayan for being unconstitutional. While the petition professes to be one for

certiorari and prohibition, petitioner even adverts to a quo warranto aspect of the

petition.[27]

 

cralawBeing a collateral attack on a public officers title, the present petition for

certiorari and prohibition must be dismissed. 

cralawThe title to a public office may not be contested except directly, by quo

warranto proceedings; and it cannot be assailed collaterally,[28] even through

mandamus[29] or a motion to annul or set aside order.[30] In Nacionalista Party v. De

Vera,[31] the Court ruled that prohibition does not lie to inquire into the validity of the

appointment of a public officer. 

x x x [T]he writ of prohibition, even when directed against persons acting as judges or other judicial officers, cannot be treated as a substitute for quo warranto or be rightfully called upon to perform any of the functions of the writ. If there is a court, judge or officer de facto, the title to the office and the right to act cannot be questioned by prohibition. If an intruder takes possession of a judicial office, the person dispossessed cannot obtain relief through a writ of prohibition commanding the alleged intruder to cease from performing judicial acts, since in its very nature prohibition is an improper remedy by which to determine the title to an office.[32]

 

cralawEven if the Court treats the case as one for quo warranto, the petition is, just

the same, dismissible. 

cralawA quo warranto proceeding is the proper legal remedy to determine the right or

title to the contested public office and to oust the holder from its enjoyment. [33] It is

brought against the person who is alleged to have usurped, intruded into, or

unlawfully held or exercised the public office,[34] and may be commenced by the

Solicitor General or a public prosecutor, as the case may be, or by any person

claiming to be entitled to the public office or position usurped or unlawfully held or

exercised by another.[35]

 

cralawNothing is more settled than the principle, which goes back to the 1905 case

of Acosta v. Flor,[36]reiterated in the recent 2008 case of Feliciano v. Villasin,[37] that for a quo warranto petition to be successful, the private person

suing must show a clear right to the contested office. In fact, not even a

mere preferential right to be appointed thereto can lend a modicum of legal ground

to proceed with the action.[38]

cralaw

cralawIn the present case, petitioner presented no sufficient proof of a clear and

indubitable franchise to the office of an Associate Justice of the Sandiganbayan. He

in fact concedes that he was never entitled to assume the office of an Associate

Justice of the Sandiganbayan.[39]

 cralawIn the instance in which the Petition for Quo Warranto is filed by an individual in his own name, he must be able to prove that he is entitled to the controverted public office, position, or franchise; otherwise, the holder of the same has a right to the undisturbed possession thereof.  In actions for Quo Warranto to determine title to a public office, the complaint, to be sufficient in form, must show that the plaintiff is entitled to the office. In Garcia v. Perez, this Court ruled that the person instituting Quo Warranto proceedings on his own behalf, under Section 5, Rule 66 of the Rules of Court, must aver and be able to show that he

is entitled to the office in dispute.Without such averment or evidence of such right, the action may be dismissed at any stage.[40] (Emphasis in the original)

 

cralawThe rightful authority of a judge, in the full exercise of his public judicial

functions, cannot be questioned by any merely private suitor, or by any other,

except in the form especially provided by law.[41] To uphold such action would

encourage every disgruntled citizen to resort to the courts, thereby causing

incalculable mischief and hindrance to the efficient operation of the governmental

machine.[42]

 

cralawClearly then, it becomes entirely unwarranted at this time to pass upon the

citizenship of Ong. The Court cannot, upon the authority of the present petition,

determine said question without encroaching on and preempting the proceedings

emanating from the RTC case. Even petitioner clarifies that he is not presently

seeking a resolution on Ongs citizenship, even while he acknowledges the

uncertainty of Ongs natural-born citizenship.[43]

 

cralawThe present case is different from Kilosbayan Foundation v. Ermita, given Ongs

actual physical possession and exercise of the functions of the office of an Associate

Justice of the Sandiganbayan, which is a factor that sets into motion the de

facto doctrine.

 

cralawSuffice it to mention that a de facto officer is one who is in possession of the

office and is discharging its duties under color of authority, and by color of authority

is meant that derived from an election or appointment, however irregular or

informal, so that the incumbent is not a mere volunteer. [44] If a person appointed to

an office is subsequently declared ineligible therefor, his presumably valid

appointment will give him color of title that will confer on him the status of a de

facto officer.[45]

 x x x A judge de facto assumes the exercise of a part of the prerogative of sovereignty, and the legality of that assumption is open to the attack of the sovereign power alone. Accordingly, it is a well-established principle, dating back from the earliest period and repeatedly confirmed by an unbroken current of decisions, that the official acts of a de facto judge are just as valid for all purposes as those of a de jure judge, so far as the public or third persons who are interested therein are concerned.[46]

 

cralawIf only to protect the sanctity of dealings by the public with persons whose

ostensible authority emanates from the State, and without ruling on the conditions

for the interplay of the de factodoctrine, the Court declares that Ong may turn out

to be either a de jure officer who is deemed, in all respects, legally appointed and

qualified and whose term of office has not expired, or a de factoofficer who enjoys

certain rights, among which is that his title to said office may not be contested

except directly by writ of quo warranto,[47] which contingencies all depend on the

final outcome of the RTC case.

 

cralawWith the foregoing disquisition, it becomes unnecessary to dwell on the

ancillary issues raised by the parties.

 

cralawWHEREFORE, the petition is DISMISSED.

 

cralawSO ORDERED.

[G.R. No. 131977. February 4, 1999]

PEDRO MENDOZA,Petitioner, vs. RAY ALLAS and GODOFREDO OLORES, Respondents.

D E C I S I O N

PUNO, J.:

Before us, petitioner prays for the execution of the decision of the trial court[1 granting his petition for quo warrantowhich ordered his reinstatement as Director III, Customs Intelligence and Investigation Service, and the payment of his back salaries and benefits.

Petitioner Pedro Mendoza joined the Bureau of Customs in 1972. He held the positions of Port Security Chief from March 1972 to August 1972, Deputy Commissioner of Customs from August 1972 to September 1975, Acting Commissioner of Customs from September 1975 to April 1977 and Customs Operations Chief I from October 1987 to February 1988.[2 On March 1, 1988, he was appointed Customs Service Chief of the Customs Intelligence and Investigation Service (CIIS). In 1989, the position of Customs Service Chief was reclassified by the Civil Service as "Director III" in accordance with Republic Act No. 6758 and National Compensation Circular No. 50. Petitioner's position was thus categorized as "Director III, CIIS" and he discharged the function and duties of said office.

On April 22, 1993, petitioner was temporarily designated as Acting District Collector, Collection District X, Cagayan de Oro City. In his place, respondent Ray Allas was appointed as "Acting Director III" of the CIIS. Despite petitioner's new assignment as Acting District Collector, however, he continued to receive the salary and benefits of the position of Director III.

In September 1994, petitioner received a letter from Deputy Customs Commissioner Cesar Z. Dario, informing him of his termination from the Bureau of Customs, in view of respondent Allas' appointment as Director III by President Fidel V. Ramos. The pertinent portion of the letter reads:

"Effective March 4, 1994, Mr. Ray Allas was appointed Director III by President Fidel V. Ramos and as a consequence, [petitioner's] services were terminated without prejudice to [his] claim for all government benefits due [him]."

Attached to the letter was the appointment of respondent Ray Allas as "Director III, CIIS, Bureau of Customs, vicePedro Mendoza."

Petitioner wrote the Customs Commissioner demanding his reinstatement with full back wages and without loss of seniority rights. No reply was made.

On December 2, 1994, petitioner filed a petition for quo warranto against respondent Allas before the Regional Trial Court, Paranaque, Branch 258.[3 The case was tried and on September 11, 1995, a decision was rendered granting the petition. The court found that petitioner was illegally terminated from office without due process of law and in violation of his security of tenure, and that as he was deemed not to have vacated his office, the appointment of respondent Allas to the same office was void ab initio. The court ordered the ouster of respondent Allas from the position of Director III, and at the same time directed the reinstatement of petitioner to the same position with payment of full back salaries and other benefits appurtenant thereto.

Respondent Allas appealed to the Court of Appeals. On February 8, 1996, while the case was pending before said court, respondent Allas was promoted by President Ramos to the position of Deputy Commissioner of Customs for Assessment and Operations. As a consequence of this promotion, petitioner moved to dismiss respondent's appeal as having been rendered moot and academic. The Court of Appeals granted the motion and dismissed the case accordingly. The order of dismissal became final and entry of judgment was made on March 19, 1996.[4

On May 9, 1996, petitioner filed with the court a quo a Motion for Execution of its decision. On July 24, 1996, the court denied the motion on the ground that the contested position vacated by respondent Allas was now being occupied by respondent Godofredo Olores who was not a party to the quo warranto petition.[5

Petitioner filed a special civil action for certiorari and mandamus with the Court of Appeals questioning the order of the trial court.[6 On November 27, 1997, the Court of Appeals dismissed the petition.[7 Hence, this recourse.

Petitioner claims that:

"The Court of Appeals grossly erred in holding that a writ of execution may no longer be issued, considering that respondent Olores who was not a party to the case now occupies the subject position."[8

The instant petition arose from a special civil action for quo warranto under Rule 66 of the Revised Rules of Court. Quo warranto is a demand made by the state upon some individual or corporation to show by what right they exercise some franchise or privilege appertaining to the state which, according to the Constitution and laws of the land, they cannot legally exercise except by virtue of a grant or authority from the state.[9 In other words, a petition for quo warranto is a proceeding to determine the right of a person to the use or exercise of a franchise or office and to oust the holder from its enjoyment, if his claim is not well-founded, or if he has forfeited his right to enjoy the privilege.[10The action may be commenced for the Government by the Solicitor General or the fiscal[11 against individuals who usurp a public office, against a public officer whose acts constitute a ground for the forfeiture of his office, and against an association which acts as a corporation without being legally incorporated.[12 The action may also be instituted by an individual in his own name who claims to be entitled to the public office or position usurped or unlawfully held or exercised by another.[13

Where the action is filed by a private person, he must prove that he is entitled to the controverted position, otherwise respondent has a right to the undisturbed possession of the office.[14 If the court finds for the respondent, the judgment should simply state that the respondent is entitled to the office.

[15 If, however, the court finds for the petitioner and declares the respondent guilty of usurping, intruding into, or unlawfully holding or exercising the office, judgment may be rendered as follows:

"Sec. 10. Judgment where usurpation found.-- When the defendant is found guilty of usurping, intruding into, or unlawfully holding or exercising an office, position, right, privilege, or franchise, judgment shall be rendered that such defendant be ousted and altogether excluded therefrom, and that the plaintiff or relator, as the case may be, recover his costs. Such further judgment may be rendered determining the respective rights in and to the office, position, right, privilege, or franchise of all the parties to the action as justice requires."

If it is found that the respondent or defendant is usurping or intruding into the office, or unlawfully holding the same, the court may order:

(1) The ouster and exclusion of the defendant from office;

(2) The recovery of costs by plaintiff or relator;

(3) The determination of the respective rights in and to the office, position, right, privilege or franchise of all the parties to the action as justice requires.[16

The character of the judgment to be rendered in quo warranto rests to some extent in the discretion of the court and on the relief sought.[17 In the case at bar, petitioner prayed for the following relief:

"WHEREFORE, it is respectfully prayed that respondent be ousted and altogether excluded from the position of Director III, Customs Intelligence and Investigation Service of the Bureau of Customs, and petitioner be seated to the position as the one legally appointed and entitled thereto.

Other reliefs, just or equitable in the premises, are likewise prayed for."[18

In granting the petition, the trial court ordered that:

"WHEREFORE, viewed in the light of the foregoing, judgment is hereby rendered granting this petition for quo warranto by:

1. Ousting and excluding respondent Ray Allas from the position of Director III, Customs Intelligence and Investigation Service of the Bureau of Customs; and

2. Reinstating petitioner Pedro C. Mendoza, Jr. to the position of Director III, Customs Intelligence and Investigation Service of the Bureau of Customs with full back wages and other monetary benefits appurtenant thereto from the time they were withheld until reinstated."[19

The trial court found that respondent Allas usurped the position of "Director III, Chief of the Customs Intelligence and Investigation Service." Consequently, the court ordered that respondent Allas be ousted from the contested position and that petitioner be reinstated in his stead. Although petitioner did not specifically pray for his back salaries, the court ordered that he be paid his "full back wages and other monetary benefits" appurtenant to the contested position "from the time they were withheld until reinstated."

The decision of the trial court had long become final and executory, and petitioner prays for its execution. He alleges that he should have been reinstated despite respondent Olores' appointment because the subject position was never vacant to begin with. Petitioner's removal was illegal and he was deemed never to have vacated his office when respondent Allas was appointed to the same. Respondent Allas' appointment was null and void and this nullity allegedly extends to respondent Olores, his successor-in-interest.[20

Ordinarily, a judgment against a public officer in regard to a public right binds his successor in office. This rule, however, is not applicable in quo warranto cases.[21 A judgment in quo warranto does not bind the respondent's successor in office, even though such successor may trace his title to the same source. This follows from the nature of the writ of quo warranto itself. It is never directed to an officer as such, but always against the person-- to determine whether he is constitutionally and legally authorized to perform any act in, or exercise any function of the office to which he lays claim.[22 In the case at bar, the petition for quo warranto was filed by petitioner solelyagainst respondent Allas. What was threshed out before the trial court was the qualification and right of petitioner to the contested position as against respondent Ray Allas, not against Godofredo Olores. The Court of Appeals did not err in denying execution of the trial court's decision.

Petitioner has apprised this Court that he reached the compulsory retirement age of sixty-five (65) years on November 13, 1997. Reinstatement not being possible, petitioner now prays for the payment of his back salaries and other benefits from the time he was illegally dismissed until finality of the trial court's decision.[23

Respondent Allas cannot be held personally liable for petitioner's back salaries and benefits. He was merelyappointed to the subject position by the President of the Philippines in the exercise of his constitutional power as Chief Executive. Neither can the Bureau of Customs be compelled to pay the said back salaries and benefits of petitioner. The Bureau of Customs was not a party to the petition for quo warranto.[24

IN VIEW WHEREOF, the petition is denied and the decision of the Court of Appeals in CA-G.R. SP No. 41801 is affirmed.

SO ORDERED.

G.R. No. 173165 : February 17, 2010

ATTY. LUCKY M. DAMASEN, Petitioner, vs. OSCAR G. TUMAMAO, Respondent.

D E C I S I O N

PERALTA, J.:

Before this Court is a Petition for Review on Certiorari ,1cralaw under Rule 45 of the 1997 Rules of Civil

Procedure, assailing the June 14, 2006 Decision2cralaw of the Court of Appeals (CA) in CA-G.R. SP No. 90882.

The facts of the case are as follows:

On December 2, 2004, Nelia Tumamao, the Vice-Mayor of San Isidro, Isabela, died.3cralaw As a result, a

permanent vacancy was created in the Office of the Vice-Mayor.

Pursuant to Sec. 44 of Republic Act (RA) No. 7160,4cralaw Ligaya C. Alonzo (Alonzo) was elevated to the

position of Vice-Mayor, she being the highest-ranking member of the Sangguniang Bayan, that is, the one who garnered the highest number of votes for that office.5

cralaw As a result, a permanent vacancy was created in the Sangguniang Bayan.

To fill up the ensuing vacancy in the Sangguniang Bayan, San Isidro Mayor Abraham T. Lim (Mayor Lim) recommended to Governor Maria Gracia Cielo M. Padaca (Governor Padaca), the appointment of respondent Oscar G. Tumamao (Tumamao), a member of the Laban ng Demokratikong Pilipino (LDP), the same political party to which Alonzo belonged.6

cralaw

On April 15, 2005, Tumamao took his oath as a member of the Sangguninang Bayan before Mayor Lim.7

cralaw

On April 26, 2005 and May 3, 2006, Tumamao attended the regular sessions of the Sangguniang Bayan.8

cralaw

On May 5, 2005, petitioner Atty. Lucky Damasen (Damasen) became a member of the LDP after taking his oath of affiliation before the LDP Provincial Chairman, Ms. Ana Benita Balauag (Provincial Chairman Balauag).9

cralaw On even date, Damasen was able to secure from LDP Provincial Chairman Balauag a letter of nomination addressed to Governor Padaca for his appointment to the Sangguniang Bayan.10

cralaw

On May 12, 2005, Damasen was appointed as Sangguniang Bayan member by Governor Padaca.11cralaw

On May 16, 2005, Damasen took his oath as member of the Sangguniang Bayan before Governor Padaca.12

cralaw

On May 17, 2005, Damasen attended the Sangguniang Bayan session, but with Tumamao present thereat, the former was not duly recognized.13

cralaw Hence, in the afternoon of the same day, Damasen filed with the Regional Trial Court of Santiago City (RTC) a Petition for Quo Warranto with Prayer for the Issuance of a Writ of Preliminary Injunction,14

cralaw seeking to be declared the rightful member of the Sangguniang Bayan, claiming that he had been nominated by LDP Provincial Chairman Balauag and had been appointed thereto by Governor Padaca.15

cralaw The case was docketed as Special Civil Action Case No. 0234.

The RTC issued a Temporary Restraining Order effective for 72 hours. Thereafter, the RTC issued an order extending the Temporary Restraining order to 17 days.

Later, in the hearing to determine the propriety of issuing a Writ of Preliminary Injunction, Damasen testified that he is a member of the LDP and was nominated to the position in question by LDP Provincial Chairman Balauag; that pursuant thereto, he was appointed by Governor Padaca as a member of the Sangguniang Bayan, and that he later took his oath before her; but that during session of the Sangguniang Bayan on May 12, 2005, he was not recognized by a majority of its members.16

cralaw

For his part, Tumamao called to the witness stand his counsel Atty. Ernest Soberano (Soberano), who identified a letter dated June 14, 2005, signed by LDP Provincial Chairman Balauag, which states that the latter was revoking her nomination of Damasen, and that she was confirming Tumamao's nomination made by Mayor Lim.17

cralaw Later, Tumamao presented Provincial Chairman Balauag who affirmed the contents of her letter revoking the nomination of Damasen.18

cralaw

On August 4, 2005, the RTC rendered a Decision19cralaw ruling in favor of Damasen, the dispositive portion

of which reads:

WHEREFORE, after careful evaluation of the evidence presented, the Court resolves the petition declaring petitioner, Atty. Lucky M. Damasen as the rightful person to have the right to occupy and exercise the functions of Sangguniang Bayan member of San Isidro, Isabela, enjoining, excluding respondent Oscar G. Tumamao from occupying and exercising the function of Sangguniang Bayan member of San Isidro, Isabela, from usurping and unlawfully holding or exercising said office. After determining that herein petitioner is the rightful person to occupy and exercise the functions of Sangguniang Bayan member of San Isidro, Isabela, it follows that he is entitled to the salaries, benefits and other emoluments appurtenant to the position. He is also entitled to recover his costs.

SO ORDERED.20cralaw

The RTC based its decision on Sec. 45 (b) of RA 7160,21cralaw which provides for the rule on succession in

cases of permanent vacancies in the Sangguninan. The RTC ruled that the evidence submitted by Damasen proved that the requirements to be able to qualify for the position was fully complied with.22

cralaw Moreover, the RTC held that the revocation of the political nomination issued by LDP Provincial

Chairman Balauag was done after Governor Padaca had acted on it and had issued the appointment of Damasen.23

cralaw Hence, the RTC declared that it could no longer undo what Governor Padaca had done, absent any showing of grave abuse of discretion.24

cralaw

Tumamao appealed the RTC Decision to the CA. On June 14, 2006, the CA rendered a Decision reversing the appealed Decision, the dispositive portion of which reads:

UPON THE VIEW WE TAKE OF THIS CASE, THUS, the judgment appealed from must be, as it hereby is, VACATED and SET ASIDE. The Quo Warranto case is hereby DISMISSED for lack of merit. Without special pronouncement as to costs.

SO ORDERED.25cralaw

The CA held that Damasen was not entitled to assume the vacant position in the Sangguniang Bayan, thus:

While Atty. Damasen might have been appointed by Governor Padaca, this appointment must fly in the face of the categorical and unbending sine qua non requirements of the statute.

Indeed, Atty. Damasen was nominated simply by Ms. Balauag, the Provincial Chairman of the LDP, who obviously is not the highest official of this political party. It cannot escape notice that the quoted provision particularizes: "highest official of the political party concerned" without any additional qualifying or restrictive words.

According credence to the June 16, 2005 letter of the LDP Deputy Secretary Counsel Demaree Raval, (and we have no reason not to), it should be easy enough to see that Atty. Damasen also was not a member of the LDP, as his application for membership therein was not endorsed to the LDP's National Council for approval.

More importantly, Atty. Damasen's aforesaid nomination was eventually withdrawn, cancelled or revoked by Ms. Balauag, who declared that she was misled into accepting him as member of the LDP (owing to the fact that Atty. Damasen was affiliated with the Lakas CMD-Party and under the banner of this party indeed ran for Mayor of San Isidro against the LDP candidate for Mayor), and in nominating him. That much is clear from Ms. Balauag's letter of June 14, 2005 to Governor Padaca, the contents whereof she affirmed in her testimony, as follows: x x x

Oddly enough, Atty. Damasen helped accentuate Ms. Balauag's thesis by admitting that he was previously a member of the Lakas-CMD, and that he did not resign therefrom when he joined the LDP, and moreover, his joining the LDP was not based on party ideals but because he just wanted to.26

cralaw

Damasen did not file a motion for reconsideration of the CA Decision and instead sought direct relief from this Court via the present petition for review. In his petition, Damasen raised the following issues for this Court's resolution, to wit:

A.

THE COURT OF APPEALS ERRED IN DISMISSING THE QUO WARRANTO ON THE BASIS THAT THE NOMINATION OF THE PETITIONER DID NOT COMPLY WITH THE REQUIREMENTS OF SECTION 45 OF REPUBLIC ACT 7160.

B.

THE COURT OF APPEALS ERRED IN ITS DECISION WHEN IT DID NOT RULE ON THE VALIDITY OF THE ASSUMPTION TO OFFICE OF PRIVATE RESPONDENT AS SANGGUNIANG BAYAN.

C.

THE COURT OF APPEALS ERRED IN NOT DISMISSING THE APPEAL FAILED BY THE PRIVATE RESPONDENT THE LATTER HAVING NO AUTHORITY TO QUESTION THE VALIDITY OF THE APPOINTMENT OF PETITIONER.27

cralaw

The petition is not meritorious.

At the outset, this Court shall address a procedural matter raised by Damasen. Damasen argues that Tumamao was not appointed as Sangguniang Bayan and, therefore, the latter has no right to question his appointment by way of appeal.28

cralaw More specifically, Damasen argues in the wise:

By reason of the appeal, the situation of the parties had been changed since it is now the private respondent who is assailing petitioner's exercise of a public office. Else wise stated, the private respondent is now alleging that the petitioner is a person who usurps, intrudes into, or unlawfully holding the position of Sangguniang Bayan. This being the case, the proper legal remedy should be a separate case of Quo Warranto to be filed against petitioner.29

cralaw

Damasen's contention that Tumamao should have filed a separate case of quo warranto and not an appeal to the CA does not hold water. The determination of who, between Damasen and Tumamao, is entitled to the contested position is the crux of the controversy in the case at bar. Hence, a separate action would only be tantamount to a multiplicity of suits, which is abhorred by law.

It is undisputed that the law applicable to herein petition is Sec. 45(b) of RA 7160, which provides for the rule on succession in cases of permanent vacancies in the Sanggunian, to wit:

Section 45. Permanent Vacancies in the Sanggunian.

(a) Permanent vacancies in the sanggunian where automatic succession provided above do not apply shall be filled by appointment in the following manner:

(1) The President, through the Executive Secretary, in the case of the Sangguniang Panlalawigan and the Sangguniang Panlungsod of highly urbanized cities and independent component cities;

(2) The governor, in the case of the Sangguniang panlungsod of component cities and the Sangguniang Bayan;

(3) The city or municipal mayor, in the case of Sangguniang Barangay, upon recommendation of the Sangguniang Barangay concerned.

(b) Except for the Sangguniang Barangay, only the nominee of the political party under which the sanggunian member concerned had been elected and whose elevation to the position next higher in rank created the last vacancy in the sanggunian shall be appointed in the manner hereinabove provided. The appointee shall come from the same political party as that of the sanggunian member who caused the vacancy and shall serve the unexpired term of the vacant office. In the appointment herein mentioned, a nomination and a certificate of membership of the appointee from the highest official of the political party concerned are conditions sine qua non, and any appointment without such nomination and certification shall be null and void ab initio and shall be a ground for administrative action against the official responsible therefore.30

cralaw

As can be gleaned from the above provision, the law provides for conditions for the rule of succession to apply: First, the appointee shall come from the same political party as that of the Sanggunian member who caused the vacancy. Second, the appointee must have a nomination and a Certificate of Membership from the highest official of the political party concerned.

It is the contention of Damasen that he has complied with the requirements of Sec. 45 (b) of RA 7160. Specifically, Damasen's position is predicated on his submission of the following documents:

1. Oath of Affiliation with the LDP31cralaw dated May 5, 2005;

2. Certificate of Membership with the LDP32cralaw dated May 5, 2005;

3. Letter of Nomination made by LDP Provincial Chairman Ana Benita G. Balauag33cralaw dated May

5, 2005;

4. Letter of Appointment from Governor Padaca34cralaw dated May 12, 2005;

5. Panunumpa sa Katungkulan as Sangguniang Bayan member35cralaw dated May 16, 2005.

For his part, Tumamao argued that Damasen has not complied with the requirements of the law. Tumamao argued in the main that Damasen is not a bona-fide member of the LDP and that Provincial Chairman Balauag is not the "highest official" of the LDP as contemplated under Sec. 45 (b) of RA 7160.

In order to resolve the brewing dispute on Damasen's membership in the LDP, this Court shall hereunder discuss and scrutinize two documents which are vital for a just resolution of the petition at bar, the first being the June 14, 2005 letter36

cralaw of LDP Provincial Chairman Balauag to Governor Padaca, and the second being the June 16, 2005 letter37

cralaw of Demaree J.B. Raval, the Deputy Secretary Counsel of the LDP also to Governor Padaca.

Revocation of the nomination given by the LDP Provincial Chairman

On June 14 2005, LDP Provincial Chairman Balauag sent a letter to Governor Padaca revoking the nomination she issued in favor of Damasen, the text of which in hereunder reproduced in its entirety, to wit:

This refers to the nomination which I issued in favor of Atty. Lucky M. Damasen to fill in the vacancy in the Sangguniang Bayan of San Isidro, Isabela dated May 5, 2005.

When Judge Jose O. Ramos (Ret.) together with Atty. Damasen came to see me at my residence in Quezon City sometime in the month of May, 2005, to request the nomination of Atty. Damasen, he did not inform me that Atty. Damasen was a candidate for Mayor in the May 2004 elections affiliated with the Lakas Party and who ran against our Party's candidate for Mayor in San Isidro. I was given the impression that Atty. Damasen was not affiliated with any political party that is why I signed the documents presented to me and endorsed his nomination. However, I later learned that Atty. Damasen was actually a candidate for Mayor and a member of Lakas so that his joining our Party and his nomination as such to the vacant position of Sanggunian member is not accordance with our Party's principles pursuant to Sec. 2, Art. IV of our By-Laws.

In view of the foregoing, as the Provincial Chairman of LDP-LABAN, I am constrained to withdraw, cancel, and/or revoke the nomination issued to Atty. Lucky M. Damasen dated May 5, 2005 for all legal intents and purposes.38

cralaw

In his defense, Damasen maintains that he did not commit any misrepresentation when he secured his Certificate of Nomination and Membership from LDP Provincial Chairman Balauag. Damasen thus argued in this wise:

According to ANA BENITA BALAUAG when she testified, she claimed that she did not know that petitioner was a candidate for Mayor during the last Local and National Election. This is absurd because Echague, Isabela where ANA BENITA BALAUAG also ran for Mayor is just an adjoining town of San Isidro, Isabela. xxx39

cralaw

In addition, Damasen asservates that in the Philippines, politicians change their political affiliation more often than not.40

cralaw More importantly, Damasen is of the belief that the subsequent revocation of the nomination after he was already appointed by the Governor has no legal effect, to wit:

Respondent is of the view that since the nomination of the petitioner dated May 5, 2005 has been cancelled and/or revoked by LDP Isabela Provincial Chairman ANA BENITA BALAUAG on June 14, 2005, petitioner no longer has a right to be a member of the Sangguniang Bayan. This is wrong. The respondent should open its eyes and must come to realize that the revocation and/or cancellation CAME AFTER the petitioner has been APPOINTED. x x x x41

cralaw

It is not the province of this Court to decide if in fact LDP Provincial Chairman Balauag knew or should have known that Damasen was a member of the Lakas-CMD party. However, as can be gleaned from the Transcript of Stenographic Notes dated July 12, 2005, LDP Provincial Chairman Balauag repeatedly denied knowing that Damasen ran for Mayor in San Isidro, Isabela.42

cralaw The same notwithstanding, this Court must take into consideration the fact that Damasen was previously a member of the Lakas-CMD party. Likewise, while the revocation of Damasen's nomination came after the fact of his appointment by Governor Padaca, the same should not serve to bar any contest on said appointment as the primordial issue to be determined is whether or not Damasen has complied with the requirements of Sec. 45 (b) of RA 7160.

Letter from the LDP that Damasen is not a bona fide member

What is damning to the cause of Damasen, is the letter of Demaree J.B. Raval, the Deputy Secretary Counsel of the LDP, addressed to Governor Padaca wherein it is categorically stated that Damasen is not a bona fide member of the LDP, to wit:

x x x x

As regards the claim of Mr. Lucky Magala Damasen, please be informed that pursuant to the LDP Constitution, Mr. Damasen does not appear in our records as a bona fide member of the LDP. While it is true that Mr. Damasen may have been issued a Certificate of Membership dated May 5, 2005 by our Provincial Chairman for Isabela, Mrs. Ana Benita G. Balauag, his membership has not been endorsed (even to date) to the LDP National Council for approval. Besides, the Certificate of Candidacy of Mr. Damasen for the May 10, 2004 elections shows that he was nominated by the "Lakas-CMD Party".43

cralaw

Like the CA, this Court has no reason to doubt the veracity of the letter coming from the LDP leadership. Quite clearly, from the tenor of the letter, it appears that the membership of Damasen still had to be approved by the LDP National Council. Thus, notwithstanding Damasen's procurement of a Certificate of Membership from LDP Provincial Chairman Balauag, to this Court's mind, the same merely started the process of his membership in the LDP, and it did not mean automatic membership thereto. While it may be argued that Damasen was already a member upon receipt of a Certificate of Membership from LDP Provincial Chairman Balauag, this Court cannot impose such view on the LDP. If the LDP leadership says that the membership of Damasen still had to be endorsed to the National Council for approval, then this Court cannot question such requirement in the absence of evidence to the contrary. It is well settled that the discretion of accepting members to a political party is a right and a privilege, a purely internal matter, which this Court cannot meddle in.

In resolving the petition at bar, this Court is guided by Navarro v. Court of Appeals44cralaw (Navarro), where

this Court explained the reason behind the rule of succession under Sec. 45 (b) of RA 7160, to wit:

The reason behind the right given to a political party to nominate a replacement where a permanent vacancy occurs in the Sanggunian is to maintain the party representation as willed by the people in the election.

With the elevation of petitioner Tamayo, who belonged to REFORMA-LM, to the position of Vice-Mayor, a vacancy occurred in the Sanggunian that should be filled up with someone belonging to the political party of petitioner Tamayo. Otherwise, REFORMA-LM's representation in the Sanggunian would be diminished. Xxx. As earlier pointed out, the reason behind Par. (b), Sec. 45 of the Local Government Code is the maintenance of party representation in the Sanggunian in accordance with the will of the electorate.45

cralaw

Since the permanent vacancy in the Sanggunian occurred because of the elevation of LDP member Alonzo to vice-mayor, it follows that the person to succeed her should also belong to the LDP so as to preserve party representation. Thus, this Court cannot countenance Damasen's insistence in clinging to an appointment when he is in fact not a bona fide member of the LDP. While the revocation of the nomination given to Damasen came after the fact of his appointment, this Court cannot rule in his favor, because the very first requirement of Sec. 45 (b) is that the appointee must come from the political party as that of the Sanggunian member who caused the vacancy. To stress, Damasen is not a bona fide member of the LDP.

In addition, appointing Damasen would not serve the will of the electorate. He himself admitts that he was previously a member of the Lakas-CMD, and that he ran for the position of Mayor under the said party on the May 2004 Elections. Likewise, he did not resign from the said party when he joined the LDP, and even admitted that his joining the LDP was not because of party ideals, but because he just wanted to.46

cralaw How can the will of the electorate be best served, given the foregoing admissions of Damasen? If this Court were to grant herein petition, it would effectively diminish the party representation of the LDP in the Sanggunian, as Damasen would still be considered a member of the Lakas-CMD, not having resigned therefrom, a scenario that defeats the purpose of the law, and that ultimately runs contrary the ratio of Navarro.

Lastly, the records of the case reveal that Tumamao has the nomination47cralaw of Senator Edgardo J.

Angara, the Party Chairman and, therefore, the highest official of the LDP. In addition, he is a member in good standing of the LDP.48

cralawThus, given the foregoing, it is this Court's view that Tumamao has complied with the requirements of law.

WHEREFORE, premises considered, the petition is DENIED. The June 14, 2006 Decision of the Court of Appeals in CA-G.R. SP No. 90882, is AFFIRMED.

SO ORDERED.

G.R. No. L-46218 October 23, 1990

JOVENTINO MADRIGAL, petitioner-appellant, vs. PROV. GOV. ARISTEO M. LECAROZ, VICE-GOVERNOR CELSO ZOLETA, JR., PROVINCIAL BOARD MEMBERS DOMINGO RIEGO AND

MARCIAL PRINCIPE; PROV. ENGR. ENRIQUE M. ISIDRO, ABRAHAM T. TADURAN AND THE PROVINCE OF MARINDUQUE, respondents-appellees.chanrobles virtual law library

 

MEDIALDEA J.:

This case was certified to US by the Court of Appeals since it raises pure questions of law (pp. 66-68, Rollo).chanroblesvirtualawlibrary chanrobles virtual law library

The issue raised in this case are certainly far from novel. We shall, therefore, simply reiterate well established jurisprudential rules on the prescriptive period within which to file a petition for mandamus to compel reinstatement to a government office and a claim for back salaries and damages related thereto.chanroblesvirtualawlibrary chanrobles virtual law library

The antecedent facts are as follows:  chanrobles virtual law library

On November 25, 1971, public respondents Governor Aristeo M. Lecaroz, Vice-Governor Celso Zoleta, Jr., Provincial Board of Marinduque members Domingo Riego and Marcial Principe abolished petitioner-appellat Joventino Madrigal's possitionas a permanent construction capataz in the office of the Provincial Engineer from the annual Roads Bridges Fund Budget for fiscal year 1971-1972 (p.2,

Records) by virtue of Resolution No. 204. The abolition was allegedly due to the poor financial condition of the province and it appearing that his position was not essential (p. 6, Records). chanroblesvirtualawlibrary chanrobles virtual law library

On April 22, 1972, Madrigal appealed to the Civil Service Commission. On August 7, 1973, he transmitted a follow-up letter to the Commission regarding his appela. On January 7, 1974, the Commission in its 1st Indorsement declared the removal of Madrigal from the service illegal (pp. 7-8, Records).chanroblesvirtualawlibrary chanrobles virtual law library

On April 26, 1974, public respondent Governor Aristeo M. Lecaroz moved for a reconsideration of said resolution. On February 10, 1975, the Commission denied the motion for reconsideration (pp. 9-10, Records).chanroblesvirtualawlibrary chanrobles virtual law library

On August 4, 1975, Madrigal sent a letter to the Provincial Board requesting implementation of the resolution of the Commission and consequently, reinstatement to his former posistion. chanroblesvirtualawlibrary chanrobles virtual law library

On August 18, 1975, the Provincial Board, through Resolution No. 93, denied Madrigal's request for reinstatement because his former posistion no longer exists. In the same resolution, it ordered the appropriation of the amount of P4,200.00 as his back salaries covering the preiod December 1, 1971 up to June 30, 1973 (p. 47, Records).chanroblesvirtualawlibrary chanrobles virtual law library

On December 15, 1975, Madrigal filed a petition before the Court of First Instance (now Regional Trial Court) of Marinduque against public respondents Governor Aristeo M. Lecaroz, Vice-Governor Celso Zoleta, Jr., Provincial Board Members Domingo Riego and Marcial Principe, Provincial Engineer Enrique M. Isidro, Abraham I. Taduran and the Province of Marinduque for mandamus and damages seeking, inter alia, (1) restoration of his abolished position in the Roads and Bridges Fund Budget of the Province; (2) reinstatement to such position; and (3) payment of his back salaries plus damages (pp. 1-5, Records).chanroblesvirtualawlibrary chanrobles virtual law library

On March 16, 1976, the trial court issued an order dismissing the petition on the ground that Madrigal's cause of action was barred by laches. The trial court rationalized its judgment as follows (pp. 31-33, Rollo):

It is beyond question that herein petitioner was separated from the service on November 25, 1971, and it was only on December 15, 1975, or FOUR (4) YEARS and TWENTY (20) DAYS after, that he filed this case for "Mandamus and Damages" with the principal aim of causing his reinstatement to the public position from where his service was terminated. chanroblesvirtualawlibrary chanrobles virtual law library

Much as the petitioner might have had a good cause of action, it is unfortunate that (sic) the same is now barred by laches.

A person claiming right to a position in the civil service should file his action for reinstatement within one year from his illegal removal from office, otherwise he is considered as having abandoned the same (Gonzales vs. Rodriguez, L-12976, March 24, 1961, 1 SCRA 755; Cebu Portland Cement Co. vs. CIR, L-17897, Aug. 31, 1962, 5 SCRA 1113; Alipio vs. Rodriguez, L-17336, Dec. 26, 1963, 9 SCRA 752).

The rationale for the aforecited doctrine on time limitation of a cause of action in a judicial tribunal by one seeking reinstatement in the civil service is that the suitor thereby is guilty of LACHES (National Shipyards and Steel Corporation vs. CIR, L-21675, May 23, 1967, 20 SCRA 134). chanroblesvirtualawlibrary chanrobles virtual law library

The ruling is no doubt inspired by the provision of Section 16, Rule 66 of the Revised Rules of Court on "Quo Warranto", pertinent portion of which reads:  chanrobles virtual law library

Sec. 16. Limitations. - Nothing contained in this rule shall be construed to authorize an action ... against a public officer or employee for his ouster from office unless the same be commenced within one (1) year after the cause of such ouster, or the right of the plaintiff to hold such office or position, arose ....chanroblesvirtualawlibrary chanrobles virtual law library

and to the established jurisprudence interpreting the aforequoted rule to the effect that the period of one year fixed therein is a condition precedent to the existence of the cause of action for quo warranto (Bumanglag vs Fernandez, L-11482, Nov. 29, 1960; Tañada vs. Yulo, 61 Phil. 515; Ortiz Oiroso vs. de Guzman, 49 Phil. 371; Tumulak vs. Egay, 82 Phil. 828). chanroblesvirtualawlibrary chanrobles virtual law library

That the instant case is one for MANDAMUS, and not QUO WARRANTO, is not of any significance, for the same principle applies as held in these cases:

An action for reinstatement, by a public official, whether it be quo warranto or mandamus, should be filed in court within one year from removal or separation, otherwise the action will be barred, (Morales, Jr. vs. Patriarca, L-21280, April 30, 1965, 13 SCRA 766; emphasis supplied). chanroblesvirtualawlibrary chanrobles virtual law library

..... We hold that as petitioner was dismissed on June 16, 1953 and did not file his petition for mandamus for his reinstatementuntil July 1, 1954 or after a period of one year, he is deemed to have abandoned his right to his former position and is not entitled to reinstatement therein by mandamus (Unabia vs. City Mayor, L-8759, May 25, 1956, 53 O.G. 132; emphasis supplied).

On April 27, 1976, the motion for reconsideration was denied (pp. 37-39, Rollo).

Madrigal assigns as errors the following:  chanrobles virtual law library

1) the trial court erred in dismissing the petition for mandamus and damages on the ground of laches; and chanrobles virtual law library

2) assuming arguendo that his claim for reinstatement was not filed seasonably, the trial court erred in not proceeding with the trial of the case on the merits to determine the claim for back salaries and damages.chanroblesvirtualawlibrary chanrobles virtual law library

As regards the first assignment of error, Madrigal alleges that the one (1) year period prescribed in an action for quo warranto is not applicable in an action for mandamus because Rule 65 of the Rules of Court does not provide for such prescriptive period. The declaration by the trial court that the pendency of administrative remedies does not operate to suspend the period of one (1) year within which to file the petition for mandamus, should be confined to actions for quo warranto only. On the contrary, he contends that exhaustion of administrative remedies is a condition sine qua non before one can petition for mandamus.chanroblesvirtualawlibrary chanrobles virtual law library

On the part of public respondents, they aver that it has become an established part of our jurisprudence, being a public policy repeatedly cited by the courts in myriad of mandamus cases, that actions for reinstatement should be brought within one year from the date of dismissal, otherwise, they will be barred by laches. The pendency of an administrative remedy before the Commission does not stop the running of the one (1) year period within which amandamus case for reinstatement should be filed.chanroblesvirtualawlibrary chanrobles virtual law library

The unbending jurisprudence in this jurisdiction is to the effect that a petition for quo warranto and mandamusaffecting titles to public office must be filed within one (1) year from the date the petitioner is ousted from his position (Galano, et al. v. Roxas, G.R. No. L-31241, September 12, 1975, 67 SCRA 8; Cornejo v. Secretary of Justice, G.R. No. L-32818, June 28, 1974, 57 SCRA 663; Sison v. Pangramuyen, etc., et al., G.R. No. L-40295, July 31, 1978, 84 SCRA 364; Cui v. Cui, G.R. No. L-18727, August 31, 1964, 11 SCRA 755; Villaluz v. Zaldivar, G.R. No. L-22754, December 31, 1965,15 SCRA 710; Villegas v. De la Cruz, G.R. No. L-23752, December 31, 1965,15 SCRA 720; De la Maza v. Ochave, G.R. No. L-22336, May 23, 1967,20 SCRA 142; Alejo v. Marquez, G.R. No. L-29053, February 27, 1971, 37 SCRA 762). The reason behind this being was expounded in the case of Unabia v. City Mayor, etc., 99 Phil. 253 where We said:  chanrobles virtual law library

..... [W]e note that in actions of quo warranto involving right to an office, the action must be instituted within the period of one year. This has been the law in the island since 1901, the period having been originally fixed in Section 216 of the Code of Civil Procedure (Act No. 190). We find this provision to be an expression of policy on the part of the State that persons claiming a right to an office of which they

are illegally dispossessed should immediately take steps to recover said office and that if they do not do so within a period of one year, they shall be considered as having lost their right thereto by abandonment. There are weighty reasons of public policy and convenience that demand the adoption of a similar period for persons claiming rights to positions in the civil service. There must be stability in the service so that public business may (sic) be unduly retarded; delays in the statement of the right to positions in the service must be discouraged. The following considerations as to public officers, by Mr. Justice Bengzon, may well be applicable to employees in the civil service:

Furthermore, constitutional rights may certainly be waived, and the inaction of the officer for one year could be validly considered as waiver, i.e., a renunciation which no principle of justice may prevent, he being at liberty to resign his position anytime he pleases. chanroblesvirtualawlibrary chanrobles virtual law library

And there is good justification for the limitation period; it is not proper that the title to public office should be subjected to continued uncertainly (sic), and the peoples" interest require that such right should be determined as speedily as practicable (Tumulak vs. Egay, 46 Off. Gaz., [8], 3693, 3695.)  chanrobles virtual law library

Further, the Government must be immediately informed or advised if any person claims to be entitled to an office or a position in the civil service as against another actually holding it, so that the Government may not be faced with the predicament of having to pay the salaries, one, for the person actually holding the office, although illegally, and another, for one not actually rendering service although entitled to do so. We hold that in view of the policy of the State contained in the law fixing the period of one year within which action forquo warranto may be instituted, any person claiming right to position in the civil service should also be required to file his petition for reinstatement within the period of one year, otherwise he is thereby considered as having abandoned his office.

The fatal drawback of Madrigal's cause is that he came to court out of time. As aforestated, it was only after four (4) years and twenty (20) days from the abolition of his position that he file the petition formandamus and damages. This single circumstance has closed the door for any judicial remedy in his favor.

And this one (1) year period is not interrupted by the prosecution of any administrative remedy (Torres v. Quintos, 88 Phil. 436). Actually, the recourse by Madrigal to the Commission was unwarranted. It is fundamental that in a case where pure questions of law are raised, the doctrine of exhaustion of administrative remedies cannot apply because issues of law cannot be resolved with finality by the administrative officer. Appeal to the administrative officer of orders involving questions of law would be an exercise in futility since administrative officers cannot decide such issues with finality (Cebu Oxygen and Acetylene Co., Inc. v. Drilon, et al., G.R. No. 82849, August 2, 1989, citing Pascual v. Provincial Board of Nueva Ecija, 106 Phil. 466; Mondano v. Silvosa, 97 Phil. 143). In the present case, only a legal question is to be resolved, that is, whether or not the abolition of Madrigal's position was in accordance with law.chanroblesvirtualawlibrary chanrobles virtual law library

With respect to the second assignment of error, Madrigal asserts that despite (1) the ruling of the Commission declaring his removal from office illegal; (2) Resolution No. 93 of the Provincial Board; and (3) Provincial Voucher No. 714 covering the appropriation for the sum of P3,667.29, representing his back salaries for said period, the trial court still refused to grant his money claim. chanroblesvirtualawlibrary chanrobles virtual law library

In answer thereto, public respondents contend that the court cannot pass upon Madrigal's right to back salaries without passing upon the validity of the abolition of his position which is a matter that cannot now be a subject of judicial inquiry. This is so because the question of back salaries and damages is only incidental to the issues involving the validity of said abolition and his request for reinstatement.chanroblesvirtualawlibrary chanrobles virtual law library

Again, We uphold the view advanced by public respondents. Madrigal loses sight of the fact that the claim for back salaries and damages cannot stand by itself. The principal action having failed, perforce, the incidental action must likewise fail. Needless to state, the claim for back salaries and damages is also subject to the prescriptive period of one (1) year (see Gutierrez v. Bachrach Motor Co., Inc., 105 Phil. 9).chanroblesvirtualawlibrary chanrobles virtual law library

ACCORDINGLY, the appeal is hereby DENIED. The orders of the Court of First Instance of Marinduque dated March 16, 1976 and April 27, 1976 are AFFIRMED. chanroblesvirtualawlibrary chanrobles virtual law library

SO ORDERED.

GR. No. L-48928 February 25, 1982

MITA PARDO DE TAVERA, plaintiff-appellant, vs. PHILIPPINE TUBERCULOSIS SOCIETY, INC., FRANCISCO ORTIGAS, JR., MIGUEL CAÑIZARES, BERNARDO P. PARDO, RALPH NUBLA,

MIDPANTAO ADIL, ENRIQUE GARCIA, ALBERTO G. ROMULO and THE PRESENT BOARD OF DIRECTORS, PHILIPPINE TUBERCULOSIS SOCIETY, INC., defendants- appellees.

 

GUERRERO, J.: chanrobles virtual law library

On March 23, 1976, plaintiff-appellant Mita Pardo de Tavera filed with the Court of First Instance of Rizal a complaint against the Philippine Tuberculosis Society, Inc. (hereinafter referred to as the Society), Miguel Canizares, Ralph Nubla, Bernardo Pardo, Enrique Garcia, Midpantao Adil, Alberto Romulo, and the present Board of Directors of the Philippine Tuberculosis Society, Inc. chanroblesvirtualawlibrary chanrobles virtual law library

On April 12, 1976, plaintiff-appellant filed an amended complaint impleading Francisco Ortigas, Jr. as party defendant.chanroblesvirtualawlibrary chanrobles virtual law library

In substance, the complaint alleged that plaintiff is a doctor of Medicine by profession and a recognized specialist in the treatment of tuberculosis, having been in the continuous practice of her profession since 1945; that she is a member of the Board of Directors of the defendant Society, in representation of the Philippine Charity Sweepstakes Office; that she was duly appointed on April 27, 1973 as Executive Secretary of the Society; that on May 29, 1974, the past Board of Directors removed her summarily from her position, the lawful cause of which she was not informed, through the simple expedient of declaring her position vacant; that immediately thereafter, defendant Alberto Romulo was appointed to the position by an affirmative vote of seven directors, with two abstentions and one objection; and that defendants Pardo, Nubla, Garcia and Adil, not being members of defendant Society when they were elevated to the position of members of the Board of Directors, are not qualified to be elected as such and hence, all their acts in said meeting of May 29, 1974 are null and void. chanroblesvirtualawlibrary chanrobles virtual law library

The defendants filed their answer on May 12, 1976, specifically denying that plaintiff was illegally removed from her position as Executive Secretary and averring that under the Code of By-Laws of the Society, said position is held at the pleasure of the Board of Directors and when the pleasure is exercised, it only means that the incumbent has to vacate the same because her term has expired; that defendants Pardo, Nubla, Adil and Garcia were, at the time of their election, members of the defendant Society and qualified to be elected as members of the Board, that assuming that said defendants were not members of defendant Society at the time of their election, the question of qualification of the members of the Board of Directors should have been raised at the time of their election: that assuming that the qualification of members of the Board of Directors can be questioned after their assumption of their offices as directors, such contest cannot be done in a collateral action; that an action to question the qualifications of the Directors must be brought within one year from their election; and that a Director elected without necessary qualification becomes at least a de facto director, whose acts are as valid and binding as a de jure director. Further, defendant disputed the timeliness of the filing of the action stating that an action to question one's ouster from a corporate office must be filed within one year from said ouster. chanroblesvirtualawlibrary chanrobles virtual law library

On the same date, defendant Adil filed a Motion to Dismiss on the ground that the complaint states no cause of action, or if it does, the same has prescribed. Inasmuch as plaintiff seeks reinstatement, he

argued that the complaint is an action for quo warranto and hence, the same should be commenced within one year from May 29, 1974 when the plaintiff was ousted from her position. chanroblesvirtualawlibrary chanrobles virtual law library

Plaintiff filed an Opposition to Motion to Dismiss on May 28, 1976, stating that the complaint is a suit for damages filed under the authority of Section 6, Article 11 of the present Constitution in relation to Articles 12 and 32(6) of the New Civil Code, and her constitutional right to equal protection of the law, as guaranteed by Section 1, Article IV of the present Constitution. chanroblesvirtualawlibrary chanrobles virtual law library

On June 2, 1976, defendant Adil filed a Reply to Plaintiff's Opposition to Motion to Dismiss arguing that since there is an averment of plaintiff's right to office, and that defendant Romulo is unlawfully in possession thereof, their it is indeed, a case for quo warranto; and that assuming that it is merely a suit for damages, then, the same is premature, pursuant to Section 16, Rule 66 of the Rules of Court.chanroblesvirtualawlibrary chanrobles virtual law library

On September 3, 1976, the coturt a quo rendered a decision holding that the present suit being one for quo warranto it should be filed within one year from plaintiff's outer from office; that nevertheless, plaintiff was not illegally rendered or used from her position as Executive Secretary in The Society since plaintiff as holding an appointment all the pleasure of the appointing power and hence her appointment in essence was temporary in nature, terminable at a moment's notice without need to show that the termination was for cause; and Chat plaintiff's ouster from office may not be challenged on the ground that the acts of defendants Pardo, Adil, Nubla and Garcia are null and void, they being not qualified to be elected members of the Board of Directors because the qualifications of the members of the Board of Directors which removed plaintiff from office may not be the subject of a collateral attack in the present suit forquo warranto affecting title to the office of Executive Secretary.chanroblesvirtualawlibrary chanrobles virtual law library

On October 13, 1976, plaintiff filed a Motion for Reconsideration to which defendants filed an Opposition. On November 25, 1976, the courta quo denied the motion for Reconsideration.chanroblesvirtualawlibrary chanrobles virtual law library

Dissatisfied with the decision and the order denying the motion for reconsideration. plaintiff filed a Notice of Appeal and an Urgent Motion for Extension of Time to File Record on Appeal, which was granted in an order dated December 15, 1976. However, on December 20, 1976, the court a quo issued an amended order where it qualified the action as principally one for quo warranto and hence, dispensed with the filing of a record on appeal as the original records of the case are required to be elevated to the Court of Appeals.chanroblesvirtualawlibrary chanrobles virtual law library

On August 8, 1978, the Court of Appeals issued a resolution certifying this case to this Court considering that the appeal raises no factual issues and involves only issues of law, as may be chanrobles virtual law library

gleaned from the following assignments of errors: chanrobles virtual law library

I. The lower court erred in holding that the present case is one for quo warranto and not an action for damages.chanroblesvirtualawlibrary chanrobles virtual law library

II. In deciding the case, the lower court erred in not upholding the Society's By-Laws, the applicable laws, and the pertinent provisions of the Constitution. chanroblesvirtualawlibrary chanrobles virtual law library

III. The lower court erred in holding that the plaintiff-appellant is not in the civil service, and therefore, not entitled to the guaranty against removal from office except for cause and after due process of law.chanroblesvirtualawlibrary chanrobles virtual law library

The nature of an action filed in court is determined by the facts alleged in the complaint as constituting the cause of action, and not those averred as a defense in the defendant's answer. The theory adopted by the plaintiff in his complaint is one thing; that by the defendant in his answer another. The purpose of an action or suit and the law to govern it, including the period of prescription, is to be determined not by the claim of the party filing the action, made in his argument or brief, but rather by the complaint itself, its allegations and prayer for relief. Rone et al. vs. Claro, et al., L-4472, May 8, 1952, 91 Phil. 250). In Baguioro vs. Barrios, et al., 77 Phil. 120, the Supreme Court held that if the relief

demanded is not the proper one which may be granted under the law, it does not characterize or determine the nature of plaintiff's action, and the relief to which plaintiff is entitled based on the facts alleged by him in his complaint, although it is not the relief demanded, is what determines the nature of the action.chanroblesvirtualawlibrary chanrobles virtual law library

While it is true that the complaint questions petitioner's removal from the position of Executive Secretary and seeks her reinstatement thereto, the nature of the suit is not necessarily one of quo warranto. The nature of the instant suit is one involving a violation of the rights of the plaintiff under the By-Laws of the Society, the Civil Code and the Constitution, which allegedly renders the individuals responsible therefore, accountable for damages, as may be gleaned from the following allegations in the complaint as constituting the plaintiff's causes of action, to wit: chanrobles virtual law library

20. That, as a consequence of the unfair and malicious removal of plaintiff from her office, which the plaintiff maintains to be contrary to morals, good customs, public policy, the pertinent provisions of said By-Laws of the Society, the laws, and the guarranties of the Constitution, by defendants Canizares, Ortigas Jr., Pardo, Adil, Nubla and Garcia, the plaintiff suffered not only material damages, but serious damage to her priceless properties, consisting of her honor and reputation, which were maliciously and unlawfully besmirched, thereby entitling her to compensation for material and moral damages, from said defendants, jointly and severally, under Article 21, in relation to Article 32(6) of the New Civil Code; chanrobles virtual law library

xxx xxx xxx chanrobles virtual law library

24. That as a consequence of the inordinate use and abuse of power by defendants, Caares Ortigas Jr., Pardo, Adil, Nubla and Garcia, in arbitrarily, illegally, and unjustly removing the plaintiff from office, without due process of law, and in denying to her the enjoyment of the guaranty of the Constitution to equal protection of the law, the plaintiff suffered material and moral damages as a result of the debasement of her dignity, both as an individual and as a professional (physician) of good standing, therefore, defendant Caares Ortigas Jr., Pardo, Adil, Nubla and Garcia should be ordered to pay her moral damages, jointly and severally; chanrobles virtual law library

xxx xxx xxx chanrobles virtual law library

26. That the acts of the defendants Canizares, Ortigas Jr., Pardo, Adil, Nubla and Garcia, in illegally removing the plaintiff from her position as Executive Secretary of defendant Society, which plaintiff was then holding under a valid appointment and thereafter, immediately appointing defendant Alberto Romulo to the position, is most unfair, unjust and malicious, because it is contrary to good morals, good customs, public policy, the pertinent provisions of the Code of By-Laws of the defendant Society, the laws and the aforementioned guarranties of the Constitution; that the plaintiff complaint that the said defendants are legally obligated to compensate her, in concept of exemplary damages, in order to restrain persons in authority from committing similar file I and un constitutional acts which debase human dignity and inflict injuries to their fellowmen; chanrobles virtual law library

xxx xxx xxx chanrobles virtual law library

31. That, as a consequence of the said unjustified refusal of the defendant, present Board of Directors of the defendant Society, to resolve the complaint of the plaintiff and extend to her the reliefs to which she is entitled under the law and the Constitution, it is respectfully submitted that said defendant Board is under legal obligation to correct the illegal and unconstitutional act of defendants Caares Ortigas Jr., Pardo, Nubla, Adil and Garcia, by restoring the plaintiff to her position as Executive Secretary of the defendant Society, payment of salaries and other benefits, corresponding to the period of her illegal and unconstitutional removal from office.

Further, it must be noted that the action is not only against Alberto Romulo, the person appointed in her stead, but also against the Society and the past and present members of the Board. In fact, Romulo is sued as present occupant of the office and not to hold him accountable for damages because he did not participate in the alleged illegal and unconstitutional removal of plaintiff- appellant. The action is primarily against the Society and the past members of the Board who are responsible for

her removal. The present Board of Directors has been implead as party defendant for the purpose merely of enabling it to act, "to reinstate the plaintiff to her position as Executive Secretary of the defendant Society" being one of the reliefs prayed for in the prayer of the complaint. chanroblesvirtualawlibrary chanrobles virtual law library

Hence, We hold that where the respondents, except for one, namely, Alberto Romulo, are not actually holding the office in question, the suit could not be one for quo warranto.chanroblesvirtualawlibrary chanrobles virtual law library

Corollarily, the one-year period fixed in Section 16, Rule 66 of the Revised Rules of Court within which a petition for quo warranto should be filed, counted from the date of ouster, does not apply to the case at bar. The action must be brought within four (4) years, in accordance with Valencia vs. Cebu Portland Cement Co., et al., L-13715, December 23, 1959, 106 Phil. 732, case involving a plaintiff separated from his employment for alleged unjustifiable causes, where this Court held that the action n is one for "injury to the rights of the plaintiff, and must be brought within 4 years murder Article 1146 of the New Civil Code .chanroblesvirtualawlibrary chanrobles virtual law library

Nonetheless, although the action is not barred by the statute of limitations, We rule that it will not prosper. Contrary to her claim, petitioner was not illegally removed or from her position as Executive Secretary in violation of Code of By-laws of the Society. the New Civil Code and the pertinent provisions of the Constitution. chanroblesvirtualawlibrary chanrobles virtual law library

Petitioner claims and the respondents do not dispute that the Executive Secretary is an officer of the Society pursuant to provision in the Code of By-laws Laws: chanrobles virtual law library

Section 7.01. Officers of the Society. - The executed officers f the Society shag be the President a Vice-President, a Treasurer who shall be elected by the Board of Directors, Executive Secretary, and an Auditor, who shall be appointed by the Board of Directors, all of whom shall exercise the functions. powers and prerogatives generally vested upon skich officers, the functions hereinafter set out for their respective offices and such other duties is from time to time, may be prescribed by the Board of Directors. On e person may hold more than one office except when the functions thereof are incompatible with each other.

It is petitioner's contention that she is subject, to removal pursuant to Section 7.04 of the Code of By-laws which respondents correctly dispute citing Section 7.02 of the same Cede. The aforementioned provisions state as follows: chanrobles virtual law library

Section 7.02. Tenure of Office. - All executive officers of the Society except the Executive Secretary and the Auditor shall be elected the Board of Directors, for a term of one rear ind shall hold office until their successors are elected and have qualified. The Executive secretary, the Auditor and all other office ers and employees of the Society shall hold office at the pleasure of the Board of Directors, unless their term of employment shall have been fixed in their contract of employment. chanroblesvirtualawlibrary chanrobles virtual law library

xxx xxx xxx chanrobles virtual law library

Section 7.04. Removal of Officers and Employees. - All officers and employees shall be subject to suspension or removal for a sufficient cause at any time by affirmative vote of a majority of an the members of the Board of Directors, except that employees appointed by the President alone or by the other officers alone at the pleasure of the officer appointing him.

It appears from the records, specifically the minutes of the special meeting of the Society on August 3, 1972, that petitioner was designated as Acting Executive Secretary with an honorarium of P200.00 monthly in view of the application of Dr. Jose Y. Buktaw for leave effective September 1, 1972 for 300 working days. This designation was formalized in Special Order No. 110, s. 1972 wherein it was indicated that: "This designation shall take effect on September 1, 1972 and shall remain until further advice." chanrobles virtual law library

In the organizational meeting of the Society on April 25, 1973, the minutes of the meeting reveal that the Chairman mentioned the need of appointing a permanent Executive Secretary and stated that the former Executive Secretary, Dr. Jose Y. Buktaw, tendered his application for optional retirement, and

while on terminal leave, Dr. Mita Pardo de Tavera was appointed Acting Executive Secretary. In view thereof, Don Francisco Ortigas, Jr. moved, duly seconded, that Dr. Mita Pardo de Tavera be appointed Executive Secretary of the Philippine Tuberculosis Society, Inc. The motion was unanimously approved.chanroblesvirtualawlibrary chanrobles virtual law library

On April 27, 1973, petitioner was informed in writing of the said appointment, to wit: chanrobles virtual law library

Dr. Mita Pardo de Tavera chanrobles virtual law library

Philippine Tuberculosis Society, Inc. chanroblesvirtualawlibrary chanrobles virtual law library

Manila chanrobles virtual law library

Madam: chanrobles virtual law library

I am pleased to inform you that at the meeting of the Board of Directors held on April 25, 1973, you were appointed Executive Secretary, Philippine Tuberculosis Society, Inc. with such compensation ,petition and allowances as are provided for in the Budget of the Society, effective immediately, vice Dr. Jose Y. Buktaw, retired. chanroblesvirtualawlibrary chanrobles virtual law library

Congratulations.

Very truly yours, chanrobles virtual law library

For the Board of Directors:chanrobles virtual law library

(Sgd) Miguel Canizares,chanrobles virtual law library

M.D. MIGUEL CARIZARES, M.D. chanroblesvirtualawlibrary chanrobles virtual law library

President

Although the minutes of the organizational meeting show that the Chairman mentioned the need of appointing a "permanent" Executive Secretary, such statement alone cannot characterize the appointment of petitioner without a contract of employment definitely fixing her term because of the specific provision of Section 7.02 of the Code of By-Laws that: "The Executive Secretary, the Auditor, and all other officers and employees of the Society shall hold office at the pleasure of the Board of Directors, unless their term of employment shall have been fixed in their contract of employment." Besides the word permanent" could have been used to distinguish the appointment from acting capacity".chanroblesvirtualawlibrary chanrobles virtual law library

The absence of a fixed term in the letter addressed to petitioner informing her of her appointment as Executive Secretary is very significant. This could have no other implication than that petitioner held an appointment at the pleasure of the appointing power. chanroblesvirtualawlibrary chanrobles virtual law library

An appointment held at the pleasure of the appointing power is in essence temporary in nature. It is co-extensive with the desire of the Board of Directors. Hence, when the Board opts to replace the incumbent, technically there is no removal but only an expiration of term and in an expiration of term, there is no need of prior notice, due hearing or sufficient grounds before the incumbent can be separated from office. The protection afforded by Section 7.04 of the Code of By-Laws on Removal of Officers and Employees, therefore, cannot be claimed by petitioner. chanroblesvirtualawlibrary chanrobles virtual law library

Thus, in the case of Moji vs. Mariño 13 SCRA 293, where the appointment contains the following proviso: that it may be terminated at anytime without any proceedings, at the pleasure of the President of the Philippines, this Court held: "It may, therefore, be said that, though not technically a temporary appointment, as this term is used in Section 24(b) of the Civil Service Act of 1959,

petitioner's appointment in essence is temporary because of its character that it is terminable at the pleasure of the appointing power. Being temporary in nature, the appointment can be terminated at a moment's notice without need to show cause as required in appointments that belong to the classified service." chanrobles virtual law library

In Paragas vs. Bernal 17 SCRA 150, this Court distinguished between removal and expiration of term .chanroblesvirtualawlibrary chanrobles virtual law library

In the case at bar there has been, however, no removal from office. Pursuant to the charter of Dagupan City, the Chief of Police thereofholds office at the pleasure of the President. Consequently, the term of office of the Chief of Police expires at any time that the President may so declare. This is not removal, inasmuch as the latter entails the ouster of an incumbent before the expiration of his term. In the present case, petitioner's term merely expired upon receipt by him of the communication of respondent Assistant Executive Secretary of the President, dated September 14, 1962.

Petitioner cannot likewise seek relief from the general provisions of the New Civil Code on Human Relations nor from the fundamental principles of the New Constitution on preservation of human dignity. While these provisions present some basic principles that are to be observed for the rightful relationship between human beings and the stability of social order, these are merely guides for human conduct in the absence of specific legal provisions and definite contractual stipulations. In the case at bar, the Code of By-Laws of the Society contains a specific provision governing the term of office of petitioner. The same necessarily limits her rights under the New Civil Code and the New Constitution upon acceptance of the appointment. chanroblesvirtualawlibrary chanrobles virtual law library

Moreover, the act of the Board in declaring her position as vacant is not only in accordance with the Code of By-Laws of the Society but also meets the exacting standards of honesty and good faith. The meeting of May 29, 1974, at which petitioner ,petitioner's position was declared vacant, was caged specifically to take up the unfinished business of the Reorganizational Meeting of the Board of April 30, 1974. Hence, and act cannot be said to impart a dishonest purpose or some moral obliquity and conscious doing to wrong but rather emanates from the desire of the Board to reorganize itself. chanroblesvirtualawlibrary chanrobles virtual law library

Finally, We find it unnecessary to resolve the third assignment of error. The proscription against removal without just cause and due process of law under the Civil Service Law does not have a bearing on the case at bar for the reason, as We have explained, that there was no removal in her case but merely an expiration of term pursuant to Section 7.02 of the Code of By-Laws. Hence, whether or not the petitioner falls within the protective mantle of the Civil Service Law is immaterial and definitely unnecessary to resolve this case.chanroblesvirtualawlibrary chanrobles virtual law library

WHEREFORE, premises considered, the decision of the lower court holding that petitioner was not illegally removed or ousted from her position as Executive Secretary of the Philippine Tuberculosis Society, Inc., is hereby AFFIRMED. chanroblesvirtualawlibrary chanrobles virtual law library

SO ORDERED.

G.R. No. L-36966 February 28, 1974

THE PHILIPPINE PUBLIC SCHOOL TEACHERS ASSOCIATION (PPSTA) COMMISSION ON ELECTIONS and the 1972 PPSTA BOARD OF DIRECTORS, Petitioners, vs. Honorable SERGIO A. F. APOSTOL, Presiding Judge Court of First Instance of Rizal, Branch XVI, Quezon City and

EUFEMIA M. SAN LUIS, Respondents.

TEEHANKEE, J.:

The Court sets aside the judgment of respondent court annulling the 1972 annual election of the PPSTA board of directors held at Teachers Camp in Baguio City for having been held outside the

association's principal office at Quezon City for lack of personality and standing on the part of private respondent as a single individual member to bring the action, which has not complied with the requirements of Rule 66 governing such special civil actions of quo warranto.chanroblesvirtualawlibrary chanrobles virtual law library

On July 20, 1972, private respondent Eufemia M. San Luis as a member of the Philippine Public School Teachers Association (PPSTA for short), a fraternal non-stock association of public school teachers throughout the country, filed with respondent court of first instance at Quezon City a complaint with preliminary injunction for the annulment of the 1972 annual elections of the PPSTA board of directors held on June 26-28, 1972 at Teachers Camp in Baguio City for having been held outside its principal office at Quezon City against herein petitioners as defendants. chanroblesvirtualawlibrary chanrobles virtual law library

Petitioners as defendants filed their answer in due course traversing the legal contentions of respondent (as hereinafter discussed). chanroblesvirtualawlibrary chanrobles virtual law library

After the parties had in a series of pleadings filed voluminous documents dealing with the background and activities of the PPSTA, particularly the questioned 1972 Annual Convention and elections held on June 26-28, 1972 in Baguio City, which respondent court considered as stipulations of facts, respondent court rendered without further hearing and trial its decision of April 26, 1973 holding that " (T)he meeting held in Baguio City being contrary to the by-laws of the corporation and the Corporation Law, whatever acts therein made, including the elections of the Board of Directors, are null and void," and declared as null and void all resolutions and corporate acts at the 29th (1972) annual PPSTA Representative Assembly, including the elections of the 1972 PPSTA board of directors and the formation of the PPSTA commission on elections which supervised the elections and proclaimed the winners.chanroblesvirtualawlibrary chanrobles virtual law library

Upon petitioners' motion for reconsideration complaining against its judgment "ordering the injunction permanent" as without basis, since it had previously denied the preliminary injunction sought by respondent under its order dated July 28, 1972 where it "(found) that this is not a proper case for injunction - the acts to be enjoined having been consummated," 1 it issued its order of May 21, 1973 denying reconsideration and amended the above-quoted portion on injunction of its judgment so as to read as follows:

xxx xxx xxx

(c) Granting final injunction perpetually restraining defendant PPSTA Commission on Elections from proclaiming the members of the defendant 1972 PPSTA Board of Directors as duly elected; and in the event that they have been proclaimed as such, restraining them from sitting as a board; and

xxx xxx xxx 2 chanrobles virtual law library

Hence, the present petition by way of appeal by certiorari. The Court granted due course as well as issued a temporary restraining order against enforcement of respondent court's decision and amendatory order which would have seated the 1972 PPSTA board of directors and would allowed the old 1971 board notwithstanding that its term has expired and that it was the one that called for the 1972 annual convention and elections to be held in Baguio City to take back the management of the PPSTA as holdover officers.chanroblesvirtualawlibrary chanrobles virtual law library

Petitioners reiterate before this Court their defenses to respondent's action in the court below inter alia as follows:  chanrobles virtual law library

That the PPSTA as a national fraternal and non-stock association of thousands of public school teachers throughout the country has under its by-laws affiliate or provincial chapters which are entitled to proportionate representation by means of official delegates at the annual convention held to elect the board of directors which in turn elects the officers of the association and to enact resolutions the teachers' common welfare; and that as alleged in the very complaint, the 1972 annual convention "was composed of at least 512 delegates from the different affiliate chapters" who officially represented the individual members of the PPSTA such as respondent;  chanrobles virtual law library

That section 24 of the Corporation Law providing for the holding of meetings of a corporation's members or stockholders "at the place where the principal office of the corporation is established or located" is not applicable to non-stock or fraternal associations like the PPSTA, which in the past has held its annual conventions and elections outside of its principal office in Quezon City (such as in Bacolod City, Naga City, Manila and on two previous occasions in Baguio City) since such outside meetings are deemed best adapted to the purposes for which the association was created 3 and conducive to the furtherance of its objectives by holding the annual representative assemblies as near to the membership in the different regions of the country, and that assuming that the convention was improperly held or called, it could be deemed validly held under the provisions of section 25 of the Corporation Law; and  chanrobles virtual law library

That while a negligible number of delegates raised some questions as to the propriety of holding the convention in Baguio City, the objection was overruled and all the chapter delegates including those who raised the objection continued participating in the deliberations and voted in the elections, and hence, respondent who was duly represented at the convention by her chapter delegates who acceded to the elections is now barred from raising any objection as to the place of the convention or elections, aside from the fact that there is no showing that such irregularity affected substantial rights of the respondent or of the other members duly represented at the convention. chanroblesvirtualawlibrary chanrobles virtual law library

Respondent on the other hand insists mainly as did respondent court on the strict letter of section 24 of the Corporation Law requiring the holding of the annual convention at the PPSTA main office in Quezon City under pain of nullity of all the acts and proceedings. chanroblesvirtualawlibrary chanrobles virtual law library

The Court finds it unnecessary to rule upon the parties' above conflicting contentions, since it finds to be decisive petitioners' contention that respondent has no personality and standing as a single individual member out of thousands of members of the PPSTA to bring the action below for annulment of the PPSTA 1972 annual convention and elections, as she was not even a chapter delegate to the said convention and she was duly represented thereat in accordance with the PPSTA's by-laws by her duly authorized chapter delegates who have raised no question as to the proceedings. 4 Article IX, section 5 of the by-laws expressly provides that "only official delegates to the representative assembly are entitled to take part in the discussions and to vote." 5

 chanrobles virtual law library

Respondent's action below was in essence one of quo warranto which is governed by Rule 66 of the Rules of Court Section 6 thereof provides that in order that an individual may directly bring the action, he or she must claim to entitled to the public office or position allegedly unlawfully held or usurped. 6 Otherwise, the action must be brought by the Solicitor General or fiscal with leave of the court upon the complaint of the relator under section 4 of the Rule.7

 chanrobles virtual law library

Chief Justice Moran thus explained the application of the two cited provisions:

The general rule is that actions for quo warranto should be brought by the Solicitor General or a fiscal in cases of usurpation of an office established by law or by the Constitution under color of an executive appointment, or the abuse of a public franchise under color of alegislative grant, for these are public wrongs and not private injuries. Since, under our system all power emanates from the people, who constitute the sovereignty, the right to inquire into the authority by which a person assumes to exercise the functions of a public office or franchise is regarded as inherent in the people on the right their sovereignty. Hence, the action should be brought by the Solicitor General or the fiscal who represents the sovereignpower.chanroblesvirtualawlibrary chanrobles virtual law library

However, in a case involving merely the administration corporate functions or duties which touch only private individual rights, such as the election of officers, admission of a corporate officer, or member, and the like the action for quo warranto may be brought with leave of court, by the Solicitor General or fiscal upon the relation of any person or persons having aninterest injuriously affected. Such action may be allowed in the discretion of the court, according to section 4 and the court, before granting leave, may direct that, notice be given to the defendant so that he may be heard in opposition thereto, under section 5. 8 chanrobles virtual law library

Respondent manifestly lays no claim herself to the office of PPSTA director nor has the present action been filed with leave of court by the Solicitor General or fiscal upon her relation as a party having an interest injuriously affected, as required by the cited Rule. chanroblesvirtualawlibrary chanrobles virtual law library

Her action must therefore fail on this score and the judgment erroneously rendered by respondent court shall be set aside.chanroblesvirtualawlibrary chanrobles virtual law library

ACCORDINGLY, the judgment under review of respondent court is hereby set aside and the complaint ordered dismissed. No pronouncement as to costs.

G.R. No. 175352 DANTE V. LIBAN, REYNALDO M. BERNARDO, and SALVADOR M. VIARI, Petitioners, versus RICHARD J. GORDON, Respondent. cralaw

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Promulgated:  cralaw

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July 15, 2009  cralaw

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x ---------------------------------------------------------------------------------------- x  cralaw

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DISSENTING OPINION cralaw

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NACHURA, J.: cralaw

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I am constrained to register my dissent because the ponencia does not only endorse

an unmistakably flagrant transgression of the Constitution but also unwittingly

espouses the destruction of the Philippine National Red Cross (PNRC) as an

institution. With all due respect, I disagree with the principal arguments advanced in

the ponencia to justify Senator Richard J. Gordons unconstitutional holding of the

chairmanship of the PNRC Board of Governors while concurrently sitting as a

member of the Senate of the Philippines. cralaw

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Procedurally, I maintain that the petition is one for prohibition and that petitioners

have standing to file the same. On the merits, I remain earnestly convinced that

PNRC is a government owned or controlled corporation (GOCC), if not a government

instrumentality; that its charter does not violate the constitutional proscription

against the creation of private corporations by special law; and that Senator

Gordons continuous occupancy of two incompatible positions is a clear violation of

the Constitution. cralaw

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Allow me to elucidate.  cralaw

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I. cralaw

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The petition should be treated  cralaw

as one for prohibition; and  cralaw

petitioners   have locus standi  cralaw

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I submit that the present petition should be treated as one for prohibition rather

than for quo warranto. In the main, the petitioners seek from this Court the

declaration that Senator Gordon has forfeited his seat in the Senate, and the

consequent proscription from further acting or representing himself as a Senator

and from receiving the salaries, emoluments, compensations, privileges and

benefits thereof. [1] Hence, the remedy sought is preventive and restrictivean

injunction against an alleged continuing violation of the fundamental

law. Furthermore, the petitioners raise a constitutional issue, without claiming

any entitlement to either the Senate seat or the chairmanship of PNRC. cralaw

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Considering that the issue involved is of fundamental constitutional significance and

of paramount importance, i.e., whether the Senator continues to commit an

infringement of the Constitution by holding two positions claimed to be

incompatible, the Court has full authority, nay the bounden duty, to treat

the vaguely worded petition as one for prohibition and assume

jurisdiction.[2] cralaw

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Petitioners, as citizens of the Republic and by being taxpayers, have locus standi to

institute the instant case. Garcillano v. the House of Representatives Committees on

Public Information, Public Order and Safety, National Defense and Security,

Information and Communications Technology, and Suffrage and Electoral

Reforms [3] echoes the current policy of the Court, as laid down inChavez v.

Gonzales, [4] to disallow procedural barriers to serve as impediments to addressing

and resolving serious legal questions that greatly impact on public interest. This is

in keeping with the Courts responsibility under the Constitution to determine

whether or not other branches of government have kept themselves within the

limits of the Constitution and the laws, and that they have not abused the discretion

given them. [5] cralaw

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Finally, as aforementioned, petitioners advance a constitutional issue which

deserves the attention of this Court in view of its seriousness, novelty and weight as

precedent. [6] Considering that Senator Gordon is charged with continuously

violating the Constitution by holding incompatible offices, the institution of the

instant action by the petitioners is proper.  cralaw

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II. cralaw

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A brief history of the PNRC  cralaw

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A historical account of the PNRCs creation is imperative in order to comprehend the

nature of the institution and to put things in their proper perspective. cralaw

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Even before its incorporation in 1947, the Red Cross, as an organization, was

already in existence in the Philippines. Apolinario Mabini played an important role in

the approval by the Malolos Republic, on February 17, 1899, of the Constitution of

the National Association of the Red Cross. Appointed to serve as its president was

Hilario del Rosario de Aguinaldo. On August 29, 1900, International Delegate of

Diplomacy Felipe Agoncillo met with International Committee of the Red Cross

(ICRC) President Gustave Moynier to lobby for the recognition of the Filipino Red

Cross Society and the application of the 1864 Geneva Convention to the country

during the Filipino-American war. [7]The Geneva Convention of August 22, 1864 dealt

mainly on the relief to wounded soldiers without any distinction as to nationality, on

the neutrality and inviolability of medical personnel and medical establishments and

units; and on the adoption of the distinctive sign of the red cross on a white ground

by hospitals, ambulances and evacuation parties and personnel. [8] cralaw

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On August 30, 1905, a Philippine branch of the American National Red Cross (ANRC)

was organized. This was later officially recognized as an ANRC chapter on December

4, 1917. In 1934, President Manuel L. Quezon initiated the establishment of an

independent Philippine Red Cross, but this did not materialize because the

Commonwealth Government at that time could not ratify the Geneva

Convention. During the Japanese occupation, a Japanese-controlled Philippine Red

Cross was created to take care of internment camps in the country. After the

liberation of Manila in 1945, local Red Cross officials and the ANRC undertook to

reconstitute the organization. [9] The Republic of the Philippines became an

independent nation on July 4, 1946, and proclaimed its adherence to the Geneva

Convention on February 14, 1947. On March 22 of that year, the PNRC was officially

created when President Manuel A. Roxas signed Republic Act (R.A.) No. 95. [10]

PNRC is a GOCC  cralaw

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Section 16, Article XII, of the Philippine Constitution, provides the inflexible

imperative for the formation or organization of private corporations, as follows:  cralaw

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Sec. 16. The Congress shall not, except by general law, provide for the formation, organization or regulation of private corporations. Government-owned or controlled corporations may be created or established by special charters in the interest of the common good and subject to the test of economic viability.  cralaw

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Delineating the nature of a GOCC, compared to a private corporation, Justice Carpio

explains this inviolable rule in Feliciano v. Commission on Audit [11] in this wise:  cralaw

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We begin by explaining the general framework under the fundamental law. The Constitution recognizes two classes of corporations. The first refers to private corporations created under a general law. The second refers to government-owned or controlled corporations created by special charters. Section 16, Article XII of the Constitution provides:  cralaw

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Section 16. The Congress shall not, except by general law, provide for the formation, organization, or regulation of private corporations. Government-owned or controlled corporations may be created or established by special charters in the interest of the common good and subject to the test of economic viability.  cralaw

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The Constitution emphatically prohibits the creation of private corporations except by a general law applicable to citizens. The purpose of this constitutional provision is to ban private corporations created by special charters, which historically gave certain individuals, families or groups special privileges denied to other citizens.  cralaw

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In short, Congress cannot enact a law creating a private corporation with a special charter. Such legislation would be unconstitutional. Private corporations may exist only under a general law. If the corporation is private, it must necessarily exist under a general law. Stated differently, only corporations created under a general law can qualify as private corporations. Under existing laws, that general law is the Corporation Code, except that the Cooperative Code governs the incorporation of cooperatives.  cralaw

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The Constitution authorizes Congress to create government-owned or controlled corporations through special charters. Since private corporations cannot have special charters, it follows that Congress can create corporations with special charters only if such corporations are government-owned or controlled. [12]

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Reason dictates that since no private corporation can have a special charter, it

follows that Congress can create corporations with special charters only if such

corporations are government-owned or controlled. [13] To hold otherwise would run

directly against our fundamental law or, worse, authorize implied amendment to it,

which this Court cannot allow.  cralaw

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The PNRC was incorporated under R.A. No 95, a special law. Following the logic

in Feliciano, it cannot be anything but a GOCC.  cralaw

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R.A. No. 95 has undergone amendment through the years. [14] Did the amendment of

the PNRC Charter have the effect of transforming it into a private corporation?  cralaw

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In Camporedondo v. National Labor Relations Commission, [15] we answered this in

the negative.The Courts ruling in that case, reiterated in Baluyot v. Holganza, [16] is

direct, definite and clear,viz: cralaw

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Resolving the issue set out in the opening paragraph of this opinion, we rule that the Philippine National Red Cross (PNRC) is a government owned and controlled corporation, with an original charter under Republic Act No. 95, as amended. The test to determine whether a corporation is government owned or controlled, or private in nature is simple. Is it created by its own charter for the exercise of a public function, or by incorporation under the general corporation law? Those with special charters are government corporations subject to its provisions, and its employees are under the jurisdiction of the Civil Service Commission, and are compulsory members of the Government Service Insurance System. The PNRC was not impliedly converted into a private corporation simply because its charter was amended to vest in it the authority to secure loans, be exempted from payment of all duties, taxes, fees and other charges of all kinds on all importations and purchases for its exclusive use, on donations for its disaster relief work and other services and in its benefits and fund raising drives and be allotted one lottery draw a year by the Philippine Charity Sweepstakes Office for the support of its disaster relief operation in addition to its existing lottery draws for blood programs. [17]

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In an effort to avoid the inescapable command

of Camporendondo, the ponencia asserts that the decision has failed to consider the

definition of a GOCC under Section 2 (13) of the Introductory Provisions of Executive

Order No. 292 (Administrative Code of 1987), which provides:  cralaw

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SEC. 2. General Terms Defined. x x x  cralaw

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(13) Government-owned or controlled corporation refers to any agency organized as a stock or non-stock corporation, vested with functions relating to public needs whether governmental or proprietary in nature, and owned by the Government directly or through its

instrumentalities either wholly, or, where applicable as in the case of stock corporations, to the extent of at least fifty-one (51) per cent of its capital stock: Provided, That government-owned or controlled corporations may be further categorized by the Department of the Budget, the Civil Service Commission, and the Commission on Audit for purposes of the exercise and discharge of their respective powers, functions and responsibilities with respect to such corporations. [18]

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The ponencia then argues that, based on the criterion in the cited provision, PNRC is

not owned or controlled by the government and, thus, is not a GOCC.  cralaw

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I respectfully differ. The quoted Administrative Code provision does not pronounce a

definition of a GOCC that strays from Section 16, Article XII of the Constitution. As

explained in Philippine National Construction Corporation v. Pabion, et al., [19] it

merely declares that a GOCC may either be a stock or non-stock corporation, or that

it may be further categorized, [20] suggesting that the definition provided in the

Administrative Code is broad enough to admit of other distinctions as to the kinds of

GOCCs. [21] cralaw

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Rather, crucial in this definition is the reference to the corporation being vested

with functions relating to public needs whether governmental or

proprietary. When we relate this to the PNRC Charter, as amended, we note that

Section 1 of the charter starts with the phrase, (T)here is hereby created in the

Republic of the Philippines a body corporate and politic to be the

voluntary organization officially designated to assist the Republic of the

Philippines in discharging the obligations set forth in the Geneva

Conventions x x x. [22] It is beyond cavil that the obligations of the Republic of

the Philippines set forth in the Geneva Conventions are public or

governmental in character. If the PNRC is officially designated to assist the

Republic, then the PNRC is, perforce, engaged in the performance of the

governments public functions.  cralaw

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PNRC is, at the very least,   cralaw

a government instrumentality  cralaw

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Further, applying the definition of terms used in the Administrative Code of 1987, as

Justice Carpio urges this Court to do, will lead to the inescapable conclusion that

PNRC is an instrumentality of the government. Section 2(10) of the said code

defines a government instrumentality as:  cralaw

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(10) Instrumentality refers to any agency of the National Government not integrated within the department framework, vested with special functions or jurisdiction by law, endowed with some if not all

corporate powers, administering special funds, and enjoying operational autonomy, usually through a charter. This term includes regulatory agencies, chartered institutions and government-owned or controlled corporations. [23]

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The PNRC is vested with the special function of assisting the Republic of

the Philippines in discharging its obligations under the Geneva Conventions. It is

endowed with corporate powers. It administers special fundsthe contributions of its

members, the aid given by the government, the support extended to it by the

Philippine Charity Sweepstakes Office (PCSO) in terms of allotment of lottery

draws. [24] It enjoys operational autonomy, as emphasized by Justice Carpio himself.

And all these attributes exist by virtue of its charter.  cralaw

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Significantly, in the United States, the ANRC, the precursor of the PNRC and likewise

a member of the International Federation of Red Cross and Red Crescent

Societies, [25] is considered as afederal instrumentality. Addressing the issue of

whether the ANRC was an entity exempt from paying unemployment compensation

tax, the US Supreme Court, in Department of Employment v. United

States, [26] characterized the Red Cross as an instrumentality of the federal

government not covered by the enforcement of the tax statute and entitled to a

refund of taxes paid  cralaw

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On the merits, we hold that the Red Cross is an instrumentality of the United Statesfor purposes of immunity from state taxation levied on its operations, and that this immunity has not been waived by congressional enactment. Although there is no simple test for ascertaining whether an institution is so closely related togovernmental activity as to become a tax-immune instrumentality, the Red Cross is clearly such an instrumentality. See generally, Sturges, The Legal Status of the Red Cross, 56 Mich.L.Rev. 1 (1957). Congress chartered the present Red Cross in 1905, subjecting it to governmental supervision and to a regular financial audit by the Defense, then War, Department. 33 Stat. 599, as amended, 36 U.S.C. s 1 et seq. Its principal officer is appointed by the President, who also appoints seven (all government officers) of the remaining 49 Governors. 33 Stat. 601, as amended, 36 U.S.C. s 5. By statute and Executive Order there devolved upon the Red Cross the right and the obligation to meet this Nation's commitments under various Geneva Conventions, to perform a wide variety of functions indispensable to the workings of our Armed Forces around the globe, and to assist the Federal Government in providing disaster assistance to the States in time of need. Although its operations are financed primarily from voluntary private contributions, the Red Cross does receive substantial material assistance from the Federal Government. And time and time again, both the President and the Congress have recognized and acted in reliance upon the Red Cross' status virtually as an arm of the Government. In those respects in which the Red Cross differs from the usual government agency-e.g., in that its employees are not

employees of the United States, and that government officials do not direct its everyday affairs-the Red Cross is like other institutions-e.g., national banks-whose status as tax-immune instrumentalities of the United States is beyond dispute. [27]

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The same conclusion was reached in R.A. Barton v. American Red Cross. [28] In that

case, a transfusion recipient and her family brought action against American Red

Cross and its state medical director under Alabama Medical Liability Act as well

as Alabama tort law for failing to properly test blood sample and failing to timely

notify recipient that donor had tested positive for human immunodeficiency virus

(HIV). The US District Court concluded that the Red Cross was a federal

instrumentality and was so intertwined with and was essential to the operation of

the federal government, both internationally and domestically; [29] thus, its

personnel were exempt from tort liability if the conduct complained of were within

the scope of official duties and were discretionary in nature. [30] The US Court of

Appeals later affirmed the decision, and the US Supreme Court denied certiorari and

rehearing on the case. [31] cralaw

Interestingly, while the United States considers the ANRC as its arm and

the US courts uphold its status as a federal instrumentality, ANRC remains an

independent, volunteer-led organization thatworks closely with the ICRC on matters

of international conflict and social, political, and military unrest. There is, therefore,

no sufficient basis for Justice Carpio to assume that if this Court will consider PNRC

as a GOCC, then it cannot merit the trust of all and cannot effectively carry out its

mission as a National Red Cross Society. cralaw

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Let it be stressed that, in much the same way as the ANRC, the PNRC has been

chartered and incorporated by the Philippine Government to aid it in the fulfillment

of its obligations under the Geneva Convention. The President of the Republic

appoints six of the 36 PNRC governors. Though it depends primarily on voluntary

contributions for its funding, PNRC receives financial assistance not only from the

National Government and the PCSO but also through the local government units.

PNRC further submits to the President an annual report containing its activities and

showing its financial condition, as well as the receipts and disbursements. PNRC has

further been recognized by the Philippine Government to be an essential

component in its international and domestic operation. There is no doubt therefore

that PNRC is a GOCC or, if not, at least a government instrumentality.  cralaw

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The fact that the Philippine or the American National Red Cross is a governmental

instrumentality does not affect its autonomy and operation in conformity with the

Fundamental Principles of the International Red Cross. The PNRC, like the ANRC,

remains autonomous, neutral and independent from the Government, and vice

versa, consonant with the principles laid down in the Geneva Convention. cralaw

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A similar standing obtains in the case of the Commission on Human Rights (CHR).

While it is a governmental office, it is independent. Separatists and insurgents do

not consider the CHR, or the PNRC in this case, as the enemy, but rather as the

entity to turn to in the event of injury to their constitutional rights, for the CHR, or to

their physical being, for the PNRC. cralaw

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The PNRC Charter does not violate   cralaw

the constitutional proscription   cralaw

against the creation of private   cralaw

corporations by special law  cralaw

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Considering that the PNRC is not a private corporation, but a GOCC or a government

instrumentality, then its charter does not violate the constitutional provision that

Congress cannot, except by a general law, provide for the formation, organization or

regulation of private corporations, unless such corporations are owned or controlled

by the Government. [32] We have already settled this issue in Camporedondo and

in Baluyot. Let it be emphasized that, in those cases, this Court has found nothing

wrong with the PNRC Charter. We have simply applied the Constitution, and

in Feliciano, this Court has explained the meaning of the constitutional provision.  cralaw

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I respectfully submit that we are not prepared to reverse the ruling of this Court in

the said cases.To rule otherwise will create an unsettling ripple effect in numerous

decisions of this Court, including those dealing with the jurisdiction of the Civil

Service Commission (CSC) and the authority of the Commission on Audit (COA),

among others.  cralaw

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Furthermore, to subscribe to the proposition that Section 1 of the PNRC Charter,

which deals with the creation and incorporation of the organization, is invalid for

being violative of the aforesaid constitutional proscription, but the rest of the

provisions in the PNRC Charter remains valid, is to reach an absurd situation in

which obligations are imposed on and a framework for its operation is laid down for

a legally non-existing entity. If Section 1 of the PNRC Charter were impulsively

invalidated, what will remain are the following provisions, which will have no

specific frame of reference─  cralaw

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SECTION 2. The name of this corporation shall be "The Philippine National Red Cross" and by that name shall have perpetual succession with the power to sue and be sued; to own and hold such real and personal estate as shall be deemed advisable and to accept bequests, donations and contributions of property of all classes for the purpose of this Corporation hereinafter set forth; to adopt a seal and to alter and destroy the same at pleasure; and to have the right to adopt and to use, in carrying out its purposes hereinafter designated, as an emblem and badge, a red Greek cross on a white ground, the same as has been described in the Geneva Conventions, and adopted by the several nations ratifying or adhering thereto; to ordain and establish by-laws and regulations not inconsistent with the laws of the Republic of the Philippines, and generally to do all such acts and things as may be necessary to carry into effect the provisions of this Act and promote the purposes of said organization; and the corporation hereby created is designated as the organization which is authorized to act in matters of relief under said Convention. In accordance with the Geneva Conventions, the issuance of the distinctive Red Cross emblem to medical units and establishments, personnel and materials neutralized in time of war shall be left to the military authorities. The red Greek cross on a white ground, as has been described by the Geneva Conventions is not, and shall not be construed as a religious symbol, and shall have equal efficacy and applicability to persons of all faiths, creeds and beliefs. The operational jurisdiction of the Philippine National Red Cross shall be over the entire territory of the Philippines.  cralaw

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SECTION 3. That the purposes of this Corporation shall be as follows:  cralaw

a. To provide volunteer aid to the sick and wounded of armed forces in time of war, in accordance with the spirit of and under the conditions prescribed by the Geneva Conventions to which the Republic of the Philippines proclaimed its adherence; cralaw

b. For the purposes mentioned in the preceding sub-section, to perform all duties devolving upon the Corporation as a result of the adherence of the Republic of the Philippines to the said Convention;  cralaw

c. To act in matters of voluntary relief and in accordance with the authorities of the armed forces as a medium of communication between people of the Republic of the Philippines and their Armed Forces, in time of peace and in time of war, and to act in such matters between similar national societies of other governments and the Governments and people and the Armed Forces of the Republic of the Philippines;  cralaw

d. To establish and maintain a system of national and international relief in time of peace and in time of war and apply the same in meeting and emergency needs caused by typhoons, flood, fires, earthquakes, and other natural disasters and to devise and carry on measures for minimizing the suffering caused by such disasters;  cralaw

e. To devise and promote such other services in time of peace and in time of war as may be found desirable in improving the health, safety and welfare of the Filipino people;  cralaw

f. To devise such means as to make every citizen and/or resident of the Philippines a member of the Red Cross.  cralaw

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SECTION 4. In furtherance of the purposes mentioned in the preceding sub-paragraphs, the Philippine National Red Cross shall: cralaw

a. Be authorized to secure loans from any financial institution which shall not exceed its budget of the previous year.  cralaw

b. Be exempt from payment of all duties, taxes, fees, and other charges of all kinds on all importations and purchases for its exclusive use, on donations for its disaster relief work and other Red Cross services, and in its benefits and fund raising drives all provisions of law to the contrary notwithstanding.  cralaw

c. Be allotted by the Philippine Charity Sweepstakes Office one lottery draw yearly for the support of its disaster relief operations in addition to its existing lottery draws for the Blood Program.  cralaw

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SECTION 5. Membership in the Philippine National Red Cross shall be open to entire population in the Philippines regardless of citizenship. Any contribution to the Philippine National Red Cross Annual Fund Campaign shall entitle the contributor to membership for one year and said contribution shall be deductible in full for taxation purposes.  cralaw

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SECTION 6. The governing powers and authority shall be vested in a Board of Governors composed of thirty members, six of whom shall be appointed by the President of the Philippines, eighteen shall be elected by chapter delegates in biennial conventions and the remaining six shall be elected by the twenty-four members of the Board already

chosen. At least one but not more than three of the Presidential appointees shall be chosen from the Armed Forces of the Philippines.  cralaw

a. The term of office of all members of the board of Governors shall be four years. Any member of the Board of Governor who has served two consecutive full terms of four years each shall be ineligible for membership on the Board for at least two years; any term served to cover unexpired terms of office of any governor will not be considered in this prohibition in serving two consecutive full terms, and provided, however, that terms served for more than two years shall be considered a full term. cralaw

b. Vacancies in the Board of Governors caused by death or resignation shall be filled by election by the Board of Governors at its next meeting, except that vacancies among the Presidential appointees shall be filled by the President.  cralaw

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SECTION 7. The President of the Philippines shall be the Honorary President of the Philippine National Red Cross. The officers shall consist of a Chairman, a Vice-Chairman, a Secretary, a Treasurer, a Counselor, an Assistant Secretary and an Assistant Treasurer, all of whom shall be elected by the Board of Governors from among its membership for a term of two years and may be re-elected. The election of officers shall take place within sixty days after all the members of the Board of Governors have been chosen and have qualified.  cralaw

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SECTION 8. The Biennial meeting of chapter delegates shall be held on such date and such place as may be specified by the Board of Governors to elect members of the Board of Governors and advice the Board of Governors on the activities of the Philippine National Red Cross; Provided, however that during periods of great emergency, the Board of Governors in its discretion may determine that the best interest of the corporation shall be served by postponing such biennial meeting. cralaw

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SECTION 9. The power to ordain, adopt and amend by-laws and regulations shall be vested in the Board of Governors.  cralaw

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SECTION 10. chanrobles virtual law libraryThe members of the Board of Governors, as well as the officers of the corporation, shall serve without compensation. The compensation of the paid staff of the corporation shall be determined by the Board of Governors upon the recommendation of the Secretary General. cralaw

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SECTION 11. chanrobles virtual law libraryAs a national voluntary organization, the Philippine National Red Cross shall be financed primarily by contributions obtained through solicitation campaigns throughout the year which shall be organized by the Board of Governors and conducted by the Chapters in their respective jurisdictions. These fund raising campaigns shall be conducted independently of other fund drives and service needs. cralaw

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SECTION 12. chanrobles virtual law libraryThe Board of Governors shall promulgate rules and regulations for the organization of local units of the Philippine National Red Cross to be known as Chapters. Said rules and regulations shall fix the relationship of the Chapters to the Corporation, define their territorial jurisdictions, and determine the number of delegates for each chapter based on population, fund campaign potentials and service needs.  cralaw

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SECTION 13. chanrobles virtual law libraryThe Corporation shall, at the end of every calendar year submit to the President of the Philippines an annual report containing the activities of the Corporation showing its financial condition, the receipts and disbursements.  cralaw

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SECTION 14. chanrobles virtual law libraryIt shall be unlawful for any person to solicit, collect or receive money, materials, or property of any kind by falsely representing or pretending himself to be a member, agent or representative of the Philippine National Red Cross.  cralaw

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SECTION 15. chanrobles virtual law libraryThe use of the name Red Cross is reserved exclusively to the Philippine National Red Cross and the use of the emblem of the red Greek cross on a white ground is reserved exclusively to the Philippine National Red Cross, medical services of the Armed Forces of the Philippines and such other medical facilities or other institutions as may be authorized by the Philippine National Red Cross as provided under Article 44 of the Geneva Conventions. It shall be unlawful for any other person or entity to use the words Red Cross or Geneva Cross or to use the emblem of the red Greek cross on a white ground or any designation, sign, or insignia constituting an imitation thereof for any purpose whatsoever. cralaw

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SECTION 16. chanrobles virtual law libraryAs used in this Decree, the term person shall include any legal person, group, or legal entity whatsoever nature, and any person violating any section of this Article shall, upon conviction therefore be liable to a find of not less than one thousand pesos or imprisonment for a term not exceeding one year, or both, at the discretion of the court, for each and every offense. In case the violation is committed by a corporation or association, the penalty shall devolve upon the president, director or any other officer responsible for such violation.  cralaw

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SECTION 17. chanrobles virtual law libraryAll acts or parts of acts which are inconsistent with the provisions of this Decree are hereby repealed.  cralaw

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Sections 2 to 17 of R.A. No. 95, as amended, are not separable from Section 1, the

provision creating and incorporating the PNRC, and cannot, by themselves, stand

independently as law. The PNRC Charter obviously does not contain a separability

clause.  cralaw

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The constitutionality of   cralaw

a law is presumed  cralaw

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Two other important points militate against the declaration of Section 1 of the PNRC

Charter as invalid and unconstitutional, namely: (1) respondent does not

question the constitutionality of the said provision; and (2) every law

enjoys the presumption of constitutionality. cralaw

cralaw

Settled is the doctrine that all reasonable doubts should be resolved in favor of the

constitutionality of a statute. [33] The presumption is that the legislature intended to

enact a valid, sensible and just law and one which operates no further than may be

necessary to effectuate the specific purpose thereof. [34] Justice Carpio, in Kapisanan

ng mga Kawani ng Energy Regulatory Board v. Barin, [35]even echoes the principle

that to justify the nullification of a law, there must be a clear and unequivocal

breach of the Constitution.

Here, as in Camporedondo and Baluyot, there is no clear showing that the PNRC

Charter runs counter to the Constitution. And, again in the same tone as

in Montesclaros v. Commission on Elections, [the parties] are not even assailing the

constitutionality of [the PNRC Charter]. A becoming courtesy to a co-equal branch

should thus impel this Court to refrain from unceremoniously invalidating a

legislative act.  cralaw

cralaw

Deleterious effects will result cralaw

if PNRC is declared a private   cralaw

corporation, among which are   cralaw

its consequent destruction as   cralaw

an institution and the Republics   cralaw

shirking its obligation under   cralaw

the Geneva Convention cralaw

  cralaw

  cralaw

The hypothesis that PNRC is a private corporation has far-reaching implications. As

mentioned earlier, it will be a reversal of the doctrines laid down

in Camporedondo and Baluyot, and it will have an unsettling ripple effect on other

numerous decisions of the Court, including those dealing with the jurisdiction of the

CSC and the authority of the COA.  cralaw

cralaw

Not only that. If PNRC is considered as a private corporation, then, this will lead to

its ultimate demise as an institution. Its employees will no longer be covered by the

Government Service Insurance System. It can no longer be extended tax

exemptions and official immunity and it cannot anymore be given support, financial

or otherwise, by the National Government, the local government units and the

PCSO; because these will violate not only the equal protection clause in the

Constitution, but also penal statutes. cralaw

cralaw

And if PNRC is consequently obliterated, the Republic will be shirking its

responsibilities and obligations under the Geneva Convention.  cralaw

This Court then has to be very careful in the resolution of this case and in making a

declaration that will have unintended yet deleterious consequences. The Court must

not arbitrarily declare a law unconstitutional just to save a single individual from the

unavoidable consequences of his transgression of the Constitution, even if it be

unintentional and done in good faith.  cralaw

cralaw

The respondent holds two  cralaw

incompatible offices  cralaw

in violation of the Constitution  cralaw

  cralaw

  cralaw

Section 13, Article VI of the Constitution explicitly provides that no Senator or

Member of the House of Representatives may hold any other office or employment

in the government, or any subdivision, agency or instrumentality thereof, including

[GOCCs] or their subsidiaries, during his term without forfeiting his seat. [36] In Adaza

v. Pacana, Jr., [37] the Court, construing a parallel provision in the 1973 Constitution,

has ruled that  cralaw

  cralaw

The language used in the above-cited section is plain, certain and free from ambiguity. The only exceptions mentioned therein are the offices of prime minister and cabinet member. The wisdom or expediency of the said provision is a matter which is not within the province of the Court to determine. cralaw

  cralaw

A public office is a public trust. It is created for the interest and the benefit of the people. As such, a holder thereof is subject to such regulations and conditions as the law may impose and he cannot complain of any restrictions which public policy may dictate on his holding of more than one office. It is therefore of no avail to petitioner that the system of government in other states allows a local elective official to act as an elected member of the parliament at the same time. The dictate of the people in whom legal sovereignty lies is explicit. It provides no exceptions save the two offices specifically cited in the above-quoted constitutional provision. Thus, while it may be said that within the purely parliamentary system of government no incompatibility exists in the nature of the two offices under consideration, as incompatibility is understood in common law, the incompatibility herein present is one created by no less than the constitution itself. In the case at bar, there is no question that petitioner has taken his oath of office as an elected Mambabatas Pambansa and has been discharging his duties as such. In the light of the oft-mentioned constitutional provision, this fact operated to vacate his former post and he cannot now continue to occupy the same, nor attempt to discharge its functions. [38]

 cralaw

  cralaw

  cralaw

There is no doubt that the language in Section 13, Article VI is unambiguous; it

requires no in-depth construction. However, as the constitutional provision is

worded at present, the then recognized exception adverted to in Adaza, i.e., offices

of prime minister and cabinet member, no longer holds true given the reversion to

the presidential system and a bicameral Congress in the 1987 Constitution. There

remains, however, a single exception to the rule. Civil Liberties Union v. Executive

Secretary, [39] reiterated in the fairly recent Public Interest Center, Inc. v.

Elma, [40]recognizes that a position held in an ex officio capacity does not violate the

constitutional proscription on the holding of multiple offices. Interpreting the

equivalent section in Article VII on the Executive Department, [41] the Court has

decreed in Civil Liberties that cralaw

  cralaw

The prohibition against holding dual or multiple offices or employment under Section 13, Article VII of the Constitution must not, however, be construed as applying to posts occupied by the Executive officials specified therein without additional compensation in an ex officio capacity as provided by law and as required by the primary functions of said officials office. The reason is that these posts do not comprise any other office within the contemplation of the constitutional prohibition but are properly an imposition of additional duties and functions on said officials. x x x  cralaw

x x x x cralaw

  cralaw

x x x x The term ex officio means from office; by virtue of office. It refers to an authority derived from official character merely, not expressly conferred upon the individual character, but rather annexed to the official position. Ex officio likewise denotes an act done in an official character, or as a consequence of office, and without any other appointment or authority other than that conferred by the office. An ex officio member of a board is one who is a member by virtue of his title to a certain office, and without further warrant or appointment. x x x  cralaw

  cralaw

x x x x cralaw

  cralaw

The ex officio position being actually and in legal contemplation part of the principal office, it follows that the official concerned has no right to receive additional compensation for his services in the said position. The reason is that these services are already paid for and covered by the compensation attached to his principal office. x x x [42]

 cralaw

  cralaw

  cralaw

In the instant case, therefore, we must decide whether the respondent holds the

chairmanship of PNRC in an ex officio capacity. Presidential Decree (P.D.) No. 1264,

amending R.A. No. 95, provides for the composition of the governing authority of

the PNRC and the manner of their appointment or election, thus:  cralaw

  cralaw

Section 6.    The governing powers and authority shall be vested in a Board of Governors composed of thirty members, six of whom shall be appointed by the President of the Philippines, eighteen shall be elected by chapter delegates in biennial conventions and the remaining six shall be elected by the twenty-four members of the Board already chosen. At least one but not more than three of the Presidential appointees shall be chosen from the Armed Forces of the Philippines.  cralaw

  cralaw

a.    The term of office of all members of the board of Governors shall be four years. Any member of the Board of Governor who has served two consecutive full terms of

four years each shall be ineligible for membership on the Board for at least two years; any term served to cover unexpired terms of office of any governor will not be considered in this prohibition in serving two consecutive full terms, and provided, however, that terms served for more than two years shall be considered a full term.  cralaw

  cralaw

  cralaw

b.    Vacancies in the Board of Governors caused by death or resignation shall be filled by election by the Board of Governors at its next meeting, except that vacancies among the Presidential appointees shall be filled by the President. cralaw

  cralaw

Section 7.    The President of the Philippines shall be the Honorary President of the Philippine National Red Cross. The officers shall consist of a Chairman, a Vice-Chairman, a Secretary, a Treasurer, a Counselor, an Assistant Secretary and an Assistant Treasurer, all of whom shall be elected by the Board of Governors from among its membership for a term of two years and may be re-elected. The election of officers shall take place within sixty days after all the members of the Board of Governors have been chosen and have qualified.  cralaw

  cralaw

  cralaw

Nowhere does it say in the law that a member of the Senate can sit in an ex

officio capacity as chairman of the PNRC Board of Governors. Chairmanship of the

PNRC Board is neither an extension of the legislative position nor is it in aid of

legislative duties. [43] Likewise, the position is neither derived from one being a

member of the Senate nor is it annexed to the Senatorial position. Stated

differently, the PNRC chairmanship does not flow from ones election as Senator of

the Republic. Applying Civil Liberties, we can then conclude that the chairmanship

of the PNRC Board is not held in an ex officio capacity by a member of Congress. cralaw

  cralaw

The fact that the PNRC Chairman of the Board is not appointed by the

President [44] and the fact that the former does not receive any compensation [45] do

not at all give the said position an ex officio character such that the occupant

thereof becomes exempt from the constitutional proscription on the holding of

multiple offices. As held in Public Interest Center, the absence of additional

compensation being received by virtue of the second post is not enough, what

matters is that the second post is held by virtue of the functions of the first office

and is exercised in an ex officio capacity. [46] Hence, Senator Gordon, in assuming

the chairmanship of the PNRC Board of Governors while being a member of the

Senate, is clearly violating Section 13, Article VI of the Constitution. While we can

only hypothesize on the extent of the incompatibility between the two officesas

stated in petitioners memorandum, Senator Gordons holding of both offices may

result in a divided focus of his legislative functions, and in a conflict of interest as

when a possible amendment of the PNRC Charter is lobbied in Congress or when the

PNRC and its officials become subjects of legislative inquiries. [47] Let it be stressed

that, as in Adaza, the incompatibility herein present is one created by no less than

the Constitution itself. [48] cralaw

  cralaw

I hasten to add that Senator Gordons chairmanship of the PNRC Board cannot be

likened to the membership of several legislators in the Legislative-Executive

Development Advisory Council, in the Council of State, in the Board of Regents of

state universities, and in the Judiciary, Executive and Legislative Advisory and

Consultative Council, because, in these bodies, the membership of the legislators is

held in an ex officio capacity or as an extension of their legislative functions. [49] cralaw

  cralaw

IN VIEW OF THE FOREGOING, I vote to GRANT the petition. cralaw

  cralaw

G.R. No. 134577. November 18, 1998

SEN. MIRIAM DEFENSOR SANTIAGO and SEN. FRANCISCO S. TATAD, Petitioners, vs. SEN. TEOFISTO T. GUINGONA, JR. and SEN. MARCELO B. FERNAN, Respondents.

D E C I S I O N

PANGANIBAN, J.:

The principle of separation of powers ordains that each of the three great branches of government has exclusive cognizance of and is supreme in matters falling within its own constitutionally allocated sphere.

Constitutional respect and a becoming regard for the sovereign acts of a coequal branch prevents this Court from prying into the internal workings of the Senate. Where no provision of the Constitution or the laws or even the Rules of the Senate is clearly shown to have been violated, disregarded or overlooked, grave abuse of discretion cannot be imputed to Senate officials for acts done within their competence and authority. This Court will be neither a tyrant nor a wimp; rather, it will remain steadfast and judicious in upholding the rule and majesty of the law.

The Case

On July 31, 1998, Senators Miriam Defensor Santiago and Francisco S. Tatad instituted an original petition for quo warranto under Rule 66, Section 5, Rules of Court, seeking the ouster of Senator Teofisto T. Guingona Jr. as minority leader of the Senate and the declaration of Senator Tatad as the rightful minority leader.

On August 4, 1998, the Court, upon receipt of the Petition, required the respondents and the solicitor general to file COMMENT thereon within a non-extendible period of fifteen (15) days from notice. On August 25, 1998, both respondents and the solicitor general submitted their respective Comments. In compliance with a Resolution of the Court dated September 1, 1998, petitioners filed their

Consolidated Reply on September 23, 1998. Noting said pleading, this Court gave due course to the petition and deemed the controversy submitted for decision, without need of memoranda, on September 29, 1998.

In the regular course, the regional trial courts and this Court have concurrent jurisdiction1 to hear and decide petitions for quo warranto (as well as certiorari, prohibition and mandamus), and a basic deference to the hierarchy of courts impels a filing of such petitions in the lower tribunals.2 However, for special and important reasons or for exceptional and compelling circumstances, as in the present case, this Court has allowed exceptions to this doctrine.3 In fact, original petitions for certiorari, prohibition, mandamus and quo warranto assailing acts of legislative officers like the Senate President4 and the Speaker of the House5 have been recognized as exceptions to this rule.

The Facts

The Senate of the Philippines, with Sen. John Henry R. Osmea as presiding officer, convened on July 27, 1998 for the first regular session of the eleventh Congress. At the time, in terms of party affiliation, the composition of the Senate was as follows:[6

10 members -Laban ng Masang Pilipino (LAMP)

7 members - Lakas-National Union of Christian Democrats-United Muslim Democrats of the Philippines (Lakas-NUCD-UMDP)

1 member - Liberal Party (LP)

1 member - Aksyon Demokrasya

1 member - Peoples Reform Party (PRP)

1 member - Gabay Bayan

2 members - Independent

----------

23 - total number of senators7 (The last six members are all classified by petitioners as independent.)

On the agenda for the day was the election of officers. Nominated by Sen. Blas F. Ople to the position of Senate President was Sen. Marcelo B. Fernan. Sen. Francisco S. Tatad was also nominated to the same position by Sen. Miriam Defensor Santiago. By a vote of 20 to 2,8 Senator Fernan was declared the duly elected President of the Senate.

The following were likewise elected: Senator Ople as president pro tempore, and Sen. Franklin M. Drilon as majority leader.

Senator Tatad thereafter manifested that, with the agreement of Senator Santiago, allegedly the only other member of the minority, he was assuming the position of minority leader. He explained that those who had voted for Senator Fernan comprised the majority, while only those who had voted for him, the losing nominee, belonged to the minority.

During the discussion on who should constitute the Senate minority, Sen. Juan M. Flavier manifested that the senators belonging to the Lakas-NUCD-UMDP Party -- numbering seven (7) and, thus, also a minority -- had chosen Senator Guingona as the minority leader. No consensus on the matter was arrived at. The following session day, the debate on the question continued, with Senators Santiago

and Tatad delivering privilege speeches. On the third session day, the Senate met in caucus, but still failed to resolve the issue.

On July 30, 1998, the majority leader informed the body that he was in receipt of a letter signed by the seven Lakas-NUCD-UMDP senators,9 stating that they had elected Senator Guingona as the minority leader. By virtue thereof, the Senate President formally recognized Senator Guingona as the minority leader of the Senate.

The following day, Senators Santiago and Tatad filed before this Court the subject petition for quo warranto, alleging in the main that Senator Guingona had been usurping, unlawfully holding and exercising the position of Senate minority leader, a position that, according to them, rightfully belonged to Senator Tatad.

Issues

From the parties pleadings, the Court formulated the following issues for resolution:

1. Does the Court have jurisdiction over the petition?

2. Was there an actual violation of the Constitution?

3. Was Respondent Guingona usurping, unlawfully holding and exercising the position of Senate minority leader?

4. Did Respondent Fernan act with grave abuse of discretion in recognizing Respondent Guingona as the minority leader?

The Courts Ruling

After a close perusal of the pleadings10 and a careful deliberation on the arguments, pro and con, the Court finds that no constitutional or legal infirmity or grave abuse of discretion attended the recognition of and the assumption into office by Respondent Guingona as the Senate minority leader.

First Issue: The Courts Jurisdiction

Petitioners principally invoke Avelino v. Cuenco11 in arguing that this Court has jurisdiction to settle the issue of who is the lawful Senate minority leader. They submit that the definitions of majority and minority involve an interpretation of the Constitution, specifically Section 16 (1), Article VI thereof, stating that [t]he Senate shall elect its President and the House of Representatives its Speaker, by a majority vote of all its respective Members.

Respondents and the solicitor general, in their separate Comments, contend in common that the issue of who is the lawful Senate minority leader is an internal matter pertaining exclusively to the domain of the legislature, over which the Court cannot exercise jurisdiction without transgressing the principle of separation of powers. Allegedly, no constitutional issue is involved, as the fundamental law does not provide for the office of a minority leader in the Senate. The legislature alone has the full discretion to provide for such office and, in that event, to determine the procedure of selecting its occupant.

Respondents also maintain that Avelino cannot apply, because there exists no question involving an interpretation or application of the Constitution, the laws or even the Rules of the Senate; neither are there peculiar circumstances impelling the Court to assume jurisdiction over the petition. The solicitor general adds that there is not even any legislative practice to support the petitioners theory that a senator who votes for the winning Senate President is precluded from becoming the minority leader.

To resolve the issue of jurisdiction, this Court carefully reviewed and deliberated on the various important cases involving this very important and basic question, which it has ruled upon in the past.

The early case Avelino v. Cuenco cautiously tackled the scope of the Courts power of judicial review; that is, questions involving an interpretation or application of a provision of the Constitution or the law, including the rules of either house of Congress. Within this scope falls the jurisdiction of the Court over questions on the validity of legislative or executive acts that are political in nature, whenever the tribunal finds constitutionally imposed limits on powers or functions conferred upon political bodies.12

In the aforementioned case, the Court initially declined to resolve the question of who was the rightful Senate President, since it was deemed a political controversy falling exclusively within the domain of the Senate. Upon a motion for reconsideration, however, the Court ultimately assumed jurisdiction (1) in the light of subsequent events which justify its intervention; and (2) because the resolution of the issue hinged on the interpretation of the constitutional provision on the presence of a quorum to hold a session13 and therein elect a Senate President.

Justice Feria elucidated in his Concurring Opinion: [I] concur with the majority that this Court has jurisdiction over cases like the present x x x so as to establish in this country the judicial supremacy, with the Supreme Court as the final arbiter, to see that no one branch or agency of the government transcends the Constitution, not only in justiceable but political questions as well.14

Justice Perfecto, also concurring, said in part:

Indeed there is no denying that the situation, as obtaining in the upper chamber of Congress, is highly explosive. It had echoed in the House of Representatives. It has already involved the President of the Philippines. The situation has created a veritable national crisis, and it is apparent that solution cannot be expected from any quarter other than this Supreme Court, upon which the hopes of the people for an effective settlement are pinned.15

x x x This case raises vital constitutional questions which no one can settle or decide if this Court should refuse to decide them.16

x x x The constitutional question of quorum should not be left unanswered.17

In Taada v. Cuenco,18 this Court endeavored to define political question. And we said that it refers to those questions which, under the Constitution, are to be decided by the people in their sovereign capacity, or in regard to which full discretionary authority has been delegated to the legislative or executive branch of the government. It is concerned with issues dependent upon the wisdom, not [the] legality, of a particular measure.19

The Court ruled that the validity of the selection of members of the Senate Electoral Tribunal by the senators was not a political question. The choice of these members did not depend on the Senates full discretionary authority, but was subject to mandatory constitutional limitations.20 Thus, the Court held that not only was it clearly within its jurisdiction to pass upon the validity of the selection proceedings, but it was also its duty to consider and determine the issue.

In another landmark case, Lansang v. Garcia,21 Chief Justice Roberto Concepcion wrote that the Court had authority to and should inquire into the existence of the factual bases required by the Constitution for the suspension of the privilege of the writ [of habeas corpus]. This ruling was made in spite of the previous pronouncements in Barcelon v. Baker22 and Montenegro v. Castaeda23 that the authority to decide whether the exigency has arisen requiring suspension (of the privilege x x x) belongs to the President and his decision is final and conclusive upon the courts and upon all other persons. But the Chief Justice cautioned: the function of the Court is merely to check -- not to supplant --- the Executive, or to ascertain merely whether he has gone beyond the constitutional limits of his jurisdiction, not to exercise the power vested in him or to determine the wisdom of his act.

The eminent Chief Justice aptly explained later in Javellana v. Executive Secretary:24

The reason why the issue under consideration and other issues of similar character are justiciable, not political, is plain and simple. One of the principal bases of the non-justiciability of so-called political

questions is the principle of separation of powers -- characteristic of the presidential system of government -- the functions of which are classified or divided, by reason of their nature, into three (3) categories, namely, 1) those involving the making of laws, which are allocated to the legislative department; 2) those concerning mainly with the enforcement of such laws and of judicial decisions applying and/or interpreting the same, which belong to the executive department; and 3) those dealing with the settlement of disputes, controversies or conflicts involving rights, duties or prerogatives that are legally demandable and enforceable, which are apportioned to courts of justice. Within its own sphere -- but only within such sphere each department is supreme and independent of the others, and each is devoid of authority not only to encroach upon the powers or field of action assigned to any of the other departments, but also to inquire into or pass upon the advisability or wisdom of the acts performed, measures taken or decisions made by the other departments -- provided that such acts, measures or decision are within the area allocated thereto by the Constitution."

Accordingly, when the grant of power is qualified, conditional or subject to limitations, the issue of whether or not the prescribed qualifications or conditions have been met, or the limitations respected is justiciable or non-political, the crux of the problem being one of legality or validity of the contested act, not its wisdom. Otherwise, said qualifications, conditions or limitations -- particularly those prescribed by the Constitution -- would be set at naught. What is more, the judicial inquiry into such issue and the settlement thereof are the main functions of the courts of justice under the presidential form of government adopted in our 1935 Constitution, and the system of checks and balances, one of its basic predicates. As a consequence, we have neither the authority nor the discretion to decline passing upon said issue, but are under the ineluctable obligation -- made particularly more exacting and peremptory by our oath, as members of the highest Court of the land, to support and defend the Constitution -- to settle it. This explains why, in Miller v. Johnson [92 Ky. 589, 18 SW 522, 523], it was held that courts have a duty, rather than apower, to determine whether another branch of the government has kept within constitutional limits.

Unlike our previous constitutions, the 1987 Constitution is explicit in defining the scope of judicial power. The present Constitution now fortifies the authority of the courts to determine in an appropriate action the validity of the acts of the political departments. It speaks of judicial prerogative in terms of duty, viz.:

Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government.25

This express definition has resulted in clearer and more resolute pronouncements of the Court. Daza v. Singson,26Coseteng v. Mitra Jr.27 and Guingona Jr. v. Gonzales28 similarly resolved issues assailing the acts of the leaders of both houses of Congress in apportioning among political parties the seats to which each chamber was entitled in the Commission on Appointments. The Court held that the issue was justiciable, even if the question were political in nature, since it involved the legality, not the wisdom, of the manner of filling the Commission on Appointments as prescribed by [Section 18, Article VI of] the Constitution.

The same question of jurisdiction was raised in Taada v. Angara,29 wherein the petitioners sought to nullify the Senates concurrence in the ratification of the World Trade Organization (WTO) Agreement. The Court ruled: Where an action of the legislative branch is seriously alleged to have infringed the Constitution, it becomes not only the right but in fact the duty of the judiciary to settle the dispute. The Court en banc unanimously stressed that in taking jurisdiction over petitions questioning an act of the political departments of government, it will not review the wisdom, merits or propriety of such action, and will strike it down only on either of two grounds: (1) unconstitutionality or illegality and (2) grave abuse of discretion.

Earlier in Co v. Electoral Tribunal of the House of Representatives30 (HRET), the Court refused to reverse a decision of the HRET, in the absence of a showing that said tribunal had committed grave abuse of discretion amounting to lack of jurisdiction. The Court ruled that full authority had been conferred upon the electoral tribunals of the House of Representatives and of the Senate as sole

judges of all contests relating to the election, the returns, and the qualifications of their respective members. Such jurisdiction is original and exclusive.31 The Court may inquire into a decision or resolution of said tribunals only if such decision or resolution was rendered without or in excess of jurisdiction, or with grave abuse of discretion.32

Recently, the Court, in Arroyo v. De Venecia,33 was asked to reexamine the enrolled bill doctrine and to look beyond the certification of the Speaker of the House of Representatives that the bill, which was later enacted as Republic Act 8240, was properly approved by the legislative body. Petitioners claimed that certain procedural rules of the House had been breached in the passage of the bill. They averred further that a violation of the constitutionally mandated House rules was a violation of the Constitution itself.

The Court, however, dismissed the petition, because the matter complained of concerned the internal procedures of the House, with which the Court had no concern. It enucleated:34

It would be an unwarranted invasion of the prerogative of a coequal department for this Court either to set aside a legislative action as void because the Court thinks the House has disregarded its own rules of procedure, or to allow those defeated in the political arena to seek a rematch in the judicial forum when petitioners can find their remedy in that department itself. The Court has not been invested with a roving commission to inquire into complaints, real or imagined, of legislative skullduggery. It would be acting in excess of its power and would itself be guilty of grave abuse of discretion were it to do so. x x x In the absence of anything to the contrary, the Court must assume that Congress or any House thereof acted in the good faith belief that its conduct was permitted by its rules, and deference rather than disrespect is due the judgment of that body.

In the instant controversy, the petitioners -- one of whom is Senator Santiago, a well-known constitutionalist -- try to hew closely to these jurisprudential parameters. They claim that Section 16 (1), Article VI of the Constitution, has not been observed in the selection of the Senate minority leader. They also invoke the Courts expanded judicial power to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of Respondents.

Dissenting in part, Mr. Justice Vicente V. Mendoza submits that the Court has no jurisdiction over the petition. Well-settled is the doctrine, however, that jurisdiction over the subject matter of a case is determined by the allegations of the complaint or petition, regardless of whether the plaintiff or petitioner is entitled to the relief asserted.35 In light of the aforesaid allegations of petitioners, it is clear that this Court has jurisdiction over the petition. It is well within the power and jurisdiction of the Court to inquire whether indeed the Senate or its officials committed a violation of the Constitution or gravely abused their discretion in the exercise of their functions and prerogatives.

Second Issue: Violation of the Constitution

Having assumed jurisdiction over the petition, we now go to the next crucial question: In recognizing Respondent Guingona as the Senate minority leader, did the Senate or its officials, particularly Senate President Fernan, violate the Constitution or the laws?

Petitioners answer the above question in the affirmative. They contend that the constitutional provision requiring the election of the Senate President by majority vote of all its members carries with it a judicial duty to determine the concepts of majority and minority, as well as who may elect a minority leader. They argue that majority in the aforequoted constitutional provision refers to that group of senators who (1) voted for the winning Senate President and (2) accepted committee chairmanships. Accordingly, those who voted for the losing nominee and accepted no such chairmanships comprise the minority, to whom the right to determine the minority leader belongs. As a result, petitioners assert, Respondent Guingona cannot be the legitimate minority leader, since he voted for Respondent Fernan as Senate President. Furthermore, the members of the Lakas-NUCD-UMDP cannot choose the minority leader, because they did not belong to the minority, having voted for Fernan and accepted committee chairmanships.

We believe, however, that the interpretation proposed by petitioners finds no clear support from the Constitution, the laws, the Rules of the Senate or even from practices of the Upper House.

The term majority has been judicially defined a number of times. When referring to a certain number out of a total or aggregate, it simply means the number greater than half or more than half of any total.36 The plain and unambiguous words of the subject constitutional clause simply mean that the Senate President must obtain the votes of more than one half of all the senators. Not by any construal does it thereby delineate who comprise the majority, much less the minority, in the said body. And there is no showing that the framers of our Constitution had in mind other than the usual meanings of these terms.

In effect, while the Constitution mandates that the President of the Senate must be elected by a number constituting more than one half of all the members thereof, it does not provide that the members who will not vote for him shall ipso facto constitute the minority, who could thereby elect the minority leader. Verily, no law or regulation states that the defeated candidate shall automatically become the minority leader.

The Comment37 of Respondent Guingona furnishes some relevant precedents, which were not contested in petitioners Reply. During the eighth Congress, which was the first to convene after the ratification of the 1987 Constitution, the nomination of Sen. Jovito R. Salonga as Senate President was seconded by a member of the minority, then Sen. Joseph E. Estrada.38 During the ninth regular session, when Sen. Edgardo J. Angara assumed the Senate presidency in 1993, a consensus was reached to assign committee chairmanships to all senators, including those belonging to the minority.39 This practice continued during the tenth Congress, where even the minority leader was allowed to chair a committee.40 History would also show that the majority in either house of Congress has referred to the political party to which the most number of lawmakers belonged, while the minority normally referred to a party with a lesser number of members.

Let us go back to the definitions of the terms majority and minority. Majority may also refer to the group, party, or faction with the larger number of votes,41 not necessarily more than one half. This is sometimes referred to as plurality. In contrast, minority is a group, party, or faction with a smaller number of votes or adherents than the majority.42 Between two unequal parts or numbers comprising a whole or totality, the greater number would obviously be the majority, while the lesser would be the minority. But where there are more than two unequal groupings, it is not as easy to say which is the minority entitled to select the leader representing all the minorities. In a government with a multi-party system such as in the Philippines (as pointed out by petitioners themselves), there could be several minority parties, one of which has to be identified by the Comelec as the dominant minority party for purposes of the general elections. In the prevailing composition of the present Senate, members either belong to different political parties or are independent. No constitutional or statutory provision prescribe which of the many minority groups or the independents or a combination thereof has the right to select the minority leader.

While the Constitution is explicit on the manner of electing a Senate President and a House Speaker, it is, however, dead silent on the manner of selecting the other officers in both chambers of Congress. All that the Charter says is that [e]ach House shall choose such other officers as it may deem necessary.43 To our mind, the method of choosing who will be such other officers is merely a derivative of the exercise of the prerogative conferred by the aforequoted constitutional provision. Therefore, such method must be prescribed by the Senate itself, not by this Court.

In this regard, the Constitution vests in each house of Congress the power to determine the rules of its proceedings.44 Pursuant thereto, the Senate formulated and adopted a set of rules to govern its internal affairs.45Pertinent to the instant case are Rules I and II thereof, which provide:

Rule I

ELECTIVE OFFICERS

SECTION 1. The Senate shall elect, in the manner hereinafter provided, a President, a President Pro Tempore, a Secretary, and a Sergeant-at-Arms.

These officers shall take their oath of office before entering into the discharge of their duties.

Rule II

ELECTION OF OFFICERS

SEC. 2. The officers of the Senate shall be elected by the majority vote of all its Members. Should there be more than one candidate for the same office, a nominal vote shall be taken; otherwise, the elections shall be by viva voce or by resolution.

Notably, the Rules of the Senate do not provide for the positions of majority and minority leaders. Neither is there an open clause providing specifically for such offices and prescribing the manner of creating them or of choosing the holders thereof. At any rate, such offices, by tradition and long practice, are actually extant. But, in the absence of constitutional or statutory guidelines or specific rules, this Court is devoid of any basis upon which to determine the legality of the acts of the Senate relative thereto. On grounds of respect for the basic concept of separation of powers, courts may not intervene in the internal affairs of the legislature; it is not within the province of courts to direct Congress how to do its work.46 Paraphrasing the words of Justice Florentino P. Feliciano, this Court is of the opinion that where no specific, operable norms and standards are shown to exist, then the legislature must be given a real and effective opportunity to fashion and promulgate as well as to implement them, before the courts may intervene.47

Needless to state, legislative rules, unlike statutory laws, do not have the imprints of permanence and obligatoriness during their effectivity. In fact, they are subject to revocation, modification or waiver at the pleasure of the body adopting them.48 Being merely matters of procedure, their observance are of no concern to the courts, for said rules may be waived or disregarded by the legislative body49 at will, upon the concurrence of a majority.

In view of the foregoing, Congress verily has the power and prerogative to provide for such officers as it may deem. And it is certainly within its own jurisdiction and discretion to prescribe the parameters for the exercise of this prerogative. This Court has no authority to interfere and unilaterally intrude into that exclusive realm, without running afoul of constitutional principles that it is bound to protect and uphold -- the very duty that justifies the Courts being. Constitutional respect and a becoming regard for the sovereign acts of a coequal branch prevents this Court from prying into the internal workings of the Senate. To repeat, this Court will be neither a tyrant nor a wimp; rather, it will remain steadfast and judicious in upholding the rule and majesty of the law.

To accede, then, to the interpretation of petitioners would practically amount to judicial legislation, a clear breach of the constitutional doctrine of separation of powers. If for this argument alone, the petition would easily fail.

While no provision of the Constitution or the laws or the rules and even the practice of the Senate was violated, and while the judiciary is without power to decide matters over which full discretionary authority has been lodged in the legislative department, this Court may still inquire whether an act of Congress or its officials has been made with grave abuse of discretion.50 This is the plain implication of Section 1, Article VIII of the Constitution, which expressly confers upon the judiciary the power and the duty not only to settle actual controversies involving rights which are legally demandable and enforceable, but likewise to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government.

Explaining the above-quoted clause, former Chief Justice Concepcion, who was a member of the 1986 Constitutional Commission, said in part:51

xxx the powers of government are generally considered divided into three branches: the Legislative, the Executive and the Judiciary. Each one is supreme within its own sphere and independent of the others. Because of that supremacy[, the] power to determine whether a given law is valid or not is vested in courts of justice.

Briefly stated, courts of justice determine the limits of power of the agencies and offices of the government as well as those of its officers. In other words, the judiciary is the final arbiter on the question whether or not a branch of government or any of its officials has acted without jurisdiction or in excess of jurisdiction, or so capriciously as to constitute an abuse of discretion amounting to excess of jurisdiction or lack of jurisdiction. This is not only a judicial power but a duty to pass judgment on matters of this nature.

This is the background of paragraph 2 of Section 1, which means that the courts cannot hereafter evade the duty to settle matters of this nature, by claiming that such matters constitute a political question.

With this paradigm, we now examine the two other issues challenging the actions, first, of Respondent Guingona and, second, of Respondent Fernan.

Third Issue: Usurpation of Office

Usurpation generally refers to unauthorized arbitrary assumption and exercise of power52 by one without color of title or who is not entitled by law thereto.53 A quo warranto proceeding is the proper legal remedy to determine the right or title to the contested public office and to oust the holder from its enjoyment.54 The action may be brought by the solicitor general or a public prosecutor55 or any person claiming to be entitled to the public office or position usurped or unlawfully held or exercised by another.56 The action shall be brought against the person who allegedly usurped, intruded into or is unlawfully holding or exercising such office.57

In order for a quo warranto proceeding to be successful, the person suing must show that he or she has a clear right to the contested office or to use or exercise the functions of the office allegedly usurped or unlawfully held by the respondent.58 In this case, petitioners present no sufficient proof of a clear and indubitable franchise to the office of the Senate minority leader.

As discussed earlier, the specific norms or standards that may be used in determining who may lawfully occupy the disputed position has not been laid down by the Constitution, the statutes, or the Senate itself in which the power has been vested. Absent any clear-cut guideline, in no way can it be said that illegality or irregularity tainted Respondent Guingonas assumption and exercise of the powers of the office of Senate minority leader. Furthermore, no grave abuse of discretion has been shown to characterize any of his specific acts as minority leader.

Fourth Issue: Fernans Recognition of Guingona

The all-embracing and plenary power and duty of the Court to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government is restricted only by the definition and confines of the term grave abuse of discretion.

By grave abuse of discretion is meant such 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 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.59

By the above standard, we hold that Respondent Fernan did not gravely abuse his discretion as Senate President in recognizing Respondent Guingona as the minority leader. Let us recall that the latter belongs to one of the minority parties in the Senate, the Lakas-NUCD-UMDP. By unanimous resolution of the members of this party that he be the minority leader, he was recognized as such by the Senate

President. Such formal recognition by Respondent Fernan came only after at least two Senate sessions and a caucus, wherein both sides were liberally allowed to articulate their standpoints.

Under these circumstances, we believe that the Senate President cannot be accused of capricious or whimsical exercise of judgment or of an arbitrary and despotic manner by reason of passion or hostility. Where no provision of the Constitution, the laws or even the rules of the Senate has been clearly shown to have been violated, disregarded or overlooked, grave abuse of discretion cannot be imputed to Senate officials for acts done within their competence and authority.

WHEREFORE, for the above reasons, the petition is hereby DISMISSED.

SO ORDERED.

G.R. No. 161414. January 17, 2005

SULTAN OSOP B. CAMID, Petitioner, vs. THE OFFICE OF THE PRESIDENT, DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT, AUTONOMOUS REGION IN MUSLIM MINDANAO,

DEPARTMENT of FINANCE, DEPARTMENT of BUDGET AND MANAGEMENT, COMMISSION ON AUDIT, and the CONGRESS OF THE PHILIPPINES (HOUSE of REPRESENTATIVES AND

SENATE), Respondents.

D E C I S I O N

TINGA, J.:

This Petition for Certiorari presents this Court with the prospect of our own Brigadoon [1]the municipality of Andong, Lanao del Sur―which like its counterpart in filmdom, is a town that is not supposed to exist yet is anyway insisted by some as actually alive and thriving. Yet unlike in the movies, there is nothing mystical, ghostly or anything even remotely charming about the purported existence of Andong. The creation of the putative municipality was declaredvoid ab initio by this Court four decades ago, but the present petition insists that in spite of this insurmountable obstacle Andong thrives on, and hence, its legal personality should be given judicial affirmation. We disagree.

The factual antecedents derive from the promulgation of our ruling in Pelaez v. Auditor General [2] in 1965. As discussed therein, then President Diosdado Macapagal issued several Executive Orders[3] creating thirty-three (33) municipalities in Mindanao. Among them was Andong in Lanao del Sur which was created by virtue of Executive Order No. 107.[4]

These executive orders were issued after legislative bills for the creation of municipalities involved in that case had failed to pass Congress.[5] President Diosdado Macapagal justified the creation of these municipalities citing his powers under Section 68 of the Revised Administrative Code. Then Vice-President Emmanuel Pelaez filed a special civil action for a writ of prohibition, alleging in main that the Executive Orders were null and void, Section 68 having been repealed by Republic Act No. 2370,[6] and said orders constituting an undue delegation of legislative power.[7]

After due deliberation, the Court unanimously held that the challenged Executive Orders were null and void. A majority of five justices, led by the ponente, Justice (later Chief Justice) Roberto Concepcion, ruled that Section 68 of the Revised Administrative Code did not meet the well-settled requirements for a valid delegation of legislative power to the executive branch,[8] while three justices opined that the nullity of the issuances was the consequence of the enactment of the 1935 Constitution, which reduced the power of the Chief Executive over local governments.[9] Pelaez was disposed in this wise:

WHEREFORE, the Executive Orders in question are declared null and void ab initio and the respondent permanently restrained from passing in audit any expenditure of public funds in implementation of

said Executive Orders or any disbursement by the municipalities above referred to. It is so ordered.[10]

Among the Executive Orders annulled was Executive Order No. 107 which created the Municipality of Andong. Nevertheless, the core issue presented in the present petition is the continued efficacy of the judicial annulment of the Municipality of Andong.

Petitioner Sultan Osop B. Camid (Camid) represents himself as a current resident of Andong,[11] suing as a private citizen and taxpayer whose locus standi 'is of public and paramount interest especially to the people of the Municipality of Andong, Province of Lanao del Sur.[12] He alleges that Andong 'has metamorphosed into a full-blown municipality with a complete set of officials appointed to handle essential services for the municipality and its constituents,[13] even though he concedes that since 1968, no person has been appointed, elected or qualified to serve any of the elective local government positions of Andong.[14] Nonetheless, the municipality of Andong has its own high school, Bureau of Posts, a Department of Education, Culture and Sports office, and at least seventeen (17) 'barangay units' with their own respective chairmen.[15] From 1964 until 1972, according to Camid, the public officials of Andong 'have been serving their constituents through the minimal means and resources with least (sic) honorarium and recognition from the Office of the then former President Diosdado Macapagal. Since the time of Martial Law in 1972, Andong has allegedly been getting by despite the absence of public funds, with the Interim Officials' serving their constituents 'in their own little ways and means.[16]

In support of his claim that Andong remains in existence, Camid presents to this Court a Certification issued by the Office of the Community Environment and Natural Resources (CENRO) of the Department of Environment and Natural Resources (DENR) certifying the total land area of the Municipality of Andong, 'created under Executive Order No. 107 issued [last] October 1, 1964.[17] He also submits a Certification issued by the Provincial Statistics Office of Marawi City concerning the population of Andong, which is pegged at fourteen thousand fifty nine (14,059) strong. Camid also enumerates a list of governmental agencies and private groups that allegedly recognize Andong, and notes that other municipalities have recommended to the Speaker of the Regional Legislative Assembly for the immediate implementation of the revival or re-establishment of Andong.[18]

The petition assails a Certification dated 21 November 2003, issued by the Bureau of Local Government Supervision of the Department of Interior and Local Government (DILG).[19] The Certification enumerates eighteen (18) municipalities certified as existing, per DILG records. Notably, these eighteen (18) municipalities are among the thirty-three (33), along with Andong, whose creations were voided by this Court in Pelaez. These municipalities are Midaslip, Pitogo, Naga, and Bayog in Zamboanga del Sur; Siayan and Pres. Manuel A. Roxas in Zamboanga del Norte; Magsaysay, Sta. Maria and New Corella in Davao; Badiangan and Mina in Iloilo; Maguing in Lanao del Sur; Gloria in Oriental Mindoro; Maasim in Sarangani; Kalilangan and Lantapan in Bukidnon; and Maco in Compostela Valley.[20]

Camid imputes grave abuse of discretion on the part of the DILG in not classifying [Andong] as a regular existing municipality and in not including said municipality in its records and official database as [an] existing regular municipality.[21] He characterizes such non-classification as unequal treatment to the detriment of Andong, especially in light of the current recognition given to the eighteen (18) municipalities similarly annulled by reason ofPelaez. As appropriate relief, Camid prays that the Court annul the DILG Certification dated 21 November 2003; direct the DILG to classify Andong as a 'regular existing municipality; all public respondents, to extend full recognition and support to Andong; the Department of Finance and the Department of Budget and Management, to immediately release the internal revenue allotments of Andong; and the public respondents, particularly the DILG, to recognize the 'Interim Local Officials' of Andong.[22]

Moreover, Camid insists on the continuing validity of Executive Order No. 107. He argues that Pelaez has already been modified by supervening events consisting of subsequent laws and jurisprudence. Particularly cited is ourDecision in Municipality of San Narciso v. Hon. Mendez,[23] wherein the Court affirmed the unique status of the municipality of San Andres in Quezon as a 'de facto municipal corporation.[24] Similar to Andong, the municipality of San Andres was created by way of executive order, precisely the manner which the Court in Pelaez had declared as

unconstitutional. Moreover, San Narciso cited, as Camid does, Section 442(d) of the Local Government Code of 1991 as basis for the current recognition of the impugned municipality. The provision reads:

Section 442. Requisites for Creation. - xxx

(d) Municipalities existing as of the date of the effectivity of this Code shall continue to exist and operate as such. Existing municipal districts organized pursuant to presidential issuances or executive orders and which have their respective sets of elective municipal officials holding office at the time of the effectivity of (the) Code shall henceforth be considered as regular municipalities.[25]

There are several reasons why the petition must be dismissed. These can be better discerned upon examination of the proper scope and application of Section 442(d), which does not sanction the recognition of just any municipality. This point shall be further explained further on.

Notably, as pointed out by the public respondents, through the Office of the Solicitor General (OSG), the case is not a fit subject for the special civil actions of certiorari and mandamus, as it pertains to the de novo appreciation of factual questions. There is indeed no way to confirm several of Camid's astonishing factual allegations pertaining to the purported continuing operation of Andong in the decades since it was annulled by this Court. No trial court has had the opportunity to ascertain the validity of these factual claims, the appreciation of which is beyond the function of this Court since it is not a trier of facts.

The importance of proper factual ascertainment cannot be gainsaid, especially in light of the legal principles governing the recognition of de facto municipal corporations. It has been opined that municipal corporations may exist by prescription where it is shown that the community has claimed and exercised corporate functions, with the knowledge and acquiescence of the legislature, and without interruption or objection for period long enough to afford title by prescription.[26] These municipal corporations have exercised their powers for a long period without objection on the part of the government that although no charter is in existence, it is presumed that they were duly incorporated in the first place and that their charters had been lost.[27] They are especially common in England, which, as well-worth noting, has existed as a state for over a thousand years. The reason for the development of that rule in England is understandable, since that country was settled long before the Roman conquest by nomadic Celtic tribes, which could have hardly been expected to obtain a municipal charter in the absence of a national legal authority.

In the United States, municipal corporations by prescription are less common, but it has been held that when no charter or act of incorporation of a town can be found, it may be shown to have claimed and exercised the powers of a town with the knowledge and assent of the legislature, and without objection or interruption for so long a period as to furnish evidence of a prescriptive right.[28]

What is clearly essential is a factual demonstration of the continuous exercise by the municipal corporation of its corporate powers, as well as the acquiescence thereto by the other instrumentalities of the state. Camid does not have the opportunity to make an initial factual demonstration of those circumstances before this Court. Indeed, the factual deficiencies aside, Camid's plaint should have undergone the usual administrative gauntlet and, once that was done, should have been filed first with the Court of Appeals, which at least would have had the power to make the necessary factual determinations. Camid's seeming ignorance of the principles of exhaustion of administrative remedies and hierarchy of courts, as well as the concomitant prematurity of the present petition, cannot be countenanced.

It is also difficult to capture the sense and viability of Camid's present action. The assailed issuance is theCertification issued by the DILG. But such Certification does not pretend to bear the authority to create or revalidate a municipality. Certainly, the annulment of the Certification will really do nothing to serve Camid's ultimate cause - the recognition of Andong. Neither does the Certification even expressly refute the claim that Andong still exists, as there is nothing in the document that comments on the present status of Andong. Perhaps the Certification is assailed before this Court if only to present an actual issuance, rather than a long-standing habit or pattern of action that can be annulled through the special civil action of certiorari. Still, the relation of the Certification to Camid's central argument is forlornly strained.

These disquisitions aside, the central issue remains whether a municipality whose creation by executive fiat was previously voided by this Court may attain recognition in the absence of any curative or reimplementing statute. Apparently, the question has never been decided before, San Narciso and its kindred cases pertaining as they did to municipalities whose bases of creation were dubious yet were never judicially nullified. The effect of Section 442(d) of the Local Government Code on municipalities such as Andong warrants explanation. Besides, the residents of Andong who belabor under the impression that their town still exists, much less those who may comport themselves as the municipality's 'Interim Government, would be well served by a rude awakening.

The Court can employ a simplistic approach in resolving the substantive aspect of the petition, merely by pointing out that the Municipality of Andong never existed.[29] Executive Order No. 107, which established Andong, was declared 'null and void ab initio in 1965 by this Court in Pelaez, along with thirty-three (33) other executive orders. The phrase 'ab initio means 'from the beginning,[30] at first,[31] from the inception.[32] Pelaez was never reversed by this Court but rather it was expressly affirmed in the cases of Municipality of San Joaquin v. Siva, [33] Municipality of Malabang v. Benito, [34] and Municipality of Kapalong v. Moya.[35] No subsequent ruling by this Court declared Pelaez as overturned or inoperative. No subsequent legislation has been passed since 1965 creating a Municipality of Andong. Given these facts, there is hardly any reason to elaborate why Andong does not exist as a duly constituted municipality.

This ratiocination does not admit to patent legal errors and has the additional virtue of blessed austerity. Still, its sweeping adoption may not be advisedly appropriate in light of Section 442(d) of the Local Government Code and our ruling in Municipality of San Narciso, both of which admit to the possibility of de facto municipal corporations.

To understand the applicability of Municipality of San Narciso and Section 442(b) of the Local Government Code to the situation of Andong, it is necessary again to consider the ramifications of our decision in Pelaez.

The eminent legal doctrine enunciated in Pelaez was that the President was then, and still is, not empowered to create municipalities through executive issuances. The Court therein recognized 'that the President has, for many years, issued executive orders creating municipal corporations, and that the same have been organized and in actual operation . . . .[36] However, the Court ultimately nullified only those thirty-three (33) municipalities, including Andong, created during the period from 4 September to 29 October 1964 whose existence petitioner Vice-President Pelaez had specifically assailed before this Court. No pronouncement was made as to the other municipalities which had been previously created by the President in the exercise of power the Court deemed unlawful.

Two years after Pelaez was decided, the issue again came to fore in Municipality of San Joaquin v. Siva.[37] The Municipality of Lawigan was created by virtue of Executive Order No. 436 in 1961. Lawigan was not one of the municipalities ordered annulled in Pelaez. A petition for prohibition was filed contesting the legality of the executive order, again on the ground that Section 68 of the Revised Administrative Code was unconstitutional. The trial court dismissed the petition, but the Supreme Court reversed the ruling and entered a new decision declaring Executive Order No. 436 void ab initio. The Court reasoned without elaboration that the issue had already been squarely taken up and settled in Pelaez which agreed with the argument posed by the challengers to Lawigan's validity.[38]

In the 1969 case of Municipality of Malabang v. Benito,[39] what was challenged is the validity of the constitution of the Municipality of Balabagan in Lanao del Sur, also created by an executive order,[40] and which, similar to Lawigan, was not one of the municipalities annulled in Pelaez. This time, the officials of Balabagan invoked de factostatus as a municipal corporation in order to dissuade the Court from nullifying action. They alleged that its status as a de facto corporation cannot be collaterally attacked but should be inquired into directly in an action for quo warrantoat the instance of the State, and not by a private individual as it was in that case. In response, the Court conceded that an inquiry into the legal existence of a municipality is reserved to the State in a proceeding for quo warranto, but only if the municipal corporation is a de facto corporation.[41]

Ultimately, the Court refused to acknowledge Balabagan as a de facto corporation, even though it had been organized prior to the Court's decision in Pelaez. The Court declared void the executive order

creating Balabagan and restrained its municipal officials from performing their official duties and functions.[42] It cited conflicting American authorities on whether a de facto corporation can exist where the statute or charter creating it is unconstitutional.[43] But the Court's final conclusion was unequivocal that Balabagan was not a de facto corporation.

In the cases where a de facto municipal corporation was recognized as such despite the fact that the statute creating it was later invalidated, the decisions could fairly be made to rest on the consideration that there was some other valid law giving corporate vitality to the organization. Hence, in the case at bar, the mere fact that Balabagan was organized at a time when the statute had not been invalidated cannot conceivably make it a de factocorporation, as, independently of the Administrative Code provision in question, there is no other valid statute to give color of authority to its creation.[44]

The Court did clarify in Malabang that the previous acts done by the municipality in the exercise of its corporate powers were not necessarily a nullity.[45] Camid devotes several pages of his petition in citing this point,[46] yet the relevance of the citation is unclear considering that Camid does not assert the validity of any corporate act of Andong prior to its judicial dissolution. Notwithstanding, the Court in Malabang retained an emphatic attitude as to the unconstitutionality of the power of the President to create municipal corporations by way of presidential promulgations, as authorized under Section 68 of the Revised Administrative Code.

This principle was most recently affirmed in 1988, in Municipality of Kapalong v. Moya.[47] The municipality of Santo Tomas, created by President Carlos P. Garcia, filed a complaint against another municipality, who challenged Santo Tomas's legal personality to institute suit. Again, Santo Tomas had not been expressly nullified by prior judicial action, yet the Court refused to recognize its legal existence. The blunt but simple ruling: 'Now then, as ruled in the Pelaez case supra, the President has no power to create a municipality. Since [Santo Tomas] has no legal personality, it can not be a party to any civil action.[48]

Nevertheless, when the Court decided Municipality of San Narciso [49] in 1995, it indicated a shift in the jurisprudential treatment of municipalities created through presidential issuances. The questioned municipality of San Andres, Quezon was created on 20 August 1959 by Executive Order No. 353 issued by President Carlos P. Garcia. Executive Order No. 353 was not one of the thirty-three issuances annulled by Pelaez in 1965. The legal status of the Municipality of San Andres was first challenged only in 1989, through a petition for quo warranto filed with the Regional Trial Court of Gumaca, Quezon, which did cite Pelaez as authority.[50] The RTC dismissed the petition for lack of cause of action, and the petitioners therein elevated the matter to this Court.

In dismissing the petition, the Court delved in the merits of the petition, if only to resolve further doubt on the legal status of San Andres. It noted a circumstance which is not present in the case at barthat San Andres was in existence for nearly thirty (30) years before its legality was challenged. The Court did not declare the executive order creating San Andres null and void. Still, acting on the premise that the said executive order was a complete nullity, the Court noted 'peculiar circumstances' that led to the conclusion that San Andres had attained the unique status of a 'de facto municipal corporation.[51] It noted that Pelaez limited its nullificatory effect only to those executive orders specifically challenged therein, despite the fact that the Court then could have very well extended the decision to invalidate San Andres as well.[52] This statement squarely contradicts Camid's reading of San Narcisothat the creation of San Andres, just like Andong, had been declared a complete nullity on the same ground of unconstitutional delegation of legislative power found in Pelaez.[53]

The Court also considered the applicability of Section 442(d)[54] of the Local Government Code of 1991. It clarified the implication of the provision as follows:

Equally significant is Section 442(d) of the Local Government Code to the effect that municipal districts "organized pursuant to presidential issuances or executive orders and which have their respective sets of elective municipal officials holding office at the time of the effectivity of (the) Code shall henceforth be considered as regular municipalities." No pretension of unconstitutionality per se of Section 442(d) of the Local Government Code is preferred. It is doubtful whether such a pretext, even if made, would succeed. The power to create political subdivisions is a function of the legislature. Congress did just that when it has incorporated Section 442(d) in the Code. Curative laws, which in

essence are retrospective, and aimed at giving "validity to acts done that would have been invalid under existing laws, as if existing laws have been complied with," are validly accepted in this jurisdiction, subject to the usual qualification against impairment of vested rights. (Emphasis supplied)[55]

The holding in San Narciso was subsequently affirmed in Municipality of Candijay v. Court of Appeals [56] and Municipality of Jimenez v. Baz [57] In Candijay, the juridical personality of the Municipality of Alicia, created in a 1949 executive order, was attacked only beginning in 1984. Pelaez was again invoked in support of the challenge, but the Court refused to invalidate the municipality, citing San Narciso at length. The Court noted that the situation of the Municipality of Alicia was strikingly similar to that in San Narciso; hence, the town should likewise 'benefit from the effects of Section 442(d) of the Local Government Code, and should [be] considered as a regular, de juremunicipality. [58]

The valid existence of Municipality of Sinacaban, created in a 1949 executive order, was among the issues raised inJimenez. The Court, through Justice Mendoza, provided an expert summation of the evolution of the rule.

The principal basis for the view that Sinacaban was not validly created as a municipal corporation is the ruling inPelaez v. Auditor General that the creation of municipal corporations is essentially a legislative matter and therefore the President was without power to create by executive order the Municipality of Sinacaban. The ruling in this case has been reiterated in a number of cases later decided. However, we have since held that where a municipality created as such by executive order is later impliedly recognized and its acts are accorded legal validity, its creation can no longer be questioned. In Municipality of San Narciso, Quezon v. Mendez, Sr., this Court considered the following factors as having validated the creation of a municipal corporation, which, like the Municipality of Sinacaban, was created by executive order of the President before the ruling in Pelaez v. Auditor General: (1) the fact that for nearly 30 years the validity of the creation of the municipality had never been challenged; (2) the fact that following the ruling in Pelaez no quo warranto suit was filed to question the validity of the executive order creating such municipality; and (3) the fact that the municipality was later classified as a fifth class municipality, organized as part of a municipal circuit court and considered part of a legislative district in the Constitution apportioning the seats in the House of Representatives. Above all, it was held that whatever doubt there might be as to the de jure character of the municipality must be deemed to have been put to rest by the Local Government Code of 1991 (R. A. No. 7160), '442(d) of which provides that "municipal districts organized pursuant to presidential issuances or executive orders and which have their respective sets of elective officials holding office at the time of the effectivity of this Code shall henceforth be considered as regular municipalities."

Here, the same factors are present so as to confer on Sinacaban the status of at least a de facto municipal corporation in the sense that its legal existence has been recognized and acquiesced publicly and officially. Sinacaban had been in existence for sixteen years when Pelaez v. Auditor General was decided on December 24, 1965. Yet the validity of E.O. No. 258 creating it had never been questioned. Created in 1949, it was only 40 years later that its existence was questioned and only because it had laid claim to an area that apparently is desired for its revenue. This fact must be underscored because under Rule 66, '16 of the Rules of Court, a quo warranto suit against a corporation for forfeiture of its charter must be commenced within five (5) years from the time the act complained of was done or committed. On the contrary, the State and even the Municipality of Jimenez itself have recognized Sinacaban's corporate existence. Under Administrative Order No. 33 dated June 13, 1978 of this Court, as reiterated by '31 of the Judiciary Reorganization Act of 1980 (B. P. Blg. 129), Sinacaban is constituted part of a municipal circuit for purposes of the establishment of Municipal Circuit Trial Courts in the country. For its part, Jimenez had earlier recognized Sinacaban in 1950 by entering into an agreement with it regarding their common boundary. The agreement was embodied in Resolution No. 77 of the Provincial Board of Misamis Occidental.

Indeed Sinacaban has attained de jure status by virtue of the Ordinance appended to the 1987 Constitution, apportioning legislative districts throughout the country, which considered Sinacaban part of the Second District of Misamis Occidental. Moreover, following the ruling in Municipality of San Narciso, Quezon v. Mendez, Sr., 442(d) of the Local Government Code of 1991 must be deemed to have cured any defect in the creation of Sinacaban.[59]

From this survey of relevant jurisprudence, we can gather the applicable rules. Pelaez and its offspring cases ruled that the President has no power to create municipalities, yet limited its nullificatory effects to the particular municipalities challenged in actual cases before this Court. However, with the promulgation of the Local Government Code in 1991, the legal cloud was lifted over the municipalities similarly created by executive order but not judicially annulled. The de facto status of such municipalities as San Andres, Alicia and Sinacaban was recognized by this Court, and Section 442(b) of the Local Government Code deemed curative whatever legal defects to title these municipalities had labored under.

Is Andong similarly entitled to recognition as a de facto municipal corporation? It is not. There are eminent differences between Andong and municipalities such as San Andres, Alicia and Sinacaban. Most prominent is the fact that the executive order creating Andong was expressly annulled by order of this Court in 1965. If we were to affirm Andong's de facto status by reason of its alleged continued existence despite its nullification, we would in effect be condoning defiance of a valid order of this Court. Court decisions cannot obviously lose their efficacy due to the sheer defiance by the parties aggrieved.

It bears noting that based on Camid's own admissions, Andong does not meet the requisites set forth by Section 442(d) of the Local Government Code. Section 442(d) requires that in order that the municipality created by executive order may receive recognition, they must 'have their respective set of elective municipal officials holding office at the time of the effectivity of [the Local Government] Code. Camid admits that Andong has never elected its municipal officers at all.[60] This incapacity ties in with the fact that Andong was judicially annulled in 1965. Out of obeisance to our ruling in Pelaez, the national government ceased to recognize the existence of Andong, depriving it of its share of the public funds, and refusing to conduct municipal elections for the void municipality.

The failure to appropriate funds for Andong and the absence of elections in the municipality in the last four decades are eloquent indicia of the non-recognition by the State of the existence of the town. The certifications relied upon by Camid, issued by the DENR-CENRO and the National Statistics Office, can hardly serve the purpose of attesting to Andong's legal efficacy. In fact, both these certifications qualify that they were issued upon the request of Camid, 'to support the restoration or re-operation of the Municipality of Andong, Lanao del Sur,[61] thus obviously conceding that the municipality is at present inoperative.

We may likewise pay attention to the Ordinance appended to the 1987 Constitution, which had also been relied upon in Jimenez and San Narciso. This Ordinance, which apportioned the seats of the House of Representatives to the different legislative districts in the Philippines, enumerates the various municipalities that are encompassed by the various legislative districts. Andong is not listed therein as among the municipalities of Lanao del Sur, or of any other province for that matter.[62] On the other hand, the municipalities of San Andres, Alicia and Sinacaban are mentioned in the Ordinance as part of Quezon,[63] Bohol,[64] and Misamis Occidental[65] respectively.

How about the eighteen (18) municipalities similarly nullified in Pelaez but certified as existing in the DILG Certificationpresented by Camid? The petition fails to mention that subsequent to the ruling in Pelaez, legislation was enacted to reconstitute these municipalities.[66] It is thus not surprising that the DILG certified the existence of these eighteen (18) municipalities, or that these towns are among the municipalities enumerated in the Ordinance appended to the Constitution. Andong has not been similarly reestablished through statute. Clearly then, the fact that there are valid organic statutes passed by legislation recreating these eighteen (18) municipalities is sufficient legal basis to accord a different legal treatment to Andong as against these eighteen (18) other municipalities.

We thus assert the proper purview to Section 442(d) of the Local Government Codethat it does not serve to affirm or reconstitute the judicially dissolved municipalities such as Andong, which had been previously created by presidential issuances or executive orders. The provision affirms the legal personalities only of those municipalities such as San Narciso, Alicia, and Sinacaban, which may have been created using the same infirm legal basis, yet were fortunate enough not to have been judicially annulled. On the other hand, the municipalities judicially dissolved in cases such as Pelaez , San Joaquin, and Malabang, remain inexistent, unless recreated through specific legislative enactments, as done with the eighteen (18) municipalities certified by the DILG. Those municipalities derive their legal

personality not from the presidential issuances or executive orders which originally created them or from Section 442(d), but from the respective legislative statutes which were enacted to revive them.

And what now of Andong and its residents? Certainly, neither Pelaez or this decision has obliterated Andong into a hole on the ground. The legal effect of the nullification of Andong in Pelaez was to revert the constituent barrios of the voided town back into their original municipalities, namely the municipalities of Lumbatan, Butig and Tubaran.[67]These three municipalities subsist to this day as part of Lanao del Sur,[68] and presumably continue to exercise corporate powers over the barrios which once belonged to Andong.

If there is truly a strong impulse calling for the reconstitution of Andong, the solution is through the legislature and not judicial confirmation of void title. If indeed the residents of Andong have, all these years, been governed not by their proper municipal governments but by a ragtag Interim Government, then an expedient political and legislative solution is perhaps necessary. Yet we can hardly sanction the retention of Andong's legal personality solely on the basis of collective amnesia that may have allowed Andong to somehow pretend itself into existence despite its judicial dissolution. Maybe those who insist Andong still exists prefer to remain unperturbed in their blissful ignorance, like the inhabitants of the cave in Plato's famed allegory. But the time has come for the light to seep in, and for the petitioner and like-minded persons to awaken to legal reality.

WHEREFORE, the Petition is DISMISSED for lack of merit. Costs against petitioner.

SO ORDERED.

G.R. No. 104226 August 12, 1993

CONCHITA ROMUALDEZ-YAP, Petitioner, vs. THE CIVIL SERVICE COMMISSION and THE PHILIPPINE NATIONAL BANK, Respondents.

PADILLA, J.:

This is a special civil action for certiorari under Rule 65 of the Rules of Court, assailing Resolution No. 92-201 of the respondent Civil Service Commission, which upheld the petitioner's separation from the Philippine National Bank(PNB) as a result of the abolition of the Fund Transfer Department pursuant to a reorganization under Executive Order No. 80, dated 3 December 1986. chanroblesvirtualawlibrary chanrobles virtual law library

Petitioner Conchita Romualdez-Yap started working with the Philippine National Bank on 20 September 1972 as special assistant with the rank of Second Assistant Manager assigned to the office of the PNB President. After several promotions, she was appointed in 1983 Senior Vice President assigned to the Fund Transfer Department.chanroblesvirtualawlibrary chanrobles virtual law library

Starting 1 April 1986 up to 20 February 1987, petitioner filed several applications for leave of absence (due to medical reasons) which were duly approved. While she was on leave, Executive Order No. 80 (Revised Charter of the PNB) was approved on 3 December 1986. Said executive order authorized the restructure/reorganization and rehabilitation of PNB. Pursuant to the reorganization plan, the Fund Transfer Department was abolished and its functions transferred to the International Department. chanroblesvirtualawlibrary chanrobles virtual law

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Consequently, petitioner was notified of her separation from the service in a letter dated 30 January 1987, thus:

Pursuant to the Transitory Provision of the 1986 Revised Charter of the Bank, please be informed that Management has approved your separation from the service effective February 16, 1986. You shall be entitled to the regular benefits allowed under existing law. (emphasis supplied)  chanrobles virtual law library

Please be informed further that under Sec. 37 of the Bank's 1986 Revised Charter, any officer or employee who feels aggrieved by any matter treated above may submit his case to the Civil Service Commission. 1 chanrobles virtual law library

This letter was received by petitioner's secretary at the PNB head office on 16 February 1987. chanroblesvirtualawlibrary chanrobles virtual law library

Petitioner's first recorded appeal to the Civil Service Commission questioning her separation is a letter dated 4 August 1989. Then CSC Chairman Samilo N. Barlongay upheld the validity of her separation from the service in a letter/opinion dated 30 August 1989 (this was allegedly received by petitioner only on 26 February 1990) stating thus:

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It may be mentioned in this connection, that inasmuch as you did not avail of the ERIP/Supplementary Retirement Plans adopted by the PNB in 1986, you have therefore lost your right thereto. Moreover, since you lack the required number of years of service to entitle you to retirement benefits under existing laws, you may be entitled to the return of your GSIS personal contributions. Considering further that you have exhausted all your accumulated leave credits as you went on leave of absence for the period from April 1, 1986 to February 20, 1987, there is no legal or valid basis to entitle you to payment of terminal leave.chanroblesvirtualawlibrary chanrobles virtual law library

Finally, pursuant to Section 16, Article XVIII of the Transitory Provisions of the 1987 Philippine Constitution, you may be entitled to payment of separation subject to auditing rules and regulations. 2

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In her motion for reconsideration with the Civil Service Commission, dated 5 March 1990, questioning Chairman Barlongay's ruling, petitioner claimed:  chanrobles virtual law library

1. The opinion/ruling was not fully supported by the evidence on record;  chanrobles virtual law library

2. Errors of law prejudicial to the interest of the movant have been committed. She argued:

. . . that her separation from the service was illegal and was done in bad faith considering that her termination on February 16, 1986 was made effective prior to the effectivity of Executive Order No. 80 on December 3, 1986, which law authorized the reorganization of the PNB, and even before February 25, 1986, when President Corazon C. Aquino came into power. She further claims that although the notice of termination was dated January 30, 1987 it was only served upon her on February 16, 1987 when the new Constitution which guarantees security of tenure to public employees was already in effect. 3

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. . . the bad faith in her separation from the service in 1987 was evident from the recent restoration of the Fund Transfer Department as a separate and distinct unit from the International Department . . . 4 chanrobles

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Denying the motion for reconsideration, the Civil Service Commission in its aforecited Resolution No. 92-201, dated 30 January, 1992, ruled:

Sec. 33 of EO 80 (1986 Revised Charter of the PNB) provides:  chanrobles virtual law library

Sec. 33. Authority to Reorganize. - In view of reduced operations contemplated under this charter in pursuance of the national policy expressed in the "Whereas" clause hereof, a reorganization of the Bank and a reduction in force are hereby authorized to achieve greater efficiency and economy in operations, including the adoption of a new staffing pattern to suit the reduced operations envisioned. The program of reorganization shall begin immediately after the approval of this Order, and shall be completed within six (6) months and shall be fully implemented within eighteen (18) months thereafter." Clearly; as aforequoted, PNB was authorized to undergo reorganization and to effect a

reduction in force to "achieve greater efficiency and economy in operations". It cannot, be disputed that reduction in force necessitates, among others, the abolition of positions/offices. The records show that prior to its reorganization, PNB originally had 7,537 positions which were reduced to 5,405 after the reorganization. Indeed, 2,132 positions were abolished, that is, the original positions in PNB were reduced by 28%. This reduction in force likewise included the senior officer positions, in PNB, which were reduced, thus:

Positions Incumbents Proposed Position

President 1 1 1Sr. Exec. VP 1 1 0Exec. VP 3 2 2Senior VP 12 11 7Vice Pres. 33 27 15 chanrobles virtual law library

The position of movant Yap (SVP) was one among the original twelve (12) SVP positions. It was one among the five (5) SVP positions which were abolished. In fact, the FTD of which she was then the incumbent SVP, was merged with the International Department to which its functions were closedly related.chanroblesvirtualawlibrary chanrobles virtual law library

It should be noted that as ruled by the Supreme Court in Dario vs. Mison (G.R. NO. 81954):

Reorganizations in this jurisdiction have been regarded as valid provided they are pursued in good faith. As a general rule, a reorganization is carried out in "good faith" if it is for the purpose of economy or to make bureaucracy more efficient. In that event, no dismissal or separation actually occurs because the position itself ceases to exist. And in that case, security of tenure would not be a Chinese Wall. . . . .chanroblesvirtualawlibrary chanrobles virtual law library

. . . Good faith, as a component of a reorganization under a constitutional regime is judged from the facts of each case.

In the instant case, therefore, this Commission is inclined to believe that the reorganization of PNB was done in good faith. For indeed, the reorganization was pursued to achieve economy. It undertook reduction in force as a means to streamline the numbers of the workforce. It was incidental that movant Yap's position was one among those abolished. Movant Yap failed to substantiate her claim by clear and convincing evidence that the abolition of her position was a result of her close identification with the previous regime, being a sister of former First Lady Imelda Romualdez Marcos. This being so, and pursuant to the presumption of regularity in the performance of official functions, the abolition of movant Yap's position should be upheld. PNB, in the instant case, has clearly proved by substantial evidence that its act in terminating the services of some of its employees was done in good faith. 5 chanrobles virtual law library

Overruling her imputation of bad faith, i.e. her separation was illegal because it took effect on 16 February 1986 or even before the promulgation of EO No. 80 on 3 December 1986, the CSC noted that the year "1986" stated in the notice of her separation from the service was a typographical error. PNB submitted documents (p. 6 of Resolution No. 92-201) supporting its stand that the separation actually took effect on 16 February 1987.chanroblesvirtualawlibrary chanrobles virtual law library

On the issue of bad faith as related to the later restoration of the Fund Transfer Department, the subject CSC resolution adds:

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It may be mentioned that the recent restoration of the Fund Transfer Department, actually was a merger of the Fund Transfer Group, the Foreign Remittance Development and Coordinating Unit based on board Resolution No. 60 of March 12, 1991, or after the lapse of over four (4) years from the date it was abolished in 1987. Moreover, the restoration of the Fund Transfer Department and other offices in the PNB was primarily caused by the improved financial capability and present needs of the Bank. This improved financial condition of the PNB is evident from the 1990 Annual Report it submitted. It may be

further stated that the re-established FTD is headed by a Vice President, a position much lower in rank than the former department headed by a Senior Vice President. chanroblesvirtualawlibrary chanrobles virtual law library

Furthermore, it should be noted that granting arguendo that movant Yap's termination from the service was tainted with bad faith, she however, is now barred from assailing the same as she did not seasonably assert her right thereto. Records show that she was separated from PNB on February 16, 1987 and it was only in 1989 or about 2 years thereafter when she brought this matter to this Commission. By her inaction in questioning her termination within a period of one year, she is considered to have acquiesced to her separation from the service and abandoned her right to the position. 6 chanrobles virtual law library

In the present petition before the Court, the following issues are raised:  chanrobles virtual law library

1. Existence of bad faith in the reorganization of the Philippine National Bank resulting in the separation from the service of petitioner.chanroblesvirtualawlibrary chanrobles virtual law library

2. Erroneous application of the Dario v. Mison doctrine vis-a-vis PNB's reorganization.chanroblesvirtualawlibrary chanrobles virtual law library

3. Erroneous application of the one (1) year prescriptive period for quo warranto proceedings in petitioner's case.

Dario v. Mison 7 laid down the requirement of good faith in the reorganization of a government bureau wherein offices are abolished. It says:

. . . Reorganizations in this jurisdiction have been regarded as valid provided they are pursued in good faith. As a general rule, a reorganization is carried out in "good faith" if it is for the purpose of economy or to make bureaucracy more efficient. In that event, no dismissal (in case of dismissal) or separation actually occurs because the position itself ceases to exist. And in that case, security of tenure would not be a Chinese wall. Be that as it may, if the "abolition," which is nothing else but a separation or removal, is done for political reasons or purposely to defeat security of tenure, or otherwise not in good faith, no valid "abolition" takes place and whatever "abolition" is done, is void ab initio. There is an invalid "abolition" as where there is merely a change of nomenclature of positions, or where claims of economy are belied by the existence of ample funds. It is to be stressed that by predisposing a reorganization to the yardstick of good faith, we are not, as a consequence, imposing a "cause" for restructuring. Retrenchment in the course of a reorganization in good faith is still removal "not for cause" if by "cause" we refer to "grounds" or conditions that call for disciplinary action. Good faith, as a component of a reorganization under a constitutional regime, is judged from the facts of each case.

In Petitioner's case, the following instances are cited by her as indicia of bad faith:

1. The abolished department was later restored and the number of senior vice presidents was increased.chanroblesvirtualawlibrary chanrobles virtual law library

2. PNB did not follow the prescribed sequence of separation of employees from the service contained in Rep. Act No. 6656 which is:

Sec. 3. In the separation of personnel pursuant to reorganization, the following order of removal shall be followed:

(a) Casual employees with less than five (5) years of government service;  chanrobles virtual law library

(b) Casual employees with five (5) years or more of government service;  chanrobles virtual law library

(c) Employees holding temporary appointments; and  chanrobles virtual law library

(d) Employees holding permanent appointments: Provided, That those in the same category as enumerated above, who are least qualified in terms of performance and merit shall be laid off first, length of service notwithstanding.

3. Petitioner was not extended preference in appointment to the positions in the new staffing pattern as mandated by Sec. 4 of Rep. Act 6656, her qualification and fitness for new positions were never evaluated or considered in violation of Sec. 27 of P.D. 807 which was incorporated as Sec. 29 Ch. 5 Subtitle A, Book V of the Administrative Code of 1987. chanroblesvirtualawlibrary chanrobles virtual law library

4. Lack of notice and bearing before separation from the service. chanroblesvirtualawlibrary chanrobles virtual law library

5. Petitioner was forced to take a leave of absence and prevented from reporting for work. chanroblesvirtualawlibrary chanrobles virtual law library

6. There is a discrepancy in the date of her separation from the service and the effectivity thereof. chanroblesvirtualawlibrary chanrobles virtual

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7. PNB employees in the Fund Transfer Department identified with her were reassigned or frozen. chanroblesvirtualawlibrary chanrobles virtual law

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8. She is listed as having resigned instead of being separated or dismissed which was what actually happened.chanroblesvirtualawlibrary chanrobles virtual law library

9. The dismissal was politically motivated, she being a sister of Mrs. Imelda Romualdez Marcos, wife of deposed President Ferdinand Marcos.

Executive Order No. 80 conferred upon the PNB the authority to reorganize. The order was issued by then Pres. Corazon Aquino on 3 December 1986 while she was exercising the powers vested in the President of the Philippines by the Freedom Constitution. After 3 December 1986, what remained to be done was the implementation of the reorganization. There is no doubt as to the legal basis for PNB's reorganization. The real question is: was it done in good faith, tested by the Dario v. Mison doctrine? chanrobles virtual law

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To start with it is almost absurd for petitioner to insist that her termination from the service was antedated to 16 February 1986. At that time, the reorganization of PNB had not even been conceived. In most of PNB's pleadings, it has documented and supported its stand that the year of petitioner's separation is 1987 not 1986. The antedating of the termination date, aside from being clearly a typographical error, is a periphernal issue. The real issue is existence of bad faith consisting of tangible bureaucratic/management pressures exerted to ease her out of office. Bad faith has been defined as a state of mind affirmatively operating with furtive design or with some motive of self interest or ill will or for an ulterior purpose. 8 It is the performance of an act with the knowledge that the actor is violating the fundamental law or right, even without willful intent to injure or purposive malice to perpetrate a damnifying harm. 9

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PNB's reorganization, to repeat, was by virtue of a valid law. At the time of reorganization, due to the critical financial situation of the bank, departments, positions and functions were abolished or merged. The abolition of the Fund Transfer Department (FTD) was deemed necessary. This, to the Court's mind, was a management prerogative exercised pursuant to a business judgment. At this point, a distinction can be made in ruling on the validity of a reorganization between a government bureau or office performing constituent functions (like the Customs) and a government-owned or controlled corporation performing ministrant functions (like the PNB). chanroblesvirtualawlibrary chanrobles virtual law library

Constituent function are those which constitute the very bonds of society and are compulsory in nature; ministrant functions are those undertaken by way of advancing the general interests of society, and are merely optional. Commercial or universal banking is, ideally, not a governmental but a private sector, endeavor. It is an optional function of government.

. . . The principles determining whether or not a government shall exercise certain of these optional functions are: (1) that a government should do for the public welfare those things which private capital would not naturally undertake and (2) that a government should do those things which by its very,

nature it is better equipped to administer for the public welfare than is any private individual or group of individuals (Malcolm, The Government of the Philippine Islands, pp. 19-20) chanrobles virtual law library

From the above we may infer that, strictly speaking, there are functions which our government is required to exercise to promote its objectives as expressed in our Constitution and which are exercised by it as an attribute of sovereignty, and those which it may exercise to promote merely the welfare, progress and prosperity of the people. To this latter class belongs the organization of those corporations owned or controlled by the government to promote certain aspects of the economic life of our people such as the National Coconut Corporation. These are what we call government-owned or controlled corporations which may take on the form of a private enterprise or one organized with powers and formal characteristics of a private corporation under the Corporation Law. (Bacani vs. Nacoco, No, L-9657, November 29, 1956, 100 Phil. 468)

But a reorganization whether in a government bureau performing constituent functions or in a government-owned or controlled corporation performing ministrant functions must meet a common test, the test of good faith. In this connection, the philosophy behind PNB's reorganization is spelled out in the whereas clauses of Executive Order No. 80:

WHEREAS, within the context of the general policy there nevertheless exists a clear role for direct government-participation in the banking system, particularly in servicing the requirements of agriculture, small and medium scale industry, export development, and the government sector. chanroblesvirtualawlibrary chanrobles virtual law library

WHEREAS, in pursuit of this national policy there is need to restructure the government financial institutions, particularly the Philippine National Bank, to achieve a more efficient and effective use of available scarce resources, to improve its viability, and to avoid unfair competition with the private sector, and chanrobles virtual law library

WHEREAS, the reorganization and rehabilitation of the Philippine National Bank into a similar but stronger and more operationally viable bank is an important component of the nationalization programs for both the financial system and the government corporation sector; . . . .

Whether there was a hidden political agenda to persecute petitioner due to her consanguinial relation to Mrs. Imelda Romualdez Marcos, the widow of former President Marcos, is not clearly shown. On the other hand, it is entirely possible that, precisely because of such consanguinial relation, petitioner may have been the object of deferential, if not special treatment under the Marcos regime. It is part of the Filipino culture to extend such deferential, if not special treatment to close relatives of persons in power. Many times this is carried to unwholesome extremes. But a discontinuance of such deferential or special treatment in the wake of a change in government or administration is not bad faith per se. It may be merely putting things in their proper places. chanroblesvirtualawlibrary chanrobles virtual law library

Due to the restructuring - and this is empirically verifiable - PNB became once more a viable banking institution. The restoration of the FTD four years after it was abolished and its functions transferred to the International Department, can be attributed to the bank's growth after reorganizations, thereby negating malice or bad faith in that reorganization. The essence of good faith lies in an honest belief in the validity of one's right. 10 It consists of an honest intention to abstain from taking an unconscionable and unscrupulous advantage of another, its absence should be established by convincing evidence. 11 chanrobles virtual law library

The records also clearly indicate that starting April 1986 to February 1987, petitioner went on leave of absence for medical reasons. While she was not reporting to the office, the bank's reorganization got underway. She continued, however, receiving her salaries, allowances, emoluments, honoraria and fees up to March 1987. Employees who were affected by the reorganization had the option to avail of the bank's Separation Benefits Plan/Early Retirement Plan (SBP/ERIP). Petitioner opted not to avail of such plan and instead submitted to the result of the bank's ongoing reorganization and management's discretion. If petitioner had the desire for continued employment with the bank, she could have asserted it for management's consideration. There is no proof on record that she affirmatively expressed willingness to be employed. Since she cannot rebut the CSC finding that her earliest appeal was made on 4 August 1989, there is no reason for this Court to hold that she did not sleep on her rights. On the contrary, her present argument that bad faith existed at the time of the abolition of the

FTD because it was restored four years later is a little too late. Who could have predicted in 1986 or 1987 that PNB would be able to rise from its financial crisis and become a viable commercial bank again? The decision to abolish the FTD at the time it was abolished, to repeat, was a business judgment made in good faith.chanroblesvirtualawlibrary chanrobles virtual law library

PNB for its part submits that its reorganization was effected in good faith because -

a) There was not only a perceptible but substantial restructuring of the PNB hierarchy showing reduction of personnel, consolidation of offices and abolition of positions. chanroblesvirtualawlibrary chanrobles virtual law library

b) Two thousand one hundred thirty two (2,132) positions were abolished during the period from February 16, 1986 to January 14, 1987 leaving a lean workforce of five thousand four hundred five (5,405) as of latter date per B.R. No. 34 hereto attached as Annex "R". chanroblesvirtualawlibrary chanrobles virtual law library

c) The number of senior officers, including Senior Vice Presidents, was accordingly reduced.

Another issue raised by petitioner is PNB's alleged non-compliance with the mandate of Sections 2 and 4 of Rep. Act No. 6656. These Sections provide:

Sec. 2. No officer or employee in the career service shall be removed except for a valid cause and after due notice and hearing. A valid cause for removal exists when, pursuant to a bona fide reorganization, a position has been abolished or rendered redundant or there is a need to merge, divide, or consolidate positions in order to meet the exigencies of the service, or other lawful causes allowed by the Civil Service Law. The existence of any or some of the following circumstances may be considered as evidence of bad faith in the removals made as a result of reorganization, giving to a claim for reinstatement or reappointment by an aggrieved party. chanroblesvirtualawlibrary chanrobles virtual law library

(a) Where there is a significant increase in the number of positions in the new staffing pattern of the department or agency concerned;  chanrobles virtual law library

(b) Where an office is abolished and another performing substantially the same functions is created;  chanrobles virtual law

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(c) Where incumbents are replaced by those less qualified in terms of status of appointment, performance and merit; chanrobles virtual law library

(d) Where there is a reclassification of offices in the department or agency concerned and the reclassified offices perform substantially the same functions as the original offices;  chanrobles virtual law library

(e) Where the removal violates the order of separation provided in Section 3 hereof.

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Sec. 4. Officers and employees holding permanent, appointments shall be given preference for appointment to the new position in the approved staffing pattern comparable to their former positions or in case there are not enough comparable positions, to positions next lower in rank. chanroblesvirtualawlibrary chanrobles virtual law library

No new employees shall be taken in until all permanent officers and employees have been appointed, including temporary and casual employees who possess the necessary qualification requirements, among which is the appropriate civil service eligibility, for permanent appointment to positions in the approved staffing pattern, in case there are still positions to be filled, unless such positions are policy-determining, primarily confidential or highly technical in nature.

In the first place, Rep. Act No. 6656 cannot be invoked by petitioner because it took effect on 15 June 1987, or after PNB's reorganization had already been implemented. But assuming, ex gratia

argumenti, that it is applicable here and petitioner must be accorded preferential right to appointment in the bank, PNB in its rejoinder impressively asserts:

Needless to say, there were various committees that were created in the implementation of the organizational restructuring of the Bank based on the foregoing policy guidelines. Each personnel to be retained was evaluated in terms of relative fitness and merit along with the other personnel of the Bank. Thus, when then SVP Federico Pascual was chosen to head the International Department from among other officers of the Bank, including Ms. Yap, his qualifications far exceeded those of the other candidates for the position. chanroblesvirtualawlibrary chanrobles virtual law library

We attach hereto as Annexes "G-1" and "G-2" the service records of Mr. Federico Pascual and Petitioner Ms. Yap, respectively, which clearly show that the qualifications of Mr. Pascual far exceed those of Petitioner Yap. Aside from being a lawyer having been a law graduate from the University of the Philippines, he is also a Bachelor of Arts degree holder from Ateneo de Manila and a Master of Laws graduate o Columbia Law School. He had studied Masteral Arts in Public Administration at the London School of Economics and had undergone extensive seminars since 1974 at the International Department and had been assigned in several foreign branches of the Bank. Before he resigned from the Bank, he held the second highest position of Executive Vice President and served as Acting President of the Bank before the incumbent president, President Gabriel Singson assumed his position.chanroblesvirtualawlibrary chanrobles virtual law library

On the other hand, the service record of Petitioner Yap will show that she only holds a Bachelor of Science in Commerce Degree from Assumption Convent and has undergone only one seminar on Management and Leadersbip Training Program. She entered the Bank service in 1972. (Rollo at pp. 312 to 313)

xxx xxx xxx

The prayer in the petition at bar seeks petitioner's immediate reinstatement to her former position as senior vice president and head of the Fund Transfer Department, or reappointment to a position of comparable or equivalent rank without loss of seniority rights and pay, etc., under the bank's new staffing pattern.chanroblesvirtualawlibrary chanrobles virtual law library

A person claiming to be entitled to a public office or position usurped or unlawfully held or exercised by another may bring an action for quo warranto (Rule 66, Sec. 6, Rules of Court). The petitioner therein must show a clear legal right to the office allegedly held unlawfully by another. 12

 chanrobles virtual law library

An action for quo warranto should be brought within one (1) year after ouster from office; 13 the failure to institute the same within the reglementary period constitutes more than a sufficient basis for its dismissal 14 since it is not proper that the title to a public office be subjected to continued uncertainty . . . 15 An exception to this prescriptive period lies only if the failure to file the action can be attributed to the acts of a responsible government officer and not of the dismissed employee. 16

 chanrobles virtual law library

Measured by the above jurisprudence, petitioner's action may be said to be one for quo warranto, seeking reinstatement to her former position which at present is occupied by another. She cannot invoke De Tavera v. Phil.Tuberculosis Society, Inc., et. al. 17 and contend that there is no claim of usurpation of office, and that quo warrantomay be availed of to assert one's right to an office in the situation obtaining in the case at bar.

Santos v. CA, et. al. 18 and Magno v. PNNC Corp. 19 are invoked by petitioner to illustrate that this action is one for separation without just cause, hence, the prescriptive period is allegedly four (4) years in accordance with Article 1146 of the Civil Code. 20 We do not agree. Petitioner's separation from the service was due to the abolition of her office in implementation of a valid reorganization. This is not the unjustifiable cause which results in injury to the rights of a person contemplated by Article 1146. The abolition of the office was not a whimsical, thoughtless move. It was a thoroughly evaluated action for streamlining functions based on a rehabilitation plan. 21 At the time of the abolition of the Fund Transfer Department in 1986, foreign exchange losses of the bank amounted to P81.1 Million.22 The head of office was a Senior Vice President. At the time of restoration of the department in 1991, it was

headed by a vice president (lower in rank) and showed earnings of P2,620.0 Million. 23 Other departments abolished in 1986 were also subsequently restored. chanroblesvirtualawlibrary chanrobles virtual law library

Restoring petitioner to her previous position with backwages would be unjust enrichment to her, considering that she had abandoned or showed lack of interest in reclaiming the same position when the bank was not yet fully rehabilitated and she only insisted on reinstatement in August 1989 or two (2) years after her alleged unjustified separation. chanroblesvirtualawlibrary chanrobles virtual law library

To those who feel that their unjustified separation from the service is for a cause beyond their control, the aforecitedMagno case teaches:

. . . while We fully recognize the special protection which the Constitution, labor laws, and social legislation accord the workingman, We cannot, however, alter or amend the law on prescription to relieve him of the consequences of his inaction. Vigilantibus, non dormientibus, jura subveniunt (Laws come to the assistance of the vigilant, not of the sleeping). His explanation that he could not have filed the complaint earlier because "he was prevented to do so beyond his control for the simple reason that private respondent have (sic) tried to circumvent the law by merely floating" him is very flimsy and does not even evoke sympathetic consideration, if at all it is proper and necessary. We note that petitioner herein is not an unlettered man; he seems to be educated and assertive of his rights and appears to be familiar with judicial procedures. He filed a motion for extension of time to file the petition and the petition itself without the assistance of counsel. We cannot believe that if indeed he had a valid grievance against PNCC he would not have taken immediate positive steps for its redress.

WHEREFORE, premises considered, the assailed CSC resolution is AFFIRMED. The petition is DISMISSED for failure to show grave abuse of discretion on the part of said CSC in rendering the questioned resolution. No pronouncement as to costs. chanroblesvirtualawlibrary chanrobles virtual law library

SO ORDERED.

G.R. No. 162272 : April 7, 2009

SANTIAGO C. DIVINAGRACIA, Petitioner, vs. CONSOLIDATED BROADCASTING SYSTEM, INC. and PEOPLE'S BROADCASTING SERVICE, INC., Respondents.

D E C I S I O N

TINGA, J.:

Does the National Telecommunications Commission (NTC) have jurisdiction over complaints seeking the cancellation of certificates of public convenience (CPCs) and other licenses it had issued to the holders of duly-issued legislative franchises on the ground that the franchisees had violated the terms of their franchises? The Court, in resolving that question, takes the opportunity to elaborate on the dynamic behind the regulation of broadcast media in the Philippines, particularly the interrelationship between the twin franchise and licensing requirements.

I.

Respondents Consolidated Broadcasting System, Inc. (CBS) and People's Broadcasting Service, Inc. (PBS) were incorporated in 1961 and 1965, respectively. Both are involved in the operation of radio broadcasting services in the Philippines, they being the grantees of legislative franchises by virtue of two laws, Republic Act (R.A.) No. 7477 and R.A. No. 7582. R.A. No. 7477, enacted on 5 May 1992, granted PBS a legislative franchise to construct, install, maintain and operate radio and television stations within the Philippines for a period of 25 years. R.A. No. 7582, enacted on 27 May 1992, extended CBS's previous legislative franchise1 to operate radio stations for another 25 years. The CBS

and PBS radio networks are two of the three networks that comprise the well-known "Bombo Radyo Philippines."2

Section 9 of R.A. No. 7477 and Section 3 of R.A. No. 7582 contain a common provision predicated on the "constitutional mandate to democratize ownership of public utilities."3 The common provision states:

SEC. 9. Democratization of ownership.― In compliance with the constitutional mandate to democratize ownership of public utilities, the herein grantee shall make public offering through the stock exchanges of at least thirty percent (30%) of its common stocks within a period of three (3) years from the date of effectivity of this Act: Provided, That no single person or entity shall be allowed to own more than five percent (5%) of the stock offerings.4

It further appears that following the enactment of these franchise laws, the NTC issued four (4) Provisional Authorities to PBS and six (6) Provisional Authorities to CBS, allowing them to install, operate and maintain various AM and FM broadcast stations in various locations throughout the nation.5 These Provisional Authorities were issued between 1993 to 1998, or after the enactment of R.A. No. 7477 and R.A. No. 7582.

Petitioner Santiago C. Divinagracia6 filed two complaints both dated 1 March 1999 with the NTC, respectively lodged against PBS7 and CBS.8 He alleged that he was "the actual and beneficial owner of Twelve percent (12%) of the shares of stock" of PBS and CBS separately,9 and that despite the provisions in R.A. No. 7477 and R.A. No. 7582 mandating the public offering of at least 30% of the common stocks of PBS and CBS, both entities had failed to make such offering. Thus, Divinagracia commonly argued in his complaints that the failure on the part of PBS and CBS "to comply with the mandate of their legislative franchise is a misuse of the franchise conferred upon it by law and it continues to exercise its franchise in contravention of the law to the detriment of the general public and of complainant who are unable to enjoy the benefits being offered by a publicly listed company."10 He thus prayed for the cancellation of all the Provisional Authorities or CPCs of PBS and CBS on account of the alleged violation of the conditions set therein, as well as in its legislative franchises.11

On 1 August 2000, the NTC issued a consolidated decision dismissing both complaints.12 While the NTC posited that it had full jurisdiction to revoke or cancel a Provisional Authority or CPC for violations or infractions of the terms and conditions embodied therein,13 it held that the complaints actually constituted collateral attacks on the legislative franchises of PBS and CBS since the sole issue for determination was whether the franchisees had violated the mandate to democratize ownership in their respective legislative franchises. The NTC ruled that it was not competent to render a ruling on that issue, the same being more properly the subject of an action for quo warrantoto be commenced by the Solicitor General in the name of the Republic of the Philippines, pursuant to Rule 66 of the Rules of Court.14

After the NTC had denied Divinagracia's motion for reconsideration,15 he filed a petition for review under Rule 43 of the Rules of Court with the Court of Appeals.16 On 18 February 2004, the Court of Appeals rendered a decision17upholding the NTC. The appellate court agreed with the earlier conclusion that the complaints were indeed a collateral attack on the legislative franchises of CBS and PBS and that a quo warranto action was the proper mode to thresh out the issues raised in the complaints.

Hence this petition, which submits as the principal issue, whether the NTC, with its retinue of regulatory powers, is powerless to cancel Provisional Authorities and Certificates of Public Convenience it issued to legislative franchise-holders. That central issue devolves into several narrower arguments, some of which hinge on the authority of the NTC to cancel the very Provisional Authorities and CPCs which it is empowered to issue, as distinguished from the legislative franchise itself, the cancellation of which Divinagracia points out was not the relief he had sought from the NTC. Questions are raised as to whether the complaints did actually constitute a collateral attack on the legislative franchises.

Yet this case ultimately rests to a large degree on fundamentals. Divinagracia's case rotates on the singular thesis that the NTC has the power to cancel Provisional Authorities and CPCs, or in effect, the

power to cancel the licenses that allow broadcast stations to operate. The NTC, in its assailed Decision, expressly admits that it has such power even as it refrained from exercising the same.18 The Court has yet to engage in a deep inquiry into the question of whether the NTC has the power to cancel the operating licenses of entities to whom Congress has issued franchises to operate broadcast stations, especially on account of an alleged violation of the terms of their franchises. This is the opportune time to examine the issue.

II.

To fully understand the scope and dimensions of the regulatory realm of the NTC, it is essential to review the legal background of the regulation process. As operative fact, any person or enterprise which wishes to operate a broadcast radio or television station in the Philippines has to secure a legislative franchise in the form of a law passed by Congress, and thereafter a license to operate from the NTC.

The franchise requirement traces its genesis to Act No. 3846, otherwise known as the Radio Control Act, enacted in 1931.19 Section 1 thereof provided that "[n]o person, firm, company, association or corporation shall construct, install, establish, or operate x x x a radio broadcasting station, without having first obtained a franchise therefor from the National Assembly x x x"20 Section 2 of the law prohibited the construction or installation of any station without a permit granted by the Secretary of Public Works and Communication, and the operation of such station without a license issued by the same Department Secretary.21 The law likewise empowered the Secretary of Public Works and Communication "to regulate the establishment, use, and operation of all radio stations and of all forms of radio communications and transmissions within the Philippine Islands and to issue such rules and regulations as may be necessary."22

Noticeably, our Radio Control Act was enacted a few years after the United States Congress had passed the Radio Act of 1927. American broadcasters themselves had asked their Congress to step in and regulate the radio industry, which was then in its infancy. The absence of government regulation in that market had led to the emergence of hundreds of radio broadcasting stations, each using frequencies of their choice and changing frequencies at will, leading to literal chaos on the airwaves. It was the Radio Act of 1927 which introduced a licensing requirement for American broadcast stations, to be overseen eventually by the Federal Communications Commission (FCC).23

This pre-regulation history of radio broadcast stations illustrates the continuing necessity of a government role in overseeing the broadcast media industry, as opposed to other industries such as print media and the Internet.24Without regulation, the result would be a free-for-all market with rival broadcasters able with impunity to sabotage the use by others of the airwaves.25 Moreover, the airwaves themselves the very medium utilized by broadcast―are by their very nature not susceptible to appropriation, much less be the object of any claim of private or exclusive ownership. No private individual or enterprise has the physical means, acting alone to actualize exclusive ownership and use of a particular frequency. That end, desirable as it is among broadcasters, can only be accomplished if the industry itself is subjected to a regime of government regulation whereby broadcasters receive entitlement to exclusive use of their respective or particular frequencies, with the State correspondingly able by force of law to confine all broadcasters to the use of the frequencies assigned to them.

Still, the dominant jurisprudential rationale for state regulation of broadcast media is more sophisticated than a mere recognition of a need for the orderly administration of the airwaves. After all, a united broadcast industry can theoretically achieve that goal through determined self-regulation. The key basis for regulation is rooted in empiricism - "that broadcast frequencies are a scarce resource whose use could be regulated and rationalized only by the Government." This concept was first introduced in jurisprudence in the U.S. case of Red Lion v. Federal Communications Commission.26

Red Lion enunciated the most comprehensive statement of the necessity of government oversight over broadcast media. The U.S. Supreme Court observed that within years from the introduction of radio broadcasting in the United States, "it became apparent that broadcast frequencies constituted a scarce resource whose use could be regulated and rationalized only by the Government. without government control, the medium would be of little use because of the cacophony of competing voices,

none of which could be clearly and predictably heard." The difficulties posed by spectrum scarcity was concretized by the U.S. High Court in this manner:

Scarcity is not entirely a thing of the past. Advances in technology, such as microwave transmission, have led to more efficient utilization of the frequency spectrum, but uses for that spectrum have also grown apace. Portions of the spectrum must be reserved for vital uses unconnected with human communication, such as radio-navigational aids used by aircraft and vessels. Conflicts have even emerged between such vital functions as defense preparedness and experimentation in methods of averting midair collisions through radio warning devices. "Land mobile services" such as police, ambulance, fire department, public utility, and other communications systems have been occupying an increasingly crowded portion of the frequency spectrum and there are, apart from licensed amateur radio operators' equipment, 5,000,000 transmitters operated on the "citizens' band" which is also increasingly congested. Among the various uses for radio frequency space, including marine, aviation, amateur, military, and common carrier users, there are easily enough claimants to permit use of the whole with an even smaller allocation to broadcast radio and television uses than now exists.(citations omitted)27

After interrelating the premise of scarcity of resources with the First Amendment rights of broadcasters, Red Lionconcluded that government regulation of broadcast media was a necessity:

Where there are substantially more individuals who want to broadcast than there are frequencies to allocate, it is idle to posit an unabridgeable First Amendment right to broadcast comparable to the right of every individual to speak, write, or publish. If 100 persons want broadcast [395 U.S. 367, 389] licenses but there are only 10 frequencies to allocate, all of them may have the same "right" to a license; but if there is to be any effective communication by radio, only a few can be licensed and the rest must be barred from the airwaves. It would be strange if the First Amendment, aimed at protecting and furthering communications, prevented the Government from making radio communication possible by requiring licenses to broadcast and by limiting the number of licenses so as not to overcrowd the spectrum.

This has been the consistent view of the Court. Congress unquestionably has the power to grant and deny licenses and to eliminate existing stations. No one has a First Amendment right to a license or to monopolize a radio frequency; to deny a station license because "the public interest" requires it "is not a denial of free speech."

By the same token, as far as the First Amendment is concerned those who are licensed stand no better than those to whom licenses are refused. A license permits broadcasting, but the licensee has no constitutional right to be the one who holds the license or to monopolize a radio frequency to the exclusion of his fellow citizens. There is nothing in the First Amendment which prevents the Government from requiring a licensee to share his frequency with others and to conduct himself as a proxy or fiduciary with obligations to present those views and voices which are representative of his community and which would otherwise, by necessity, be barred from the airwaves.28

x x x

Rather than confer frequency monopolies on a relatively small number of licensees, in a Nation of 200,000,000, the Government could surely have decreed that each frequency should be shared among all or some of those who wish to use it, each being assigned a portion of the broadcast day or the broadcast week. The ruling and regulations at issue here do not go quite so far. They assert that under specified circumstances, a licensee must offer to make available a reasonable amount of broadcast time to those who have a view different from that which has already been expressed on his station. The expression of a political endorsement, or of a personal attack while dealing with a controversial public issue, simply triggers this time sharing. As we have said, the First Amendment confers no right on licensees to prevent others from broadcasting on "their" frequencies and no right to an unconditional monopoly of a scarce resource which the Government has denied others the right to use.

In terms of constitutional principle, and as enforced sharing of a scarce resource, the personal attack and political editorial rules are indistinguishable from the equal-time provision of §315, a specific enactment of Congress requiring stations to set aside reply time under specified circumstances and to

which the fairness doctrine and these constituent regulations are important complements. That provision, which has been part of the law since 1927, Radio Act of 1927, §18, 44 Stat. 1170, has been held valid by this Court as an obligation of the licensee relieving him of any power in any way to prevent or censor the broadcast, and thus insulating him from liability for defamation. The constitutionality of the statute under the First Amendment was unquestioned.(citations omitted)29

As made clear in Red Lion, the scarcity of radio frequencies made it necessary for the government to step in and allocate frequencies to competing broadcasters. In undertaking that function, the government is impelled to adjudge which of the competing applicants are worthy of frequency allocation. It is through that role that it becomes legally viable for the government to impose its own values and goals through a regulatory regime that extends beyond the assignation of frequencies, notwithstanding the free expression guarantees enjoyed by broadcasters. As the government is put in a position to determine who should be worthy to be accorded the privilege to broadcast from a finite and limited spectrum, it may impose regulations to see to it that broadcasters promote the public good deemed important by the State, and to withdraw that privilege from those who fall short of the standards set in favor of other worthy applicants.

Such conditions are peculiar to broadcast media because of the scarcity of the airwaves. Indeed, any attempt to impose such a regulatory regime on a medium that is not belabored under similar physical conditions, such as print media, will be clearly antithetical to democratic values and the free expression clause. This Court, which has adopted the "scarcity of resources" doctrine in cases such as Telecom. & Broadcast Attys. of the Phils., Inc. v. COMELEC,30emphasized the distinction citing Red Lion:

Petitioners complain that B.P. Blg. 881, §92 singles out radio and television stations to provide free air time. They contend that newspapers and magazines are not similarly required as, in fact, in Philippine Press Institute v. COMELEC we upheld their right to the payment of just compensation for the print space they may provide under §90.

The argument will not bear analysis. It rests on the fallacy that broadcast media are entitled to the same treatment under the free speech guarantee of the Constitution as the print media. There are important differences in the characteristics of the two media, however, which justify their differential treatment for free speech purposes. Because of the physical limitations of the broadcast spectrum, the government must, of necessity, allocate broadcast frequencies to those wishing to use them. There is no similar justification for government allocation and regulation of the print media.

In the allocation of limited resources, relevant conditions may validly be imposed on the grantees or licensees. The reason for this is that, as already noted, the government spends public funds for the allocation and regulation of the broadcast industry, which it does not do in the case of the print media. To require the radio and television broadcast industry to provide free air time for the COMELEC Time is a fair exchange for what the industry gets.31

Other rationales may have emerged as well validating state regulation of broadcast media,32 but the reality of scarce airwaves remains the primary, indisputable and indispensable justification for the government regulatory role. The integration of the scarcity doctrine into the jurisprudence on broadcast media illustrates how the libertarian ideal of the free expression clause may be tempered and balanced by actualities in the real world while preserving the core essence of the constitutional guarantee. Indeed, without government regulation of the broadcast spectrum, the ability of broadcasters to clearly express their views would be inhibited by the anarchy of competition. Since the airwaves themselves are not susceptible to physical appropriation and private ownership, it is but indispensable that the government step in as the guardian of the spectrum.

Reference to the scarcity doctrine is necessary to gain a full understanding of the paradigm that governs the state regulation of broadcast media. That paradigm, as it exists in the United States, is contextually similar to our own, except in one very crucial regard - the dual franchise/license requirements we impose.

III.

Recall that the Radio Control Act specifically required the obtention of a legislative franchise for the operation of a radio station in the Philippines. When the Public Service Act was enacted in 1936, the Public Service Commission (PSC) was vested with jurisdiction over "public services," including over "wire or wireless broadcasting stations."33However, among those specifically exempted from the regulatory reach of the PSC were "radio companies, except with respect to the fixing of rates."34 Thus, following the Radio Control Act, the administrative regulation of "radio companies" remained with the Secretary of Public Works and Communications. It appears that despite the advent of commercial television in the 1950s, no corresponding amendment to either the Radio Control Act or the Public Service Act was passed to reflect that new technology then.

Shortly after the 1972 declaration of martial law, President Marcos issued Presidential Decree (P.D.) No. 1, which allocated to the Board of Communications the authority to issue CPCs for the operation of radio and television broadcasting systems and to grant permits for the use of radio frequencies for such broadcasting systems. In 1974, President Marcos promulgated Presidential Decree No. 576-A, entitled "Regulating the Ownership and Operation of Radio and Television Stations and for other Purposes." Section 6 of that law reads:

Section 6. All franchises, grants, licenses, permits, certificates or other forms of authority to operate radio or television broadcasting systems shall terminate on December 31, 1981. Thereafter, irrespective of any franchise, grants, license, permit, certificate or other forms of authority to operate granted by any office, agency or person, no radio or television station shall be authorized to operated without the authority of the Board of Communications and the Secretary of Public Works and Communications or their successors who have the right and authority to assign to qualified parties frequencies, channels or other means of identifying broadcasting systems; Provided, however, that any conflict over, or disagreement with a decision of the aforementioned authorities may be appealed finally to the Office of the President within fifteen days from the date the decision is received by the party in interest.

A few years later, President Marcos promulgated Executive Order (E.O.) No. 546, establishing among others the National Telecommunications Commission. Section 15 thereof enumerates the various functions of the NTC.

Section 15. Functions of the Commission.― The Commission shall exercise the following functions:

a. Issue Certificate of Public Convenience for the operation of communications utilities and services, radio communications systems, wire or wireless telephone or telegraph systems, radio and television broadcasting system and other similar public utilities;

b. Establish, prescribe and regulate areas of operation of particular operators of public service communications; and determine and prescribe charges or rates pertinent to the operation of such public utility facilities and services except in cases where charges or rates are established by international bodies or associations of which the Philippines is a participating member or by bodies recognized by the Philippine Government as the proper arbiter of such charges or rates;

c. Grant permits for the use of radio frequencies for wireless telephone and telegraph systems and radio communication systems including amateur radio stations and radio and television broadcasting systems;

d. Sub-allocate series of frequencies of bands allocated by the International Telecommunications Union to the specific services;

e. Establish and prescribe rules, regulations, standards, specifications in all cases related to the issued Certificate of Public Convenience and administer and enforce the same;

f. Coordinate and cooperate with government agencies and other entities concerned with any aspect involving communications with a view to continuously improve the communications service in the country;

g. Promulgate such rules and regulations, as public safety and interest may require, to encourage a larger and more effective use of communications, radio and television broadcasting facilities, and to maintain effective competition among private entities in these activities whenever the Commission finds it reasonably feasible;

h. Supervise and inspect the operation of radio stations and telecommunications facilities;

i. Undertake the examination and licensing of radio operators;

j. Undertake, whenever necessary, the registration of radio transmitters and transceivers; and

k. Perform such other functions as may be prescribed by law.

These enactments were considered when in 2003 the Court definitively resolved that the operation of a radio or television station does require a congressional franchise. In Associated Communications & Wireless Services v. NTC,35 the Court took note of the confusion then within the broadcast industry as to whether the franchise requirement first ordained in the 1931 Radio Control Act remained extant given the enactment of P.D. No. 576-A in 1974 and E.O. No. 546 in 1979. Notably, neither law had specifically required legislative franchises for the operation of broadcast stations. Nonetheless, the Court noted that Section 1 of P.D. No. 576-A had expressly referred to the franchise requirement in stating that "[n]o radio station or television channel may obtain a franchise unless it has sufficient capital on the basis of equity for its operation for at least one year. ."36 Section 6 of that law made a similar reference to the franchise requirement.37 From those references, the Court concluded that the franchise requirement under the Radio Control Act was not repealed by P.D. No. 576-A.38

Turning to E.O. No. 546, the Court arrived at a similar conclusion, despite a Department of Justice Opinion stating that the 1979 enactment had dispensed with the congressional franchise requirement. The Court clarified that the 1989 ruling in Albano v. Reyes, to the effect that "franchises issued by Congress are not required before each and every public utility may operate" did not dispense with the franchise requirement insofar as broadcast stations are concerned.

Our ruling in Albano that a congressional franchise is not required before "each and every public utility may operate" should be viewed in its proper light. Where there is a law such as P.D. No. 576-A which requires a franchise for the operation of radio and television stations, that law must be followed until subsequently repealed. As we have earlier shown, however, there is nothing in the subsequent E.O. No. 546 which evinces an intent to dispense with the franchise requirement. In contradistinction with the case at bar, the law applicable in Albano, i.e., E.O. No. 30, did not require a franchise for the Philippine Ports Authority to take over, manage and operate the Manila International Port Complex and undertake the providing of cargo handling and port related services thereat. Similarly, in Philippine Airlines, Inc. v. Civil Aeronautics Board, et al., we ruled that a legislative franchise is not necessary for the operation of domestic air transport because "there is nothing in the law nor in the Constitution which indicates that a legislative franchise is an indispensable requirement for an entity to operate as a domestic air transport operator." Thus, while it is correct to say that specified agencies in the Executive Branch have the power to issue authorization for certain classes of public utilities, this does not mean that the authorization or CPC issued by the NTC dispenses with the requirement of a franchise as this is clearly required under P.D. No. 576-A.39

The Court further observed that Congress itself had accepted it as a given that a legislative franchise is still required to operate a broadcasting station in the Philippines.

That the legislative intent is to continue requiring a franchise for the operation of radio and television broadcasting stations is clear from the franchises granted by Congress after the effectivity of E.O. No. 546 in 1979 for the operation of radio and television stations. Among these are: (1) R.A. No. 9131 dated April 24, 2001, entitled "An Act Granting the Iddes Broadcast Group, Inc., a Franchise to Construct, Install, Establish, Operate and Maintain Radio and Television Broadcasting Stations in the Philippines"; (2) R.A. No. 9148 dated July 31, 2001, entitled "An Act Granting the Hypersonic Broadcasting Center, Inc., a Franchise to Construct, Install, Establish, Operate and Maintain Radio Broadcasting Stations in the Philippines;" and (3) R.A. No. 7678 dated February 17, 1994, entitled "An

Act Granting the Digital Telecommunication Philippines, Incorporated, a Franchise to Install, Operate and Maintain Telecommunications Systems Throughout the Philippines." All three franchises require the grantees to secure a CPCN/license/permit to construct and operate their stations/systems. Likewise, the Tax Reform Act of 1997 provides in Section 119 for tax on franchise of radio and/or television broadcasting companies x x x 40

Associated Communications makes clear that presently broadcast stations are still required to obtain a legislative franchise, as they have been so since the passage of the Radio Control Act in 1931. By virtue of this requirement, the broadcast industry falls within the ambit of Section 11, Article XII of the 1987 Constitution, the one constitutional provision

concerned with the grant of franchises in the Philippines.41 The requirement of a legislative franchise likewise differentiates the Philippine broadcast industry from that in America, where there is no need to secure a franchise from the U.S. Congress.

It is thus clear that the operators of broadcast stations in the Philippines must secure a legislative franchise, a requirement imposed by the Radio Control Act of 1931 and accommodated under the 1987 Constitution. At the same time, the Court in Associated Communications referred to another form of "permission" required of broadcast stations, that is the CPC issued by the NTC. What is the source of such requirement?

The Radio Control Act had also obliged radio broadcast stations to secure a permit from the Secretary of Commerce and Industry42 prior to the construction or installation of any station.43 Said Department Secretary was also empowered to regulate "the establishment, use and operation of all radio stations and of all forms of radio communications and

transmission within the Philippines."44 Among the specific powers granted to the Secretary over radio stations are the approval or disapproval of any application for the construction, installation, establishment or operation of a radio station45 and the approval or disapproval of any application for renewal of station or operation license.46

As earlier noted, radio broadcasting companies were exempted from the jurisdiction of the defunct Public Service Commission except with respect to their rates; thus, they did not fall within the same regulatory regime as other public services, the regime which was characterized by the need for CPC or CPCN. However, following the Radio Control Act, it became clear that radio broadcast companies need to obtain a similar license from the government in order to operate, at that time from the Department of Public Works and Communications.

Then, as earlier noted, in 1972, President Marcos through P.D. No. 1, transferred to the Board of Communications the function of issuing CPCs for the operation of radio and television broadcasting systems, as well as the granting of permits for the use of radio frequencies for such broadcasting systems. With the creation of the NTC, through E.O. No. 546 in 1979, that agency was vested with the power to "[i]ssue certificate[s] of public convenience for the operation of. radio and television broadcasting system[s]."47 That power remains extant and undisputed to date.

This much thus is clear. Broadcast and television stations are required to obtain a legislative franchise, a requirement imposed by the Radio Control Act and affirmed by our ruling in Associated Broadcasting. After securing their legislative franchises, stations are required to obtain CPCs from the NTC before they can operate their radio or television broadcasting systems. Such requirement while traceable also to the Radio Control Act, currently finds its basis in E.O. No. 546, the law establishing the NTC.

From these same legal premises, the next and most critical question is whether the NTC has the power to cancel the CPCs it has issued to legislative franchisees.

IV.

The complexities of our dual franchise/license regime for broadcast media should be understood within the context of separation of powers. The right of a particular entity to broadcast over the airwaves is

established by law -i.e., the legislative franchise - and determined by Congress, the branch of government tasked with the creation of rights and obligations. As with all other laws passed by Congress, the function of the executive branch of government, to which the NTC belongs, is the implementation of the law. In broad theory, the legal obligation of the NTC once Congress has established a legislative franchise for a broadcast media station is to facilitate the operation by the franchisee of its broadcast stations. However, since the public administration of the airwaves is a requisite for the operation of a franchise and is moreover a highly technical function, Congress has delegated to the NTC the task of administration over the broadcast spectrum, including the determination of available bandwidths and the allocation of such available bandwidths among the various legislative franchisees. The licensing power of the NTC thus arises from the necessary delegation by Congress of legislative power geared towards the orderly exercise by franchisees of the rights granted them by Congress.

Congress may very well in its wisdom impose additional obligations on the various franchisees and accordingly delegate to the NTC the power to ensure that the broadcast stations comply with their obligations under the law. Because broadcast media enjoys a lesser degree of free expression protection as compared to their counterparts in print, these legislative restrictions are generally permissible under the Constitution. Yet no enactment of Congress may contravene the Constitution and its Bill of Rights; hence, whatever restrictions are imposed by Congress on broadcast media franchisees remain susceptible to judicial review and analysis under the jurisprudential framework for scrutiny of free expression cases involving the broadcast media.

The restrictions enacted by Congress on broadcast media franchisees have to pass the mettle of constitutionality. On the other hand, the restrictions imposed by an administrative agency such as the NTC on broadcast media franchisees will have to pass not only the test of constitutionality, but also the test of authority and legitimacy, i.e., whether such restrictions have been imposed in the exercise of duly delegated legislative powers from Congress. If the restriction or sanction imposed by the administrative agency cannot trace its origin from legislative delegation, whether it is by virtue of a specific grant or from valid delegation of rule-making power to the administrative agency, then the action of such administrative agency cannot be sustained. The life and authority of an administrative agency emanates solely from an Act of Congress, and its faculties confined within the parameters set by the legislative branch of government.

We earlier replicated the various functions of the NTC, as established by E.O. No. 546. One can readily notice that even as the NTC is vested with the power to issue CPCs to broadcast stations, it is not expressly vested with the power to cancel such CPCs, or otherwise empowered to prevent broadcast stations with duly issued franchises and CPCs from operating radio or television stations.

In contrast, when the Radio Control Act of 1931 maintained a similar requirement for radio stations to obtain a license from a government official (the Secretary of Commerce and Industry), it similarly empowered the government, through the Secretary of Public Works and Communications, to suspend or revoke such license, as indicated in Section 3(m):

Section 3. The Secretary of Public Works and Communications is hereby empowered, to regulate the construction or manufacture, possession, control, sale and transfer of radio transmitters or transceivers (combination transmitter-receiver) and the establishment, use, the operation of all radio stations and of all form of radio communications and transmissions within the Philippines. In addition to the above he shall have the following specific powers and duties:

(m) He may, at his direction bring criminal action against violators of the radio laws or the regulations and confiscate the radio apparatus in case of illegal operation; or simply suspend or revoke the offender's station or operator licenses or refuse to renew such licenses; or just reprimand and warn the offenders;48

Section 3(m) begets the question - did the NTC retain the power granted in 1931 to the Secretary of Public Works and Communications to "x x x suspend or revoke the offender's station or operator licenses or refuse to renew such licenses"? We earlier adverted to the statutory history. The enactment of the Public Service Act in 1936 did not deprive the Secretary of regulatory jurisdiction over radio

stations, which included the power to impose fines. In fact, the Public Service Commission was precluded from exercising such jurisdiction, except with respect to the fixing of rates.

Then, in 1972, the regulatory authority over broadcast media was transferred to the Board of Communications by virtue of P. D. No. 1, which adopted, approved, and made as part of the law of the land the Integrated Reorganization Plan which was prepared by the Commission on Reorganization.49 Among the cabinet departments affected by the plan was the Department of Public Works and Communications, which was now renamed the Department of Public Works, Transportation and Communication.50 New regulatory boards under the administrative supervision of the Department were created, including the Board of Communications.51

The functions of the Board of Communications were enumerated in Part X, Chapter I, Article III, Sec. 5 of the Integrated Reorganization Plan.52 What is noticeably missing from these enumerated functions of the Board of Communications is the power to revoke or cancel CPCs, even as the Board was vested the power to issue the same. That same pattern held true in 1976, when the Board of Communications was abolished by E.O. No. 546.53 Said executive order, promulgated by then President Marcos in the exercise of his legislative powers, created the NTC but likewise withheld from it the authority to cancel licenses and CPCs, even as it was empowered to issue CPCs. Given the very specific functions allocated by law to the NTC, it would be very difficult to recognize any intent to allocate to the Commission such regulatory functions previously granted to the Secretary of Public Works and Communications, but not included in the exhaustive list of functions enumerated in Section 15.

Certainly, petitioner fails to point to any provision of E.O. No. 546 authorizing the NTC to cancel licenses. Neither does he cite any provision under P.D. No. 1 or the Radio Control Act, even if Section 3(m) of the latter law provides at least, the starting point of a fair argument. Instead, petitioner relies on the power granted to the Public Service Commission to revoke CPCs or CPCNs under Section 16(m) of the Public Service Act.54 That argument has been irrefragably refuted by Section 14 of the Public Service Act, and by jurisprudence, most especially RCPI v. NTC.55 As earlier noted, at no time did radio companies fall under the jurisdiction of the Public Service Commission as they were expressly excluded from its mandate under Section 14. In addition, the Court ruled in RCPI that since radio companies, including broadcast stations and telegraphic agencies, were never under the jurisdiction of the Public Service Commission except as to rate-fixing, that Commission's authority to impose fines did not carry over to the NTC even while the other regulatory agencies that emanated from the Commission did retain the previous authority their predecessor had exercised.56 No provision in the Public Service Act thus can be relied upon by the petitioner to claim that the NTC has the authority to cancel CPCs or licenses.

It is still evident that E.O. No. 546 provides no explicit basis to assert that the NTC has the power to cancel the licenses or CPCs it has duly issued, even as the government office previously tasked with the regulation of radio stations, the Secretary of Public Works and Communications, previously possessed such power by express mandate of law. In order to sustain petitioner's premise, the Court will be unable to rely on an unequivocally current and extant provision of law that justifies the NTC's power to cancel CPCs. Petitioner suggests that since the NTC has the power to issue CPCs, it necessarily has the power to revoke the same. One might also argue that through the general rule-making power of the NTC, we can discern a right of the NTC to cancel CPCs.

We must be mindful that the issue for resolution is not a run-of-the-mill matter which would be settled with ease with the application of the principles of statutory construction. It is at this juncture that the constitutional implications of this case must ascend to preeminence.

A.

It is beyond question that respondents, as with all other radio and television broadcast stations, find shelter in the Bill of Rights, particularly Section 3, Article III of the Constitution. At the same time, as we have labored earlier to point out, broadcast media stands, by reason of the conditions of scarcity, within a different tier of protection from print media, which unlike broadcast, does not have any regulatory interaction with the government during its operation.

Still, the fact that state regulation of broadcast media is constitutionally justified does not mean that its practitioners are precluded from invoking Section 3, Article III of the Constitution in their behalf. Far from it. Our democratic way of life is actualized by the existence of a free press, whether print media or broadcast media. As with print media, free expression through broadcast media is protected from prior restraint or subsequent punishment. The franchise and licensing requirements are mainly impositions of the laws of physics which would stand to periodic reassessment as technology advances. The science of today renders state regulation as a necessity, yet this should not encumber the courts from accommodating greater freedoms to broadcast media when doing so would not interfere with the existing legitimate state interests in regulating the industry.

In FCC v. League of Women Voters of California,57 the U.S. Supreme Court reviewed a law prohibiting noncommercial broadcast stations that received funding from a public corporation from "engaging in editorializing." The U.S. Supreme Court acknowledged the differentiated First Amendment standard of review that applied to broadcast media. Still, it struck down the restriction, holding that "[the] regulation impermissibly sweeps within its prohibition a wide range of speech by wholly private stations on topics that do not take a directly partisan stand or that have nothing whatever to do with federal, state, or local government."58 We are similarly able to maintain fidelity to the fundamental rights of broadcasters even while upholding the rationale behind the regulatory regime governing them.

Should petitioner's position that the NTC has the power to cancel CPCs or licenses it has issued to broadcast stations although they are in the first place empowered by their respective franchise to exercise their rights to free expression and as members of a free press, be adopted broadcast media would be encumbered by another layer of state restrictions. As things stand, they are already required to secure a franchise from Congress and a CPC from the NTC in order to operate. Upon operation, they are obliged to comply with the various regulatory issuances of the NTC, which has the power to impose fees and fines and other mandates it may deem fit to prescribe in the exercise of its rule-making power.

The fact that broadcast media already labors under this concededly valid regulatory framework necessarily creates inhibitions on its practitioners as they operate on a daily basis. Newspapers are able to print out their daily editions without fear that a government agency such as the NTC will be able to suspend their publication or fine them based on their content. Broadcast stations do already operate with that possibility in mind, and that circumstance ineluctably restrains its content, notwithstanding the constitutional right to free expression. However, the cancellation of a CPC or license to operate of a broadcast station, if we recognize that possibility, is essentially a death sentence, the most drastic means to inhibit a broadcast media practitioner from exercising the constitutional right to free speech, expression and of the press.

This judicial philosophy aligns well with the preferred mode of scrutiny in the analysis of cases with dimensions of the right to free expression. When confronted with laws dealing with freedom of the mind or restricting the political process, of laws dealing with the regulation of speech, gender, or race as well as other fundamental rights as expansion from its earlier applications to equal protection, the Court has deemed it appropriate to apply "strict scrutiny" when assessing the laws involved or the legal arguments pursued that would diminish the efficacy of such constitutional right. The assumed authority of the NTC to cancel CPCs or licenses, if sustained, will create a permanent atmosphere of a less free right to express on the part of broadcast media. So that argument could be sustained, it will have to withstand the strict scrutiny from this Court.

Strict scrutiny entails that the presumed law or policy must be justified by a compelling state or government interest, that such law or policy must be narrowly tailored to achieve that goal or interest, and that the law or policy must be the least restrictive means for achieving that interest. It is through that lens that we examine petitioner's premise that the NTC has the authority to cancel licenses of broadcast franchisees.

B.

In analyzing the compelling government interest that may justify the investiture of authority on the NTC advocated by petitioner, we cannot ignore the interest of the State as expressed in the respective

legislative franchises of the petitioner, R.A. No. 7477 and R. A. Act No. 7582. Since legislative franchises are extended through statutes, they should receive recognition as the ultimate expression of State policy. What the legislative franchises of respondents express is that the Congress, after due debate and deliberation, declares it as State policy that respondents should have the right to operate broadcast stations. The President of the Philippines, by affixing his signature to the law, concurs in such State policy.

Allowing the NTC to countermand State policy by revoking respondent's vested legal right to operate broadcast stations unduly gives to a mere administrative agency veto power over the implementation of the law and the enforcement of especially vested legal rights. That concern would not arise if Congress had similarly empowered the NTC with the power to revoke a franchisee's right to operate broadcast stations. But as earlier stated, there is no such expression in the law, and by presuming such right the Court will be acting contrary to the stated State interest as expressed in respondents' legislative franchises.

If we examine the particular franchises of respondents, it is readily apparent that Congress has especially invested the NTC with certain powers with respect to their broadcast operations. Both R.A. No. 747759 and R.A. No. 758260require the grantee "to secure from the [NTC] the appropriate permits and licenses for its stations," barring the private respondents from "using any frequency in the radio spectrum without having been authorized by the [NTC]." At the same time, both laws provided that "[the NTC], however, shall not unreasonably withhold or delay the grant of any such authority."

An important proviso is stipulated in the legislative franchises, particularly under Section 5 of R.A. No. 7477 and Section 3 of R.A. No. 7582, in relation to Section 11 of R.A. No. 3902.

Section 5. Right of Government. ― A special right is hereby reserved to the President of the Philippines, in times of rebellion, public peril, calamity, emergency, disaster or disturbance of peace and order, to temporarily take over and operate the stations of the grantee, temporarily suspend the operation of any stations in the interest of public safety, security and public welfare, or authorize the temporary use and operation thereof by any agency of the Government, upon due compensation to the grantee, for the use of said stations during the period when they shall be so operated.

The provision authorizes the President of the Philippines to exercise considerable infringements on the right of the franchisees to operate their enterprises and the right to free expression. Such authority finds corollary constitutional justification as well under Section 17, Article XII, which allows the State "in times of national emergency, when the public interest so requires x x x during the emergency and under reasonable terms prescribed by it, temporarily take over or direct the operation of any privately-owned public utility or business affected with public interest." We do not doubt that the President or the State can exercise such authority through the NTC, which remains an agency within the executive branch of government, but such can be exercised only under limited and rather drastic circumstances. They still do not vest in the NTC the broad authority to cancel licenses and permits.

These provisions granting special rights to the President in times of emergency are incorporated in our understanding of the legislated state policy with respect to the operation by private respondents of their legislative franchises. There are restrictions to the operation of such franchises, and when these restrictions are indeed exercised there still may be cause for the courts to review whether said limitations are justified despite Section 3, Article I of the Constitution. At the same time, the state policy as embodied in these franchises is to restrict the government's ability to impair the freedom to broadcast of the stations only upon the occurrence of national emergencies or events that compromise the national security.

It should be further noted that even the aforequoted provision does not authorize the President or the government to cancel the licenses of the respondents. The temporary nature of the takeover or closure of the station is emphasized in the provision. That fact further disengages the provision from any sense that such delegated authority can be the source of a broad ruling affirming the right of the NTC to cancel the licenses of franchisees.

With the legislated state policy strongly favoring the unimpeded operation of the franchisee's stations, it becomes even more difficult to discern what compelling State interest may be fulfilled in ceding to

the NTC the general power to cancel the franchisee's CPC's or licenses absent explicit statutory authorization. This absence of a compelling state interest strongly disfavors petitioner's cause.

C.

Now, we shall tackle jointly whether a law or policy allowing the NTC to cancel CPCs or licenses is to be narrowly tailored to achieve that requisite compelling State goal or interest, and whether such a law or policy is the least restrictive means for achieving that interest. We addressed earlier the difficulty of envisioning the compelling State interest in granting the NTC such authority. But let us assume for argument's sake, that relieving the injury complained off by petitioner - the failure of private respondents to open up ownership through the initial public offering mandated by law - is a compelling enough State interest to allow the NTC to extend consequences by canceling the licenses or CPCs of the erring franchisee.

There is in fact a more appropriate, more narrowly-tailored and least restrictive remedy that is afforded by the law. Such remedy is that adverted to by the NTC and the Court of Appeals - the resort to quo warranto proceedings under Rule 66 of the Rules of Court.

Under Section 1 of Rule 66, "an action for the usurpation of a public office, position or franchise may be brought in the name of the Republic of the Philippines against a person who usurps, intrudes into, or unlawfully holds or exercises public office, position or franchise."61 Even while the action is maintained in the name of the Republic62 , the Solicitor General or a public prosecutor is obliged to commence such action upon complaint, and upon good reason to believe that any case specified under Section 1 of Rule 66 can be established by proof.63

The special civil action of quo warranto is a prerogative writ by which the Government can call upon any person to show by what warrant he holds a public office or exercises a public franchise.64 It is settled that "[t]he determination of the right to the exercise of a franchise, or whether the right to enjoy such privilege has been forfeited by non-user, is more properly the subject of the prerogative writ of quo warranto, the right to assert which, as a rule, belongs to the State 'upon complaint or otherwise,' the reason being that the abuse of a franchise is a public wrong and not a private injury."65 A forfeiture of a franchise will have to be declared in a direct proceeding for the purpose brought by the State because a franchise is granted by law and its unlawful exercise is primarily a concern of Government.66 Quo warranto is specifically available as a remedy if it is thought that a government corporation has offended against its corporate charter or misused its franchise.67

The Court of Appeals correctly noted that in PLDT v. NTC,68 the Court had cited quo warranto as the appropriate recourse with respect to an allegation by petitioner therein that a rival telecommunications competitor had failed to construct its radio system within the ten (10) years from approval of its franchise, as mandated by its legislative franchise.69 It is beyond dispute that quo warranto exists as an available and appropriate remedy against the wrong imputed on private respondents.

Petitioners argue that since their prayer involves the cancellation of the provisional authority and CPCs, and not the legislative franchise, then quo warranto fails as a remedy. The argument is artificial. The authority of the franchisee to engage in broadcast operations is derived in the legislative mandate. To cancel the provisional authority or the CPC is, in effect, to cancel the franchise or otherwise prevent its exercise. By law, the NTC is incapacitated to frustrate such mandate by unduly withholding or canceling the provisional authority or the CPC for reasons other than the orderly administration of the frequencies in the radio spectrum.

What should occur instead is the converse. If the courts conclude that private respondents have violated the terms of their franchise and thus issue the writs of quo warranto against them, then the NTC is obliged to cancel any existing licenses and CPCs since these permits draw strength from the possession of a valid franchise. If the point has not already been made clear, then licenses issued by the NTC such as CPCs and provisional authorities are junior to the legislative franchise enacted by Congress. The licensing authority of the NTC is not on equal footing with the franchising authority of the State through Congress. The issuance of licenses by the NTC implements the legislative franchises established by Congress, in the same manner that the executive branch implements the laws of

Congress rather than creates its own laws. And similar to the inability of the executive branch to prevent the implementation of laws by Congress, the NTC cannot, without clear and proper delegation by Congress, prevent the exercise of a legislative franchise by withholding or canceling the licenses of the franchisee.

And the role of the courts, through quo warranto proceedings, neatly complements the traditional separation of powers that come to bear in our analysis. The courts are entrusted with the adjudication of the legal status of persons, the final arbiter of their rights and obligations under law. The question of whether a franchisee is in breach of the franchise specially enacted for it by Congress is one inherently suited to a court of law, and not for an administrative agency, much less one to which no such function has been delegated by Congress. In the same way that availability of judicial review over laws does not preclude Congress from undertaking its own remedial measures by appropriately amending laws, the viability of quo warranto in the instant cases does not preclude Congress from enforcing its own prerogative by abrogating the legislative franchises of respondents should it be distressed enough by the franchisees' violation of the franchises extended to them.

Evidently, the suggested theory of petitioner to address his plaints simply overpowers the delicate balance of separation of powers, and unduly grants superlative prerogatives to the NTC to frustrate the exercise of the constitutional freedom speech, expression, and of the press. A more narrowly-tailored relief that is responsive to the cause of petitioner not only exists, but is in fact tailor-fitted to the constitutional framework of our government and the adjudication of legal and constitutional rights. Given the current status of the law, there is utterly no reason for this Court to subscribe to the theory that the NTC has the presumed authority to cancel licenses and CPCs issued to due holders of legislative franchise to engage in broadcast operations.

V.

An entire subset of questions may arise following this decision, involving issues or situations not presently before us. We wish to make clear that the only aspect of the regulatory jurisdiction of the NTC that we are ruling upon is its presumed power to cancel provisional authorities, CPCs or CPCNs and other such licenses required of franchisees before they can engage in broadcast operations. Moreover, our conclusion that the NTC has no such power is borne not simply from the statutory language of E.O. No. 546 or the respective stipulations in private respondents' franchises, but moreso, from the application of the strict scrutiny standard which, despite its weight towards free speech, still involves the analysis of the competing interests of the regulator and the regulated.

In resolving the present questions, it was of marked impact to the Court that the presumed power to cancel would lead to utterly fatal consequences to the constitutional right to expression, as well as the legislated right of these franchisees to broadcast. Other regulatory measures of less drastic impact will have to be assessed on their own terms in the proper cases, and our decision today should not be accepted or cited as a blanket shearing of the NTC's regulatory jurisdiction. In addition, considering our own present recognition of legislative authority to regulate broadcast media on terms more cumbersome than print media, it should not be discounted that Congress may enact amendments to the organic law of the NTC that would alter the legal milieu from which we adjudicated today.

Still, the Court sees all benefit and no detriment in striking this blow in favor of free expression and of the press. While the ability of the State to broadly regulate broadcast media is ultimately dictated by physics, regulation with a light touch evokes a democracy mature enough to withstand competing viewpoints and tastes. Perhaps unwittingly, the position advocated by petitioner curdles a most vital sector of the press - broadcast media - within the heavy hand of the State. The argument is not warranted by law, and it betrays the constitutional expectations on this Court to assert lines not drawn and connect the dots around throats that are free to speak.

WHEREFORE, the instant petition is DENIED. No pronouncement as to costs.

SO ORDERED.

EN BANC  

ENGR. RANULFO C.FELICIANO,Petitioner,         

- versus -        NESTOR P. VILLASIN,cralaw Respondent.

  G.R. No. 174929 Present: PUNO, C.J.,QUISUMBING,YNARES-SANTIAGO,CARPIO,AUSTRIA-MARTINEZ,CORONA,CARPIO MORALES,AZCUNA,TINGA,CHICO-NAZARIO,VELASCO, JR.,NACHURA,*

REYES,DE CASTRO, andBRION, JJ. Promulgated: June 27, 2008

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x  D E C I S I O N  CHICO-NAZARIO, J.:  

This is a Petition for Certiorari under Rule 65 of the Revised Rules of Court assailing

the following: (1) the Order[1] dated 28 July 2006 of Branch 6 of the Regional Trial

Court (RTC) of Tacloban City, Leyte, dismissing petitioner Ranulfo C. Felicianos

Petition for Quo Warranto against respondent Nestor P. Villasin in Civil Case No.

2006-03-29; and (2) the Order[2] dated 8 September 2006 of the same

court denying petitioners Motion for Reconsideration.

 

cralawThe following are the antecedent facts of this case:

 

cralawPetitioner Feliciano was appointed General Manager (GM) of Leyte Metropolitan

Water District (LMWD) on 11 June 1975 by the LMWD Board of Directors through

Resolution No. 14, Series of 1975.[3]

cralawOn 6 March 1990, the Local Water Utilities Administration (LWUA) took over the

management and policy-making functions of LMWD owing to LMWDs default on the

payment of its obligations to LWUA. Said move was made pursuant to Presidential

Decree No. 198, otherwise known as THE PROVINCIAL WATER UTILITIES ACT OF

1973,[4] issued on 25 May 1973. The LWUA appointed an Interim General Manager

and Chairman of the Board of Directors, as well as its members.

 

After the LWUA took over the management and policy-making functions of the

LMWD in March 1990, Engineer (Engr.) Cayo U. Emnas was appointed as take-over

General Manager. Emnas thereafter filed administrative charges against Feliciano

for Grave Misconduct, Dishonesty and Conduct Unbecoming an LMWD Official,

docketed as Administrative Case No. LMWD-OGCC-01-01.[5] Feliciano was accused of

authorizing payment of his backwages amounting to P134,721.64, for the period 6

March 1990 up to 23 October 1990, although he did not report for work during said

period.

cralaw

cralawThe Office of the Government Corporate Counsel (OGCC) handled the

investigation of the charges against Feliciano. In a Resolution dated 16 September

1991, the OGCC found Feliciano guilty as charged and recommended the penalty of

dismissal. Pertinent portions of the OGCC Resolution reads:

 The action of respondent in authorizing, causing and receiving the aforesaid disbursement of P134,721.64 in payment obstensibly of his backwages for the period starting 6 March 1990 up to and until 23 October 1990, knowing that during the said period he did not report for work nor rendered service to LMWD as testified to by complainants witnesses, is not only irregular but unlawful. Worse, respondent being the General Manager, necessarily had taken advantage of his position and abused the confidence reposed in his office in the perpetration of the said rank dishonesty. As a consequence thereof, LMWD was defrauded and suffered damage in the sum ofP134,721.64.

 cralawAccordingly, undersigned finds respondent Ranulfo C. Feliciano guilty, as charged, of GRAVE MISCONDUCT, DISHONESTY, AND CONDUCT UNBECOMING OF AN LMWD OFFICIAL. cralawIn view of the grave nature of the offense committed by respondent, the large sum which LMWD has been defrauded of, and the existence of aggravating circumstances occasioned by respondents taking undue advantage of his position and abusing the confidence of his office, undersigned recommends the imposition of the penalty of DISMISSAL on respondent.[6]

 

On 11 November 1991, the Interim LMWD Board of Directors approved in toto the

findings of the OGCC including its recommendation to dismiss Feliciano.[7]

cralawOn 1 October 1993, the Civil Service Commission (CSC) issued Memorandum

Circular No. 41, Series of 1993, directing Board Chairpersons and GMs of water

districts to submit personnel appointments for approval by the CSC.

 

cralawOn 20 July 1998, the take-over of the management and operations of the LMWD

by the LWUA was lifted by the LWUA Board of Trustees in its Resolution No. 138,

Series of 1998.[8]

 

cralawOn 25 September 1998, the new regular LMWD Board of Directors unanimously

approvedResolution No. 98-002 ordering Feliciano to re-assume[9] the post he had

vacated as GM of LMWD. The position was accepted by Feliciano on 27 September

1998.[10]

 

cralawAs GM, Feliciano appointed Edgar R. Nedruda, Milagros A. Majadillas and Edgar

B. Ortega as Division Manager, Quality Control Assurance Officer and Plant

Equipment Operator E, respectively, at the LMWD.[11] In compliance with CSC

Memorandum Circular No. 41, Series of 1993, Feliciano submitted the same to the

CSC Regional Office (CSCRO) for approval. The CSCRO, however, disapproved

Felicianos LMWD personnel appointments in its Order issued on 8 June 1999 since

GM Feliciano did not possess the required CSC-approved appointment pursuant to

CSC Memorandum Circular No. 41, S. 1993.[12] Feliciano appealed the Order to the

CSC.

 

On 8 September 2000, the CSC through its Chairperson Corazon Alma G. de Leon,

issued CSC Resolution No. 002107 denying Felicianos appeal of his disapproved

LMWD personnel appointments on the ground that he was only a de facto officer.[13] It found that Feliciano had no authority to make appointments since he himself

lacked the required CSC-approved appointment pursuant to CSC Memorandum

Circular No. 40, Series of 1998, and Memorandum Circular No. 41, Series of 1993.[14] The CSC thus resolved:

 WHEREFORE, the Order issued by the Civil Service Commission (CSCRO) Regional Office No. VIII, Palo, Leyte, disapproving the appointments of Nedruda, Majadillas and Ortega on the ground that Ranulfo Feliciano lacks the authority to appoint, is hereby affirmed. cralawAccordingly, the Human Resource Management Officer/Personnel Officer of the Leyte Metro Water District (LMWD) may re-submit the

appointment of Ranulfo Feliciano to the position of General Manager of the LMWD, to the CSC Leyte Field Office for attestation. cralawFeliciano may likewise re-appoint Nedruda, Majadillas and Ortega to the same positions. (Emphases ours.)  

Feliciano filed a Motion for Reconsideration citing as main argument the fact that

the LMWD was not a government-owned and controlled corporation, but a special

type of non-stock, non-profit private corporation imbued with public interest, and

therefore, not covered by the civil service rules.

 

The CSC denied Felicianos Motion for Reconsideration in its Resolution No.

010218, issued on 22 January 2001, which reiterated that Felicianos argument on

the private character of water districts had long been put to rest in Davao City

Water District v. Civil Service Commission, which declared water districts to be

government-owned or controlled corporations with original charter, falling under the

jurisdiction of the CSC and Commission on Audit (COA).

 

Not satisfied, Feliciano appealed CSC Resolutions No. 002107 and 010218 to the

Court of Appeals via Petition for Certiorari. The case was docketed as CA-G.R. No.

63325. On 1 September 2005, the Court of Appeals in Cebu City, through Associate

Justice Ramon M. Bato, Jr., denied the petition.[15] Feliciano filed a Motion for

Reconsideration but the same was denied per Resolution dated 15 August 2006.[16] Feliciano thereafter appealed to this Court on 15 August 2006 viapetition for

review on certiorari in G.R. No. 174178. In an en banc Decision issued on 17

October 2006, this Court denied the petition for its failure to sufficiently show that

the CSC committed any reversible error in issuing the challenged decision and

resolution. Felicianos Motion for Reconsideration thereof was denied on 23 January

2007.

 

cralawOn 12 January 2005, the CSC issued a Memorandum directing its Regional

Director (for Region 8) Rodolfo Encajonado (RD Encajonado) to submit an update on

the status of Felicianos appointment as GM of LMWD.

 

cralawIn his Memorandum submitted to the CSC on 14 January 2005, RD Encajonado

reported that the LMWD Board of Directors had not yet submitted the required

appointment of Feliciano as GM of LMWD for attestation, as required by CSC

Resolutions No. 002107 and No. 010218. On account thereof, the CSC, through its

Chairperson Karina Constantino-David, issued on 28 February 2005CSC Resolution

No. 050307, declaring Feliciano to be a mere de facto officer of LMWD and

ordering him to vacate the position of GM, to wit:

cralaw

cralawWith the promulgation on September 13, 1991 of the above-mentioned Supreme Court decision,[17] the issuance on October 1, 1993 of the aforestated CSC Memorandum Circular, and the adoption on January 22, 2001 of CSC Resolution No. 01-2018 denying Felicianos motion for reconsideration, Feliciano is under legal obligation to comply by submitting his appointment to the Commission for attestation/approval. This, he did not do. He instead stubbornly maintained his personal stand that water districts are private corporations, not government-owned or controlled corporations with original charter. For all legal intents and purposes, effective upon his receipt on February 6, 2001 of CSC Resolution No. 01-0218 denying his motion for reconsideration, Feliciano is a mere usurper or intruder who has no right or title whatsoever to the position/office of General Manager. His further occupancy of the position after said date holds him criminally liable for usurpation of authority. cralawx x x x 

WHEREFORE, the Commission resolves as follows: 

1.      Between June 8, 1999 (the date when the Civil Service Commission Regional Office No. VIII issued an Order disapproving the appointments of Edgar R. Nedruda, Milagros A. Majadillas and Edgar B. Ortega on the ground that Ranulfo C. Feliciano does not possess a CSC-approved appointment) and February 6, 2001 (the date when Feliciano received a copy of CSC Resolution No. 01-0218 denying his motion for reconsideration and affirming CSC Resolution No. 00-2107), Feliciano shall be treated as a de facto officer whose acts are valid and binding only as regards innocent third persons. Insofar as Feliciano himself is concerned, his acts are void, hence, he is not entitled to the emoluments of the office. Regarding the three (3) issued appointments, the same are all void, since Feliciano has no authority to issue the same.

 2.      Starting February 6, 2001, Feliciano is a mere usurper or intruder

without any right or title to the office/position of General Manager of the Leyte Metropolitan Water District (LMWD). His further occupancy of the position of General Manager after February 6, 2001 holds him criminally liable for usurpation of authority. Effective upon receipt of this Resolution, he is ordered to vacate the position of LMWD General Manager.[18]

  

cralawOn 22 March 2005, Feliciano again sought recourse at the Court of Appeals

where he filed a Petition for Certiorari and Prohibition with application for

Temporary Restraining Order (TRO) and Writ of Injunction, seeking to enjoin the

implementation of CSC Resolution No. 050307, Series of 2005. The case was

docketed as CA-G.R. SP No. 00489.[19]

 

cralawOn 30 March 2005, while CA-G.R. SP No. 00489 was still pending with the Court

of Appeals, with no injunction having been issued by the appellate court, the LMWD

Board of Directors declared the GM position occupied by Feliciano vacant by virtue

of LMWD Resolution No. 050307.[20]

 

cralawThe Court of Appeals subsequently issued on 12 April 2005 a Resolution in CA-

G.R. SP No. 00489 granting a TRO effective for sixty days. After the lapse of the

TRO, the LMWD Board of Directors appointed Villasin as the new GM of LMWD on 14

June 2005. On 16 September 2005, the Court of Appeals dismissed CA-G.R. SP No.

00489 which reached this Court via petition for review in G.R. No. 172141. This was

eventually denied by this Court and entry of judgment was made on 14 November

2006. On 28 December 2005, the LMWD Board of Directors unanimously approved

LMWD Resolution No. 05-145 certifying that Villasin was the GM of LMWD pursuant

to the provisions of Presidential Decree No. 198 and the CSC Rules and Regulations.

 

cralawOn 28 March 2006, Feliciano thus filed with the RTC a Petition for Quo

Warranto against Villasin under Rule 66 of the 1997 Rules of Civil Procedure,

docketed as Civil Case No. 2006-03-29.

 

cralawFeliciano asked the RTC to restore him to his position as GM of LMWD, and to

remove Villasin therefrom. In particular, he prayed for the following in his Petition

for Quo Warranto:

 1.      To order [Villasin] to vacate the Office of General Manager of

LMWD and for [Feliciano] to be seated to such office; 

2.      To mandate [Villasin] to pay the salaries and other emoluments of [Feliciano] which as of this date amounts to more than One Million Two Hundred Thousand Pesos (P1,200,000.00);

 3.      To direct [Villasin] to pay [Feliciano] attorneys fees comprised of

Two Hundred Thousand Pesos (P200,000.00) as acceptance fees and Five Thousand Pesos (P5,000.00) appearance per hearing;

 4.      To command [Villasin] to pay the cost of herein Petition for Quo

Warranto. 

cralaw[Feliciano] also prays for such other reliefs as may be necessary under the circumstances.[21]

  

Citing the Courts ruling in Villaluz v. Zaldivar,[22] Feliciano argued that since the

LWUA had no power to remove a GM appointed by a regular Board of Directors, it

should follow then that an interim Board of Directors neither had the power to

discipline or remove a regular GM of LMWD.

 

cralawVillasin countered by filing a Comment/Answer with Motion to Dismiss the

Petition for Quo Warranto, on the following grounds:

 (a)    Forum shopping;

 (b)    Feliciano is disqualified from government service due to his

dismissal from office on 11 November 1991; 

(c)    Petitioners claim that LMWD is a private entity defeats his petition since quo warranto is a remedy of a person claiming a public office;

 (d)    Quo warranto case was filed more than a year from the time the

cause of action arose or beyond the reglementary period; 

(e)    The Court of Appeals had already denied his petition for Review on Certiorari on CSC Resolution No. 050307.

  

cralawA hearing with notice to the parties was set for 2 June 2006 but Feliciano failed

to attend the same.[23] The RTC then ordered Civil Case No. 2006-03-29 submitted

for Resolution.

 

On 28 July 2006, the RTC issued an Order dismissing Felicianos Petition for Quo

Warranto, finding that:

 The scope of the remedy of quo warranto instituted by an individual is that he, the petitioner, has prior right to the position or office held by the respondent. Where there is no legal ground or where the fundamental basis of the petition is none or destroyed, it becomes unnecessary to pass upon the right of the respondent.

 x x x x cralawWHEREFORE, in view of the aforegoing (sic), for lack of cause of action amounting to want of jurisdiction, this petition shall be, as it is hereby ordered, dismissed.[24]

 

 

cralawFeliciano filed his Motion for Reconsideration alleging that the Order issued by

the RTC was conjectural, presumptuous and specious. However, the Motion for

Reconsideration was denied by the RTC in an Order dated 8 September

2006. According to the RTC, the Quo Warranto Petition was prematurely filed

considering that Felicianos Petition for Review on Certiorari with the Court of

Appeals, involving CSC Resolutions No. 002107 and No. 010218, was still pending

with the Court of Appeals. Hence, the issue of whether Feliciano is holding the GM

position in a de facto or a de jure capacity is yet to be resolved. The RTC therefore

decreed:cralawWHEREFORE, with prematurity in the institution of the present petition as duly admitted by herein petitioner-movant coupled with the fact that the rest of the arguments raised in the motion have already been considered and rejected by this court in the order dated, July 28, 2006, the motion for reconsideration is hereby denied.[25]

  

cralawOn 14 October 2006, Feliciano went directly to this Court via the instant

Petition for Certiorariunder Rule 65 of the Revised Rules of Court, raising the

following arguments:

 

I.RESPONDENT COURT HAS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION AS ITS DISMISSAL OF THE PETITION IS SO WHIMSICAL, CAPRICIOUS AND ARBITRARY AMOUNTING THEREFORE TO A PATENT AND GROSS EVASION OF A POSITIVE DUTY OR VIRTUAL REFUSAL TO PERFORM JUDICIAL DUTY. 

II. 

RESPONDENT COURT HAS COMMITTED GRAVE ABUSE OF DISCRETION AS ITS DISMISSAL OF THE PETITION, BASED ON GROUNDS NOT SOUGHT AND PRAYED FOR IN THE MOTION TO DISMISS, CONSTITUTES A DENIAL OF DUE PROCESS.  

As hereinbefore stated, CA-G.R. SP No. 00489, Felicianos Petition

for Certiorari and Prohibition seeking to enjoin the implementation of CSC

Resolution No. 050307, was dismissed by the Court of Appeals in a Decision dated

16 September 2005. Feliciano appealed said Court of Appeals Decision before this

Court through a Petition for Review on Certiorari, docketed as G.R. No.

172141. This Court, however, in an En Banc Resolution dated 6 June 2006, ruled to:

 

cralawb) DENY the petition for failure thereof to sufficiently show that the Court of Appeals committed any reversible error in issuing the challenged decision and resolution as to warrant the exercise by this Court of its discretionary appellate jurisdiction.[26]

  

cralawThe Court En Banc denied with finality Felicianos Motion for Reconsideration

on 22 August 2006, and entry of judgment was made in G.R. No. 172141 on 14

November 2006.

cralaw

In the instant Petition, which actually arose from the appointment by the LMWD

Board of Directors of Villasin as the new GM of LMWD after the CSC ordered

Feliciano to vacate the same in its Resolution No. 050307, Feliciano prays that this

Court set aside and declare null and void the Orders dated 28 July 2006 and 8

September 2006 of the RTC dismissing his Petition for Quo Warranto in Civil Case

No. 2006-03-29.

 

Petitioner raises several issues in this Petition, which all boil down to the sole

question of whether the RTC committed grave abuse of discretion amounting to lack

or excess of jurisdiction in dismissing Felicianos Petition for Quo Warranto.

 

cralawWorthy to note is the failure of Feliciano to implead herein the RTC, the tribunal

that rendered the assailed Orders, as a nominal party (public respondent) in the

instant Petition for Certiorari. One of the requisites of an independent civil action

for Certiorari is that it must be directed against a tribunal, a board, or an

officer exercising judicial or quasi-judicial functions. Feliciano failed to

comply with said requirement and this failure is sufficient to dismiss this Petition.

cralaw

cralawUnder Rule 65 of the Rules of Court, failure to comply with any of the aforesaid

requirements for filing an independent civil action for Certiorari is sufficient ground

for the dismissal of the petition.This rule accords sufficient discretion to the court

hearing the special civil action whether or not to dismiss the petition outright for

failure to comply with said requirement.

cralaw

Evidently, the function of this Court is merely to check whether the RTC committed

grave abuse of discretion amounting to lack or excess of jurisdiction in dismissing

Felicianos Petition for Quo Warranto before it.

 

In a petition for certiorari under Section 1, Rule 65 of the Rules of Court, the

following essential requisites must be present, to wit: (1) the writ is directed against

a tribunal, a board, or an officer exercising judicial or quasi-judicial functions; (2)

such tribunal, board, or officer has acted without or in excess of jurisdiction, or with

grave abuse of discretion amounting to lack or excess of jurisdiction; and (3) there

is no appeal or any plain, speedy, and adequate remedy in the ordinary course of

law.[27]

 

cralawGrave abuse of discretion implies such capricious and whimsical exercise of

judgment as is equivalent to lack of jurisdiction, or, in other words, where the power

is exercised in an arbitrary or despotic manner by reason of passion or personal

hostility,[28] and it must be so patent and gross as to amount to an evasion of

positive duty or to a virtual refusal to perform the duty enjoined or to act at all in

contemplation of law.[29]

 

cralawA petition for certiorari under Rule 65 of the Rules of Court will prosper only if

there is a showing of grave abuse of discretion or an act without or in excess of

jurisdiction on the part of respondent tribunal. In the absence of such a showing,

there is no reason for this Court to annul the decision of the respondent tribunal or

to substitute it with its own judgment, for the simple reason that it is not the office

of a petition for Certiorari to inquire into the correctness of the assailed decision.

 

Nonetheless, even as this Court delves into the merits of the present Petition, it still

must fail.

 

cralawFelicianos Petition for Quo Warranto centers on his alleged right as the one

legally entitled to occupy the position of GM of LMWD. He presented two main

issues therein:

 (1)               Whether or not the LMWD Board of Directors, through

Resolution No. 05-037, legally and validly ousted him; and (2)               Whether or not the LMWD Board of Directors legally and

validly appointed Villasin.  

Contending that his appointment as GM on 11 June 1975 by the LMWD Board of

Directors and subsequent assumption of office bestowed on him a legal right to the

said position, Feliciano argues that Republic Act No. 9286, [30] which further amended

Presidential Decree No. 198, and was approved on 2 April 2004, vested him with

security of tenure. Feliciano adds that the Interim LMWD Board of Directors, in fact,

had no power to dismiss him when he was dismissed on 11 November 1991.

 

It is well-established that Quo Warranto proceedings determine the right of a person

to the use or exercise of a franchise or an office and to oust the holder from its

enjoyment, if the latters claim is not well-founded, or if he has forfeited his right to

enjoy the privilege. According to the Rules of Procedure:

 cralawThe action may be commenced for the Government by the Solicitor General or the fiscal against a person who usurps, intrudes into, or unlawfully holds or exercises a public office, position or franchise; a public officer whose acts constitute a ground for the forfeiture of his office; or against an association which acts as a corporation without being legally incorporated or without lawful authority to so act.[31]

  cralawThe action may also be instituted by an individual in his own name who claims to be entitled to the public office or position usurped or unlawfully held or exercised by another.[32] (Emphasis supplied.)  

The possible outcome of a Petition for Quo Warranto can be any of the following:

 If the court finds for the respondent, the judgment should simply state that the respondent is entitled to the office. If, however, the court finds for the petitioner and declares the respondent guilty of usurping, intruding into, or unlawfully holding or exercising the office, judgment may be rendered as follows:

 cralaw"Sec. 10. Judgment where usurpation found.-- When the defendant is found guilty of usurping, intruding into, or unlawfully holding or exercising an office, position, right, privilege, or franchise, judgment shall be rendered that such defendant be ousted and altogether excluded therefrom, and that the plaintiff or relator, as the case may be, recover his costs. Such further judgment may be rendered determining the respective rights in and to the office, position, right, privilege, or franchise of all the parties to the action as justice requires."

 If it is found that the respondent or defendant is usurping or intruding into the office, or unlawfully holding the same, the court may order: 

(1)cralawThe ouster and exclusion of the defendant from office; (2)cralawThe recovery of costs by plaintiff or relator; 

(3)cralawThe determination of the respective rights in and to the office, position, right, privilege or franchise of all the parties to the action as justice requires.[33]

  

In the instance in which the Petition for Quo Warranto is filed by an individual in his

own name, he must be able to prove that he is entitled to the controverted public

office, position, or franchise; otherwise, the holder of the same has a right to the

undisturbed possession thereof. In actions forQuo Warranto to determine title to a

public office, the complaint, to be sufficient in form, must show that the plaintiff is

entitled to the office.[34] In Garcia v. Perez,[35] this Court ruled that the person

instituting Quo Warranto proceedings on his own behalf, under Section 5, Rule 66 of

the Rules of Court, must aver and be able to show that he is entitled to the office in

dispute. Without such averment or evidence of such right, the action may be

dismissed at any stage.[36]

 

Due to the recent turn of events, Feliciano lost any legal standing to pursue via Quo

Warrantoproceedings his claim to the position of GM of LMWD considering this

Courts En Banc Resolutions dated 6 June 2006 and 22 August 2006 in G.R. No.

172141 which denied with finality his Petition for Review on Certiorari of the Court

of Appeals Decision dated 16 September 2005 and Resolution dated 31 March 2006

in CA-G.R. SP No. 00489 upholding the legality of CSC Resolution No. 050307. To

recall, CSC Resolution No. 050307 treated Feliciano as a de facto officer with regard

to his acts as GM of LMWD; and declared him to be a usurper of or an intruder to

the said position beginning 6 February 2001, and thus ordered him to vacate the

same.

 

Considering that entry of judgment was already made in G.R. No. 172141 as of 14

November 2006, there is therefore no more obstacle to the appointment by the

LMWD Board of Directors of Villasin as the new GM of LMWD.

 

Feliciano imputes grave abuse of discretion on the part of the RTC for allegedly

failing to afford him due process, since his Petition for Quo Warranto was dismissed

based on its face and without having been heard. In granting Villasins Motion to

Dismiss the Petition for Quo Warranto, the RTC ratiocinated:

 Inferred, in the year 1999, petitioner herein already knew that his appointment as General Manager of LMWD was placed in doubt and declared ineffective. So his acts as such since then were void. Petitioner, in fact was ordered by the Civil Service Commission to vacate the position of LMWD General Manager since he assumed the

position without completed appointment (General Manager, Philippine Ports Authority, et al. vs. Julieta Monserat, 381 SCRA 200.) cralawx x x As of the moment, without the CSC approved appointment, he is, the law points, a de facto officer. He held the position of General Manager of LMWD without the completed appointment. Over this, but for the creed petitioner avows, the court believes that while the necessary intent is there, the sporting idea of fair play, is not sufficient for the petition to succeed. Petitioner surely is a de facto officer.[37]

  

The Court emphasizes that an action for Quo Warranto may be dismissed at any

stage when it becomes apparent that the plaintiff is not entitled to the disputed

pubic office, position or franchise.[38] Hence, the RTC is not compelled to still proceed

with the trial when it is already apparent on the face of the Petition for Quo

Warranto that it is insufficient. The RTC may already dismiss said petition at this

point.

 

Feliciano presents as an alternative argument the fact that as GM of LMWD, he is

not part of the personnel of the water district, arguing that his appointment does

not need CSC attestation. He explains that:

 [E]ven granting that the CSC can declare him a de facto officer and usurper, the same has already prescribed, since as early as September 8, 2000 in its Resolution No. 002107 or four (4) years before its Resolution No. 050307, it has already known about petitioner being a de facto officer, that being the GM of LMWD, he is not part of the personnel of LMWD, thus, his appointment is not subject to attestation under CSC Resolution No. 41, S. 1993 x x x.[39]

  

We find his argument untenable.

 

To determine whether personnel of the LMWD, particularly the GM, are subject to

CSC Rules and Regulations, we must delve into the pertinent laws affecting the

management and policy-making functions of the LMWD.

 

The provisions of Presidential Decree No. 198 read:

 Chapter VI

Officers and Employees Section 23. Additional Officers. - At the first meeting of the board, or as soon thereafter as practicable, the board shall appoint, by a majority vote, a general manager, an auditor, and an attorney, and

shall define their duties and fix their compensation. Said officers shall service at the pleasure of the board. x x x x Section 25. Exemption from Civil Service. - The district and its employees, being engaged in a proprietary function, are hereby exempt from the provisions of the Civil Service Law. x x x.  

On 15 August 1975, Presidential Decree No. 768 amended Section 23 of Presidential

Decree No. 198 to read:

 cralawSEC. 23. The General Manager. - At the first meeting of the board, or as soon thereafter as practicable, the board shall appoint, by a majority vote, a general manager and shall define his duties and fix his compensation. Said officer shall serve at the pleasure of the board.   

On 11 June 1978, Presidential Decree No. 1479[40] amended Presidential Decree No.

198, as amended by Presidential Decree No. 768, removing Section 25 of the latter,

which had exempted the district and its employees from the coverage of the Civil

Service. Thus, with such amendment, officers and employees of water districts were

put under the mantle of Civil Service Rules and Regulations.

 

On 2 April 2004, Republic Act No. 9286 further amended Section 23 of Presidential

Decree No. 198, to read:

 Sec. 23. The General Manager. At the first meeting of the Board, or as soon thereafter as practicable, the Board shall appoint, by a majority vote, a general manager and shall define his duties and fix his compensation. Said officer shall not be removed from office, except for cause and after due process.  

From the foregoing, as early as the issuance of Presidential Decree No. 1479 on 11

June 1978, it is clear that the LMWD GM is covered by Civil Service Rules and

Regulations.

 

As we have held in Tanjay Water District v. Gabaton,[41] Davao City Water District v.

Civil Service Commission,[42] and Hagonoy Water District v. National Labor Relations

Commission,[43] water districts are government instrumentalities[44] whose officers

and employees belong to the civil service. These rulings are in consonance with the

provisions of Article IX-B, Section 2 of the Constitution, whose provisions read:

 cralawThe civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government-owned or controlled corporations with original charters.  

The position of General Manager being unequivocally part of the personnel of the

water district whose officers and employees are covered under the civil service, an

appointment thereto requires the attestation of the CSC for it to be valid.

 

cralawMoreover, this Court cannot ignore the fact that petitioner Feliciano violated the

rule on forum shopping[45] in his quest for a favorable opinion on his cause of

action.

 

cralawForum shopping exists when a party repetitively avails himself of several

judicial remedies in different courts, simultaneously or successively, all substantially

founded on the same transactions and the same essential facts and circumstances,

and all raising substantially the same issues either pending in, or already resolved

adversely by, some other court.[46]

 

cralawThe following elements of forum shopping have been established: (a) identity of parties, or at least such parties as represent the same interests in both actions; (b) identity of rights asserted and relief prayed for, the relief being founded on the same set of facts; and (c) the identity of the two preceding particulars, such that any judgment rendered in the other action will, regardless of which party is successful, amount to res judicata in the action under consideration.[47]

  

The prohibition on forum shopping is embodied in Rule 7 of the Rules of Court,

which provides, viz:

 Sec. 5. Certification against forum shopping.The plaintiff or principal party shall certify under oath in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed therewith: (a) that he has not theretofore commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and, to the best of his knowledge, no such other action or claim is pending therein; (b) if there is such other pending action or claim, a complete statement of the present status thereof; and (c) if he should thereafter learn that

the same or similar action or claim has been filed or is pending, he shall report that fact within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been filed. Failure to comply with the foregoing requirements shall not be curable by mere amendment of the complaint or other initiatory pleading but shall be cause for the dismissal of the case without prejudice, unless otherwise provided, upon motion and after hearing. The submission of a false certification or non-compliance with any of the undertakings therein shall constitute indirect contempt of court, without prejudice to the corresponding administrative and criminal actions. If the acts of the party or his counsel clearly constitute willful and deliberate forum shopping, the same shall be ground for summary dismissal with prejudice and shall constitute direct contempt, as well as a cause for administrative sanctions.  

cralawWhat is pivotal to consider in determining whether forum shopping exists or not

is the vexation caused to courts and the parties-litigants by a party who asks

appellate courts and/or administrative entities to rule on the same or related causes

and/or to grant the same or substantially the same reliefs, in the process creating

the possibility of conflicting decisions being rendered by the different courts upon

the same issues.[48]

 

cralawFeliciano has evidently trifled with the courts and abused their processes in

improperly instituting several cases and filing multiple petitions, cases or

proceedings, and splitting causes of action all of which focused on the legality of his

termination as LMWD GM. While a party may avail himself of the remedies

prescribed by the Rules of Court for the myriad reliefs from the court, such party is

not free to resort to them simultaneously or at his pleasure or caprice. 

 

cralawIt is pertinent to note that at the time Feliciano filed G.R. No. 174929  on 14

October 2006, the legality of his termination as LMWD GM has, in fact, been

resolved with finality with the entry of judgment in G.R. No. 172141. To recall, this

Court En Banc denied G.R. No. 172141 and affirmed CA-G.R. SP No. 00489 which

upheld CSC Resolution No. 050307. With the denial of G.R. No. 172141, the validity

of CSC Resolution No. 050307 declaring Feliciano to be a de facto officer from 8

June 1999 to 6 February 2001, and a mere usurper thereafter, has been laid to rest.

 

Feliciano, however, insisted on pursuing this petition for certiorari, being fully aware

of the finality of G.R. No. 172141 and the consequences resulting therefrom.

 

cralawThis Court reiterates the raison detre for the proscription against forum

shopping. The grave evil sought to be avoided by the rule against forum shopping is

the rendition by two competent tribunals of two separate and contradictory

decisions unscrupulous party litigants, taking advantage of a variety of competent

tribunals, may repeatedly try their luck in several fora until a favorable result is

reached.[49]

 

IN ALL, we find that the RTC committed no grave abuse of discretion in dismissing

Felicianos Petition for Quo Warranto.

 

cralawWHEREFORE, premises considered, this Petition

for Certiorari is DISMISSED, and the Orders dated 8 July 2006 and 8 September

2006 issued by Branch 6 of the Regional Trial Court in Tacloban, Leyte, in Civil Case

No. 2006-03-29, dismissing petitioner Ranulfo C. Felicianos Petition for Quo

Warranto, are hereby AFFIRMED.

 

cralawFeliciano and his counsel are hereby REPRIMANDED for FORUM SHOPPING,

with a WARNINGthat a repetition of the same or similar act will be dealt with more

severely. Costs against petitioner.

 SO ORDERED.  

RULE 67 – EXPROPRIATION

G.R. No. 166973 : February 10, 2009

NATIONAL POWER CORPORATION, Petitioner, vs. BENJAMIN ONG CO, Respondent.

D E C I S I O N

TINGA, J.:

Before us is a Rule 45 petition[1] which seeks the reversal of the Decision[2] and

Resolution[3] of the Court of Appeals in CA-G.R. No. 79211. The Court of Appeals

Decision affirmed the Partial Decision[4] of the Regional Trial Court (RTC) of San

Fernando, Pampanga, Branch 41 in Civil Case No. 12281, fixing the compensation

due respondent following the expropriation of his property for the construction of

petitioners power transmission lines. chanroblesvirtuallawlibrary

Petitioner was established by R.A. No. 6395 to undertake the development of

hydroelectric generation of power and the production of electricity from nuclear,

geothermal and other sources, as well as the transmission of electric power on a

nationwide basis.[5] Its charter grants to petitioner, among others, the power to

exercise the right to eminent domain.[6] chanroblesvirtuallawlibrary

On 27 June 2001, petitioner filed a complaint[7] with the RTC of San Fernando,

Pampanga, for the acquisition of an easement of right-of-way over three (3) lots at

Barangay Cabalantian, Bacolor, Pampanga with a total area of 575 square meters

belonging to respondent, in connection with the construction of its transmission

lines for its Lahar Affected Transmission Line Project (Lahar

Project). chanroblesvirtuallawlibrary

On 25 March 2002, petitioner obtained a writ of possession and on 15 April

2002 it took possession of the property. chanroblesvirtuallawlibrary

At the pre-trial conference, respondent conceded the necessity of

expropriation. Thus, the sole issue for litigation revolved around the determination

of just compensation. chanroblesvirtuallawlibrary

The RTC appointed three (3) commissioners[8] to determine the fair market

value of the property as of 15 April 2002. Commissioners Dayrit and Garcia

submitted their joint report[9]wherein they appraised the value of the property

at P1,900.00 per square meter or a total ofP1,179,000.00, while Commissioner

Abcejo submitted his Commissioner's Report[10] pegging the value of the property

at P875.00 per square meter. chanroblesvirtuallawlibrary

The RTC rendered its Partial Decision,[11] wherein it declared the validity of the

expropriation and ordered petitioner to pay the sum of P1,179,000.00, with interest

at 6% per annum beginning 15 April 2002, the date of actual taking, until full

payment. It adopted the findings of Commissioners Dayrit and Garcia as more

reliable since their report was based on established facts and they had evaluated

the market, location and physical characteristics of the property while

Commissioner Abcejos report had merely taken the average between the Provincial

Appraisal Report (P1,500.00/sq.m.) and the Land Bank Appraisal Report

(P250.00/sq.m.) that were both done in 1998. chanroblesvirtuallawlibrary

Not satisfied, petitioner filed an appeal with the Court of Appeals. chanroblesvirtuallawlibrary

On 20 October 2004, the Court of Appeals rendered its Decision[12] holding petitioner

liable to pay the full fair market value at the time of actual taking, with interest at

6% per annum from 15 April 2002. To determine the actual valuation of the

property, the Court of Appeals ordered the RTC to appoint a new set of disinterested

commissioners. chanroblesvirtuallawlibrary

Petitioner filed a motion for partial reconsideration, questioning the order to pay the

full fair market value computed as of the date of its actual possession of the

property. The Court of Appeals denied the motion for partial reconsideration; hence,

the present petition. chanroblesvirtuallawlibrary

On 11 April 2007,[13] the Court required the parties to submit their supplemental

memoranda discussing the following issues: chanroblesvirtuallawlibrary

chanroblesvirtuallawlibrary

Is Republic Act No. 8974 (2000), otherwise known as An Act to Facilitate the Acquisition of Right-of-Way, site or Location for National Government Infrastructure Projects and for other purposes, applicable to actions for eminent domain filed by the National Power Corporation (Napocor) pursuant to its charter (Rep. Act. No. 6395, as amended) for the purpose of constructing power transmission lines on the properties subject of said actions? chanroblesvirtuallawlibrary

Assuming that Rep. Act No. 8974 is applicable to said expropriation proceedings:chanroblesvirtuallawlibrary

a. What are the effects, if any, of Rep. Act No. 8974 and its implementing Rules on the Standards for the determination of the provisional value and the final amount of just compensation in the present case, including on the question of whether the just compensation should be reckoned from the date of the filing of the complaint since such date preceded the date of the taking of the property in this case? chanroblesvirtuallawlibrary

b. Is the 10% limit on the amount of just compensation for the acquisition of right-of-way easements on lands or portions thereof to be

traversed by the transmission lines, as provided for in Section 3-a(b) of Napocor's charter, still in effect in light of the valuation standards provided for in Rep. Act No. 8974 and its implementing rules? chanroblesvirtuallawlibrary

Eminent domain is the inherent power of a sovereign state to appropriate

private property to particular use to promote public welfare. [14] In the exercise of its

power of eminent domain, just compensation must be given to the property owner

to satisfy the requirements of Sec. 9, Art. III[15] of the Constitution. Just

compensation is the fair market value of the property.[16] Fair market value is that

sum of money which a person desirous but not compelled to buy, and an owner

willing but not compelled to sell, would agree on as a price to be given and received

therefor.[17] Judicial determination is needed to arrive at the exact amount due to the

property owner. chanroblesvirtuallawlibrary

chanroblesvirtuallawlibrary

The power to expropriate is legislative in character and must be expressly

conferred by statute. Under its charter, petitioner is vested with the power of

eminent domain.

The first aspect of the compensation issue is whether what should be paid is

the full fair market value of the property or a mere easement fee. Petitioner relies

on Sec. 3A[18] of R.A. No. 6395, as amended, which provides that only an easement

fee equivalent to 10% of the market value shall be paid to affected property

owners. Based on this amendatory provision, petitioner is willing to pay an

easement fee of 10% for the easement of right-of-way it acquired for the installation

of power transmission lines. chanroblesvirtuallawlibrary

As intimated in the Courts 2007 Resolution, the case at bar is further complicated

by the enactment of R.A. No. 8974 before the filing of the expropriation

complaint. chanroblesvirtuallawlibrary

R.A. No. 8974,[19] entitled An Act To Facilitate The Acquisition Of Right-Of-Way, Site

Or Location For National Government Infrastructure Projects And For Other

Purposes, defines national government projects as follows: chanroblesvirtuallawlibrary

Sec. 2. National Government ProjectsThe term national government projects shall refer to all national government infrastructure, engineering works and service contracts, including projects undertaken by government-owned and -controlled corporations, all projects covered by Republic Act No. 6957, as amended by Republic Act No. 7718, otherwise known as the Build-Operate-and-Transfer Law, and other related and necessary activities, such as site acquisition, supply and/or installation of equipment and materials, implementation, construction, completion, operation, maintenance, improvement, repair and rehabilitation, regardless of source of funding. chanroblesvirtuallawlibrary

Petitioner expropriated respondents property for its Lahar Project, a project

for public use.[20] In Republic v. Gingoyon (Gingoyon), we observed that R.A. No.

8974 covers expropriation proceedings intended for national government

infrastructure projects.[21] The Implementing Rules and Regulations[22] of R.A. No.

8974 explicitly include power generation, transmission and distribution projects

among the national government projects covered by the law. There is no doubt that

the installation of transmission lines is important to the continued growth of the

country. Electricity moves our economy, it is a national concern. R.A. No. 8974

should govern the expropriation of respondent's property since the Lahar Project is

a national government project.chanroblesvirtuallawlibrary

Significantly, Gingoyon is explicit authority that R.A. No. 8974 applies with

respect to substantive matters covered by it to the exclusion of Rule 67 in cases

when expropriation is availed of for a national government project. We noted

in Gingoyon: chanroblesvirtuallawlibrary

It is the plain intent of Rep. Act No. 8974 to supersede the system of deposit under Rule 67 with the scheme of immediate payment in cases involving national government infrastructure projects. chanroblesvirtuallawlibrary

x x x chanroblesvirtuallawlibrary

It likewise bears noting that the appropriate standard of just compensation is a substantive matter. It is well within the province of the legislature to fix the standard, which it did through the enactment of Rep. Act No. 8974. Specifically, this prescribes the new standards in determining the amount of just compensation in expropriation cases relating to national government infrastructure projects, as well as the manner of payment thereof. At the same time, Section 14 of the Implementing Rules recognizes the continued applicability of Rule 67 on procedural aspects when it provides all matters regarding defenses and objections to the complaint, issues on uncertain ownership and conflicting claims, effects of appeal on the rights of the parties, and such other incidents affecting the complaint shall be resolved under the provisions on expropriation of Rule 67 of the Rules of Court.[23] chanroblesvirtuallawlibrary

The right of a property owner to receive just compensation prior to the actual

taking of the property by the State is a proprietary right which Congress can

legislate on.[24] R.A. No. 8974 being applicable in this case, the government agency

involved must comply with the guidelines set forth in Sec. 4 [25] of R.A. No.

8974. chanroblesvirtuallawlibrary

chanroblesvirtuallawlibrary

As earlier mentioned, Section 3A of R.A. No. 6395, as amended, substantially

provides that properties which will be traversed by transmission lines will only be

considered as easements and just compensation for such right of way easement

shall not exceed 10 percent of the market value.[26] However, this Court has

repeatedly 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.[27] chanroblesvirtuallawlibrary

In National Power Corporation v. Manubay Agro-Industrial Development Corporation,[28] we held that the taking of property was purely an easement of a right of way, but

we nevertheless ruled that the full market value should be paid instead of an

easement fee.[29] This Court is mindful of the fact that the construction of the

transmission lines will definitely have limitations and will indefinitely deprive the

owners of the land of their normal use. chanroblesvirtuallawlibrary

chanroblesvirtuallawlibrary

The presence of transmission lines undoubtedly restricts respondents use of

his property.Petitioner is thus liable to pay respondent the full market value of the

property. chanroblesvirtuallawlibrary

The second aspect of the compensation issue relates to the reckoning date

for the determination of just compensation. Petitioner contends that the

computation should be made as of 27 June 2001, the date when it filed the

expropriation complaint, as provided in Rule 67. We agree. chanroblesvirtuallawlibrary

Rule 67 clearly provides that the value of just compensation shall be determined as

of the date of the taking of the property or the filing of the complaint, whichever

came first.[30] In B.H. Berkenkotter & Co. v. Court of Appeals, we held

that: chanroblesvirtuallawlibrary

chanroblesvirtuallawlibrary

It is settled that just compensation is to be ascertained as of the time of the taking, which usually coincides with the commencement of the expropriation proceedings. Where the institution of the action precedes entry into the property, the just compensation is to be ascertained as of the time of the filing of the complaint.[31] (emphasis supplied)

Typically, the time of taking is contemporaneous with the time the

petition is filed. The general rule is what is provided for by Rule 67. There

are exceptionsgrave injustice to the property owner,[32] the taking did not

have color of legal authority,[33] the taking of the property was not initially for

expropriation[34] and the owner will be given undue increment advantages

because of the expropriation.[35] However, none of these exceptions are

present in the instant case. chanroblesvirtuallawlibrary

Moreover, respondents reliance on the ruling in City of Cebu v. Spouses

Dedamo,[36] is misplaced since the applicable law therein was the Local Government

Code which explicitly provides that the value of just compensation shall be

computed at the time of taking.[37] chanroblesvirtuallawlibrary

Based on the foregoing, the reckoning date for the determination of the

amount of just compensation is 27 June 2001, the date when petitioner filed its

expropriation complaint. chanroblesvirtuallawlibrary

As a final note, the function for determining just compensation remains

judicial in character. In Export Processing Zone Authority v. Dulay,[38] and National

Power Corporation v. Purefoods,[39]we ruled: chanroblesvirtuallawlibrary

The determination of just compensation in eminent domain cases is a judicial function. The executive department or legislature may make the initial determinations but when a party claims a violation of the guarantee in the Bill of Rights that private property may not be taken for public use without just compensation, no statute, decree, or executive order can mandate its own determination shall prevail over the court's findings. Much less can the courts be precluded from looking into the just-ness of the decreed compensation.[40] chanroblesvirtuallawlibrary

Thus, the lower court must use the standards set forth in Sec. 5 [41] of R.A. No.

8974 to arrive at the amount of just compensation. chanroblesvirtuallawlibrary

To recapitulate, R.A. No. 8974 applies to properties expropriated for the

installation of petitioners power transmission lines. Also, petitioner is liable to pay

the full amount of the fair market value and not merely a 10 percent easement fee

for the expropriated property. Likewise, the value of the property should be

reckoned as of 27 June 2001, the date of the filing of the complaint in compliance

with Rule 67. Lastly, respondent failed to assign as error the Court of Appeals ruling

regarding the need to appoint a new set of commissioners.[42] However, even if

respondent had assigned the matter as error, it would still be denied since the

conflicting appraisals submitted by the commissioners were not both reckoned as of

the date of filing of the complaint. Thus, there is need to remand this case in line

with the appellate courts valid directive for the new set of

commissioners. chanroblesvirtuallawlibrary

WHEREFORE the petition is partially GRANTED. The Decision of the Court of

Appeals isAFFIRMED insofar as it ordered petitioner to pay the full amount of the

fair market value of the property involved as just compensation and

is REVERSED insofar as it directed that such compensation be computed as of the

date of taking instead of earlier which is the date of filing of the complaint. This

case is REMANDED to the trial court for the appointment of a new set of

commissioners in accordance with Sec. 8, Rule 67 of the Rules of Court and the

determination of just compensation in conformity with this

Decision. The Regional Trial Court of San Fernando City, Pampanga is directed to

conduct, complete and resolve the further proceedings with deliberate

dispatch. chanroblesvirtuallawlibrary

SO ORDERED.

G.R. No. 173085 : January 19, 2011

PHILIPPINE VETERANS BANK, Petitioner, v. BASES CONVERSION DEVELOPMENT AUTHORITY, LAND BANK OF THE PHILIPPINES , ARMANDO SIMBILLO, CHRISTIAN MARCELO, ROLANDODAVID, RICARDO BUCUD, PABLO SANTOS, AGRIFINA ENRIQUEZ, CONRADO ESPELETA, CATGERUBE CASTRO, CARLITO MERCADO and ALFREDO SUAREZ, Respondent.

D E C I S I O N

ABAD, J.: chanrob1esvirtwallawlibrary

This case is about the authority of the court in an expropriation case to adjudicate questions of ownership of the subject properties where such questions involve the determination of the validity of the issuance to the defendants of Certificates of Land Ownership Awards (CLOAs) and Emancipation Patents (EPs), questions that fall within the jurisdiction of the Department of Agrarian Reform Adjudication Board (DARAB).

The Facts and the Case

In late 2003 respondent Bases Conversion Development Authority (BCDA), a government corporation, filed several expropriation actions before the various branches of the Regional Trial Court (RTC) of Angeles City, for acquisition of lands needed for the construction of the Subic-Clark-Tarlac Expressway Project. Ten of these cases were raffled to Branch 58 of the court1

cralaw and it is these that are the concern of the present petition.

The defendants in Branch 58 cases were respondents Armando Simbillo, Christian Marcelo, Rolando David, Ricardo Bucud, Pablo Santos, Agrifina Enriquez, Conrado Espeleta, Catgerube Castro, Carlito Mercado, and Alfredo Suarez. They were the registered owners of the expropriated lands that they acquired as beneficiaries of the comprehensive agrarian reform program. Another defendant was Land Bank of the Philippines, the mortgagee of the lands by virtue of the loans it extended for their acquisition. The lands in these cases were located in Porac and Floridablanca, Pampanga.

On learning of the expropriation cases before Branch 58, petitioner Philippine Veterans Bank (PVB) filed motions to intervene in all the cases with attached complaints-in-intervention, a remedy that it adopted in similar cases with the other branches. PVB alleged that the covered properties actually belonged to Belmonte Agro-Industrial Development Corp. which mortgaged the lands to PVB in 1976. PVB had since foreclosed on the mortgages and bought the same at public auction in 1982. Unfortunately, the bank had been unable to consolidate ownership in its name.

But, in its order of August 18, 2004,2cralaw Branch 58 denied PVB's motion for intervention on the ground that the

intervention amounts to a third-party complaint that is not allowed in expropriation cases and that the intervention would delay the proceedings in the cases before it. Besides, said Branch 58, PVB had a pending action for annulment of the titles issued to the individual defendants and this was pending before Branch 62 of the court.

PVB filed its motion for reconsideration but Branch 58 denied the same, prompting the bank to file a petition for certiorari with the Court of Appeals (CA).3

cralaw On January 26, 2006 the CA rendered a decision, dismissing the petition for lack of merit.4

cralaw It also denied in a resolution dated June 2, 20065cralawPVB's motion for

reconsideration.

Meanwhile, on April 3, 2006 Branch 58 issued separate decisions in all 10 cases before it, granting the expropriation of the subject properties. The court noted the uncertainty as to the ownership of such properties but took no action to grant BCDA's prayer in its complaint that it determine the question of ownership of the same pursuant to Section 9, Rule 67 of the Revised Rules of Civil Procedure.6

cralawredlaw

The Issue Presented

The issue presented in this case is whether or not the CA erred in holding that PVB was not entitled to intervene in the expropriation cases before Branch 58 of the Angeles City RTC.

The Court's Ruling

PVB maintains that in deciding the case, the RTC and the CA ignored Section 9, Rule 67 of the 1997 Rules of Civil Procedure, which authorizes the court adjudicating the expropriation case to hear and decide conflicting claims regarding the ownership of the properties involved while the compensation for the expropriated property is in the meantime deposited with the court. Section 9 provides: chanrob1esvirtwallawlibrary

Sec. 9. Uncertain ownership; conflicting claims. - If the ownership of the property taken is uncertain, or there are conflicting claims to any part thereof, the court may order any sum or sums awarded as compensation for the property to be paid to the court for the benefit of the person adjudged in the same proceeding to be entitled thereto. But the judgment shall require the payment of the sum or sums awarded to either the defendant or the court before the plaintiff can enter upon the property, or retain it for the public use or purpose if entry has already been made.

PVB's point regarding the authority of the court in expropriation cases to hear and adjudicate conflicting claims over the ownership of the lands involved in such cases is valid. But such rule obviously cannot apply to PVB for the following reasons: chanrob1esvirtwallawlibrary

1. At the time PVB tried to intervene in the expropriation cases, its conflict with the farmer beneficiaries who held CLOAs, EPs, or TCTs emanating from such titles were already pending before Angeles City RTC Branch 62, a co-equal branch of the same court. Branch 58 had no authority to pre-empt Branch 62 of its power to hear and adjudicate claims that were already pending before it.

2. Of course, subsequently, after the CA dismissed PVB's petition on January 26, 2006, the latter filed a motion for reconsideration, pointing out that it had in the meantime already withdrawn the actions it filed with Branch 62 after learning from the decision of the Supreme Court in Department of Agrarian Reform v. Cuenca,7

cralaw that jurisdiction over cases involving the annulment of CLOAs and EPs were vested by Republic Act 6657 in the DARAB.8

cralawredlaw

PVB now points out that, since there was no longer any impediment in RTC Branch 58 taking cognizance of its motion for intervention and adjudicating the parties' conflicting claims over the expropriated properties, the CA was in error in not reconsidering its decision.

But PVB's withdrawal of its actions from Branch 62 cannot give Branch 58 comfort. As PVB itself insists, jurisdiction over the annulment of the individual defendants' CLOAs and EPs (which titles if annulled would leave PVB's titles to the lands unchallenged) lies with the DARAB. Branch 58 would still have no power to adjudicate the issues of ownership presented by the PVB's intervention.

Actually, PVB's remedy was to secure an order from Branch 58 to have the proceeds of the expropriation deposited with that branch in the meantime, pending adjudication of the issues of ownership of the expropriated lands by the DARAB. Section 9 above empowers the court to order payment to itself of the proceeds of the expropriation whenever questions of ownership are yet to be settled. There is no reason why this rule should not be applied even where the settlement of such questions is to be made by another tribunal.

WHEREFORE, the Court DENIES the petition and AFFIRMS the decision of the Court of Appeals dated January 26, 2006 and its resolution dated June 2, 2006 in CA-G.R. SP 88144.

SO ORDERED.

 

EN BANC

 

REPUBLIC OF THE PHILIPPINES, G.R. No. 166429

Represented by Executive Secretary

Eduardo R. Ermita, the DEPARTMENT

OF TRANSPORTATION AND Present:

COMMUNICATIONS (DOTC), and the

MANILA INTERNATIONAL AIRPORT DAVIDE, JR., C.J.,

AUTHORITY (MIAA), PUNO,

Petitioners, PANGANIBAN,

' QUISUMBING,

YNARES-SANTIAGO,

SANDOVAL-GUTIERREZ,

CARPIO,

' -versus- AUSTRIA-MARTINEZ,

CORONA,

CARPIO-MORALES,

CALLEJO, SR.,

AZCUNA,

HON. HENRICK F. GINGOYON, TINGA,

In his capacity as Presiding CHICO-NAZARIO, and

Judge of the Regional Trial Court, GARCIA, JJ.

Branch 117, Pasay City and

PHILIPPINE INTERNATIONAL AIR

TERMINALS CO., INC.,

Respondents. Promulgated:

 

December 19, 2005

 

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

 

D E C I S I O N

TINGA, J.:

The Ninoy Aquino International Airport Passenger Terminal III (NAIA 3) was conceived, designed and constructed to serve as the country's show window to the world. Regrettably, it has spawned controversies. Regrettably too, despite the apparent completion of the terminal complex way back it has not yet been operated. This has caused immeasurable economic damage to the country, not to mention its deplorable discredit in the international community.

 

In the first case that reached this Court, Agan v. PIATCO, [1] the contracts' which the Government had with the contractor were voided for being contrary to law and public policy. The second case now before the Court involves the matter of just compensation due the contractor for the terminal complex it built. We decide the case on the basis of fairness, the same norm that pervades both the Court's 2004 Resolution in the first case and the latest expropriation law.

 

The present controversy has its roots with the promulgation of the Court's decision in Agan v. PIATCO, [2]promulgated in 2003 (2003 Decision). This decision nullified the 'Concession Agreement for the Build-Operate-and-Transfer Arrangement of the Ninoy Aquino International Airport Passenger Terminal III entered into between the Philippine Government (Government) and the Philippine International Air Terminals Co., Inc. (PIATCO), as well as the amendments and supplements thereto. The agreement had authorized PIATCO to build a new international airport terminal (NAIA 3), as well as a franchise to operate and maintain the said terminal during the concession period of 25 years. The contracts were nullified, among others, that Paircargo Consortium, predecessor of PIATCO, did not possess the requisite financial capacity when it was awarded the NAIA 3 contract and that the agreement was' contrary to public policy. [3]

 

At the time of the promulgation of the 2003 Decision, the NAIA 3 facilities had already been built by PIATCO and were nearing completion. [4] However, the ponencia was silent as to the legal status of the NAIA 3 facilities following the nullification of the contracts, as well as whatever rights of PIATCO for reimbursement for its expenses in the construction of the facilities. Still, in his Separate Opinion, Justice Panganiban, joined by Justice Callejo, declared as follows:

 

Should government pay at all for reasonable expenses incurred in the construction of the Terminal? Indeed it should, otherwise it will be unjustly enriching itself at the expense of Piatco and, in particular, its funders, contractors and investors ' both local and foreign . After all, there is no question that the State needs and will make use of Terminal III, it being part and parcel of the critical infrastructure and transportation-related programs of government. [5]

 

PIATCO and several respondents-intervenors filed their respective motions for the reconsideration of the 2003 Decision. These motions were denied by the Court in its Resolution dated 21 January 2004 (2004 Resolution). [6]However, the Court this time squarely addressed the issue of the rights of PIATCO to refund, compensation or reimbursement for its expenses in the construction of the NAIA 3 facilities. The holding of the Court on this crucial point follows:

 

This Court, however, is not unmindful of the reality that the structures comprising the NAIA IPT III facility are almost complete and that funds have been spent by PIATCO in their construction.For the government to take over the said facility, it has to compensate respondent PIATCO as builder of the said structures. The compensation must be just and

in accordance with law and equity for the government can not unjustly enrich itself at the expense of PIATCO and its investors.[7]

 

 

 

After the promulgation of the rulings' in Agan, the NAIA 3 facilities have remained in the possession of PIATCO, despite the avowed intent of the Government to put the airport terminal into immediate operation. The Government and PIATCO conducted several rounds of negotiation regarding the NAIA 3 facilities. [8] It also appears that arbitral proceedings were commenced before the International Chamber of Commerce International Court of Arbitration and the International Centre for the Settlement of Investment Disputes, [9] although the Government has raised jurisdictional questions before those two bodies. [10]

 

Then, on 21 December 2004, the Government [11] filed a Complaint for expropriation with the Pasay City Regional Trial Court (RTC), together with an Application for Special Raffle seeking the immediate holding of a special raffle. The Government sought upon the filing of the complaint the issuance of a writ of possession authorizing it to take immediate possession and control over the NAIA 3 facilities.

 

The Government also declared that it had deposited the amount of P 3,002,125,000.00 [12] (3 Billion) [13] in Cash with the Land Bank of the Philippines, representing the NAIA 3 terminal's assessed value for taxation purposes. [14]

 

The case [15] was raffled to Branch 117 of the Pasay City RTC, presided by respondent judge Hon. Henrick F. Gingoyon

(Hon. Gingoyon). On the same day that the Complaint was filed, the RTC issued an Order [16] directing the issuance of a writ of possession to the Government, authorizing it to 'take or enter upon the possession of the NAIA 3 facilities. Citing the case of City of v. Serrano, [17] the RTC noted that it had the ministerial duty to issue the writ of possession upon the filing of a complaint for expropriation sufficient in form and substance, and upon deposit made by the government of the amount equivalent to the assessed value of the property subject to expropriation. The RTC found these requisites present, particularly noting that '[t]he case record shows that [the Government has] deposited the assessed value of the [NAIA 3 facilities] in the Land Bank of the Philippines, an authorized depositary, as shown by the certification attached to their complaint. Also on the same day, the RTC issued a Writ of Possession. According to PIATCO, the Government was able to take possession over the NAIA 3 facilities immediately after the Writ of Possession was issued. [18]

 

However, on 4 January 2005, the RTC issued another Order designed to supplement its 21 December 2004 Order and the Writ of Possession. In the 4 January 2005 Order, now assailed in the present petition, the RTC noted that its earlier issuance of its writ of possession was pursuant to Section 2, Rule 67 of the 1997 Rules of Civil Procedure. However, it was observed that Republic Act No. 8974 (Rep. Act No. 8974), otherwise known as 'An Act to Facilitate the Acquisition of Right-of-Way, Site or Location for National Government Infrastructure Projects and For Other Purposes' and its Implementing Rules and Regulations (Implementing Rules) had amended Rule 67 in many respects.

 

There are at least two crucial differences between the respective procedures under Rep. Act No. 8974 and Rule 67.

Under the statute, the Government is required to make immediate payment to the property owner upon the filing of the complaint to be entitled to a writ of possession, whereas' in Rule 67, the Government is required only to make an initial deposit with an authorized government depositary. Moreover, Rule 67 prescribes that the initial deposit be equivalent to the assessed value of the property for purposes of taxation, unlike Rep. Act No. 8974 which provides, as the relevant standard for initial compensation, the market value of the property as stated in the tax declaration or the current relevant zonal valuation of the Bureau of Internal Revenue (BIR), whichever is higher, and the value of the improvements and/or structures using the replacement cost method.

 

Accordingly, on the basis of Sections 4 and 7 of Rep. Act No. 8974 and Section 10 of the Implementing Rules, the RTC made key qualifications to its earlier issuances. First, it directed the Land Bank of the Philippines, Baclaran Branch (LBP-Baclaran), to immediately release the amount of US$62,343,175.77 to PIATCO, an amount which the RTC characterized as that which the Government 'specifically made available for the purpose of this expropriation; and such amount to be deducted from the amount of just compensation due PIATCO as eventually determined by the RTC. Second, the Government was directed to submit to the RTC a Certificate of Availability of Funds signed by authorized officials to cover the payment of just compensation. Third, the Government was directed 'to maintain, preserve and safeguard the NAIA 3 facilities or 'perform such as acts or activities in preparation for their direct operation of the airport terminal, pending expropriation proceedings and full payment of just compensation. However, the Government was prohibited 'from performing acts of ownership like awarding concessions or leasing any part of [NAIA 3] to other parties. [19]

 

The very next day after the issuance of the assailed 4 January 2005 Order, the Government filed an Urgent Motion for Reconsideration, which was set for hearing on 10 January 2005. On 7 January 2005, the RTC issued another Order, the second now assailed before this Court, which appointed three (3) Commissioners to ascertain the amount of just compensation for the NAIA 3 Complex. That same day, the Government filed a Motion for Inhibition of Hon. Gingoyon.

 

The RTC heard the Urgent Motion for Reconsideration and Motion for Inhibition on 10 January 2005. On the same day, it denied these motions in an Omnibus Order dated 10 January 2005. This is the third Order now assailed before this Court. Nonetheless, while the Omnibus Orderaffirmed the earlier dispositions in the 4 January 2005 Order, it excepted from affirmance 'the superfluous part of the Order prohibiting the plaintiffs from awarding concessions or leasing any part of [NAIA 3] to other parties. [20]

 

Thus, the present Petition for Certiorari and Prohibition under Rule 65 was filed on 13 January 2005. The petition prayed for the nullification of the RTC orders dated 4 January 2005, 7 January 2005, and 10 January 2005, and for the inhibition of Hon. Gingoyon from taking further action on the expropriation case. A concurrent prayer for the issuance of a temporary restraining order and preliminary injunction was granted by this Court in a Resolution dated 14 January 2005. [21]

 

The Government, in imputing grave abuse of discretion to the

acts of Hon. Gingoyon, raises five general arguments, to wit:

 

(i) that Rule 67, not Rep. Act No. 8974, governs the present expropriation proceedings;

 

(ii) that Hon. Gingoyon erred when he ordered the immediate release of the amount of US$62.3 Million to PIATCO considering that the assessed value as alleged in the complaint was only P 3 Billion;

 

(iii) that the RTC could not have prohibited the Government from enjoining the performance of acts of ownership;

 

 

 

(iv) that the appointment of the three commissioners was erroneous; and

 

(v) that Hon. Gingoyon should be compelled to inhibit himself from the expropriation case. [22]

 

Before we delve into the merits of the issues raised by the Government, it is essential to consider the crucial holding of the Court in its 2004 Resolution in Agan, which we repeat below:

 

This Court, however, is not unmindful of the reality that the structures comprising the NAIA IPT III facility are almost complete and that funds have been spent by PIATCO in their construction. For the government to take over the said facility, it has to compensate respondent PIATCO as builder of the said structures. The compensation must be just and in accordance with law and equity for the government can not unjustly enrich itself at the expense of PIATCO and its investors. [23]

 

This pronouncement contains the fundamental premises which

permeate this decision of the Court. Indeed, Agan , final and

executory as it is, stands as governing law in this case, and any

disposition of the present petition must conform to the conditions

laid down by the Court in its 2004Resolution .

 

 

 

 

The 2004 Resolution Which Is

Law of This Case Generally

Permits Expropriation

 

The pronouncement in the 2004 Resolution is especially significant to this case in two aspects, namely: (i) that

PIATCO must receive payment of just compensation determined in accordance with law and equity; and (ii) that the government is barred from taking over NAIA 3 until such just compensation is paid . The parties cannot be allowed to evade the directives laid down by this Court through any mode of judicial action, such as the complaint for eminent domain.

 

It cannot be denied though that the Court in the 2004 Resolution prescribed mandatory guidelines which the Government must observe before it could acquire the NAIA 3 facilities. Thus, the actions of respondent judge under review, as well as the arguments of the parties must, to merit affirmation, pass the threshold test of whether such propositions are in accord with the 2004 Resolution.

 

The Government does not contest the efficacy of this pronouncement in the 2004 Resolution , [24]thus its application

 

 

to the case at bar is not a matter of controversy. Of course, questions such as what is the standard of 'just compensation and which particular laws and equitable principles are applicable, remain in dispute and shall be resolved forthwith.

 

The Government has chosen to resort to expropriation, a remedy available under the law, which has the added benefit of an integrated process for the determination of just compensation and the payment thereof to PIATCO. We

appreciate that the case at bar is a highly unusual case, whereby the Government seeks to expropriate a building complex constructed on land which the State already owns. [25] There is an inherent illogic in the resort to eminent domain on property already owned by the State. At first blush, since the State already owns the property on which NAIA 3 stands, the proper remedy should be akin to an action for ejectment.

 

However, the reason for the resort by the Government to expropriation proceedings is understandable in this case. The 2004 Resolution, in requiring the payment of just compensation prior to the takeover by the Government of

 

NAIA 3, effectively precluded it from acquiring possession or ownership of the NAIA 3 through the unilateral exercise of its rights as the owner of the ground on which the facilities stood. Thus, as things stood after the 2004 Resolution, the right of the Government to take over the NAIA 3 terminal was preconditioned by lawful order on the payment of just compensation to PIATCO as builder of the structures.

 

The determination of just compensation could very well be agreed upon by the parties without judicial intervention, and it appears that steps towards that direction had been engaged in. Still, ultimately, the Government resorted to its inherent power of eminent domain through expropriation proceedings. Is eminent domain appropriate in the first place, with due regard not only to the law on expropriation but also to the Court's 2004 Resolution in Agan ?

 

The right of eminent domain extends to personal and real property, and the NAIA 3 structures, adhered as they are to the soil, are considered as real property. [26] The public purpose for the expropriation is also beyond dispute. It should also be noted that Section 1 of Rule 67 (on Expropriation) recognizes the possibility that the property sought to be expropriated may be titled in the name of the

 

Republic of the Philippines, although occupied by private individuals, and in such case an averment to that effect should be made in the complaint. The instant expropriation complaint did aver that the NAIA 3 complex 'stands on a parcel of land owned by the Bases Conversion Development Authority, another agency of [the Republic of the Philippines]. [27]

 

Admittedly, eminent domain is not the sole judicial recourse by which the Government may have acquired the NAIA 3 facilities while satisfying the requisites in the 2004 Resolution. Eminent domain though may be the most effective, as well as the speediest means by which such goals may be accomplished. Not only does it enable immediate possession after satisfaction of the requisites under the law, it also has a built-in procedure through which just compensation may be ascertained. Thus, there should be no question as to the propriety of eminent domain proceedings in this case.

 

Still, in applying the laws and rules on expropriation in the case at bar, we are impelled to apply or construe these rules in accordance with the Court's prescriptions in the 2004 Resolution to achieve the end effect that the Government may validly take over the NAIA 3 facilities. Insofar as this case is concerned, the 2004 Resolution is effective not only as a legal precedent, but as the source of rights and prescriptions that

must be guaranteed, if not enforced, in the resolution of this petition. Otherwise, the integrity and efficacy of the rulings of this Court will be severely diminished.

 

It is from these premises that we resolve the first question, whether Rule 67 of the Rules of Court or Rep. Act No. 8974 governs the expropriation proceedings in this case.

 

Application of Rule 67 Violates

the 2004 Agan Resolution

 

The Government insists that Rule 67 of the Rules of Court governs the expropriation proceedings in this case to the exclusion of all other laws. On the other hand, PIATCO claims that it is Rep. Act No. 8974 which does apply. Earlier, we had adverted to the basic differences between the statute and the procedural rule. Further elaboration is in order.

 

Rule 67 outlines the procedure under which eminent domain may be exercised by the Government. Yet by no means does it serve at present as the solitary guideline through which the State may expropriate private property. For example, Section 19 of the Local Government Code governs as to the exercise by local government units of the power of eminent domain through an enabling ordinance. And then there is Rep. Act No. 8974, which covers expropriation proceedings intended for national government infrastructure projects.

 

Rep. Act No. 8974, which provides for a procedure eminently

more favorable to the property owner than Rule 67, inescapably applies in instances when the national government expropriates property 'for national government infrastructure projects. [28] Thus, if expropriation is engaged in by the national government for purposes other than national infrastructure projects, the assessed value standard and the deposit mode prescribed in Rule 67 continues to apply.

 

Under both Rule 67 and Rep. Act No. 8974, the Government commences expropriation proceedings through the filing of a complaint. Unlike in the case of local governments which necessitate an authorizing ordinance before expropriation may be accomplished, there is no need under Rule 67 or Rep. Act No. 8974 for legislative authorization before the Government may proceed with a particular exercise of eminent domain. The most crucial difference between Rule 67 and Rep. Act No. 8974 concerns the particular essential step the Government has to undertake to be entitled to a writ of possession.

 

 

 

 

The first paragraph of Section 2 of Rule 67 provides:

 

'SEC. 2. Entry of plaintiff upon depositing value with authorized government depository. ' Upon the filing of the complaint or at any time thereafter and after due notice to the defendant, the plaintiff shall have the right to take or enter upon the possession of the real property involved if he

deposits with the authorized government depositary an amount equivalent to the assessed value of the property for purposes of taxation to be held by such bank subject to the orders of the court. Such deposit shall be in money, unless in lieu thereof the court authorizes the deposit of a certificate of deposit of a government bank of the Republic of the Philippines payable on demand to the authorized government depositary.

 

 

In contrast, Section 4 of Rep. Act No. 8974 relevantly states:

 

SEC. 4. Guidelines for Expropriation Proceedings . Whenever it is necessary to acquire real property for the right-of-way, site or location for any national government infrastructure project through expropriation, the appropriate proceedings before the proper court under the following guidelines:

 a) Upon the filing of the complaint, and after due notice to the defendant, the implementing agency shall immediately pay the owner of the property the amount equivalent to the sum of (1) one hundred percent (100%) of the value of the property based on the current relevant zonal valuation of the Bureau of Internal Revenue (BIR); and (2) the value of the improvements and/or structures as determined under Section 7 hereof; 

. . . c) In case the completion of a government infrastructure project is of utmost urgency and importance, and there is no existing valuation of the area concerned, the implementing agency shall immediately pay the owner of the property its proffered value taking into consideration the standards prescribed in Section 5 hereof.

 

Upon completion with the guidelines abovementioned, the court shall immediately issue to the implementing agency an order to take possession of the property and start the implementation of the project.

 Before the court can issue a Writ of

Possession, the implementing agency shall present to the court a certificate of availability of funds from the proper official concerned.

 . . . 

 

As can be gleaned from the above-quoted texts, Rule 67 merely requires the Government to deposit with an authorized government depositary the assessed value of the property for expropriation for it to be entitled to a writ of possession. On the other hand, Rep. Act No. 8974 requires that the Government make a direct payment to the property owner before the writ may issue. Moreover, such payment is based on the zonal valuation of the BIR in the case of land, the value of the improvements or structures under the replacement cost method, [29] or if no such valuation is available and in cases of

utmost urgency, the proffered value of the property to be seized.

 

It is quite apparent why the Government would prefer to apply Rule 67 in lieu of Rep. Act No. 8974. Under Rule 67, it would not be obliged to immediately pay any amount to PIATCO before it can obtain the writ of possession since all it need do is deposit the amount equivalent to the assessed value with an authorized government depositary. Hence, it devotes considerable effort to point out that Rep. Act No. 8974 does not apply in this case, notwithstanding the undeniable reality that NAIA 3 is a national government project. Yet, these efforts fail, especially considering the controlling effect of the 2004 Resolution in Agan on the adjudication of this case.

 

It is the finding of this Court that the staging of expropriation proceedings in this case with the exclusive use of Rule 67 would allow for the Government to take over the NAIA 3 facilities in a fashion that directly rebukes our 2004 Resolution in Agan . This Court cannot sanction deviation from its own final and executory orders.

 

Section 2 of Rule 67 provides that the State 'shall have the right to take or enter upon the possession of the real property involved if [the plaintiff] deposits with the authorized government depositary an amount equivalent to the assessed value of the property for purposes of taxation to be held by such bank subject to the orders of the court. [30] It is thus apparent that under the provision, all the Government need do to obtain a writ of possession is to deposit the amount equivalent to the assessed value with an authorized government depositary.

 

Would the deposit under Section 2 of Rule 67 satisfy the requirement laid down in the 2004 Resolution that '[f]or the government to take over the said facility, it has to compensate respondent PIATCO as builder of the said structures' ? Evidently not.

 

If Section 2 of Rule 67 were to apply, PIATCO would be enjoined from receiving a single centavo as just compensation before the Government takes over the NAIA 3 facility by virtue of a writ of possession. Such an injunction squarely contradicts the letter and intent of the 2004 Resolution. Hence, the position of the Government sanctions its own disregard or violation the prescription laid down by this Court that there must first be just compensation paid to PIATCO before the Government may take over the NAIA 3 facilities.

 

Thus, at the very least, Rule 67 cannot apply in this case without violating the 2004 Resolution. Even assuming that Rep. Act No. 8974 does not govern in this case, it does not necessarily follow that Rule 67 should then apply. After all, adherence to the letter of Section 2, Rule 67 would in turn violate the Court's requirement in the 2004 Resolution that there must first be payment of just compensation to PIATCO before the Government may take over the property.

 

It is the plain intent of Rep. Act No. 8974 to supersede the system of deposit under Rule 67 with the scheme of 'immediate payment in cases involving national government infrastructure projects. The following portion of the Senate deliberations, cited by PIATCO in its Memorandum, is worth quoting to

cogitate on the purpose behind the plain meaning of the law:

 

THE CHAIRMAN (SEN. CAYETANO). 'x x x Because the Senate believes that, you know, we have to pay the landowners immediately not by treasury bills but by cash. Since we are depriving them, you know, upon payment, 'no, of possession, we might as well pay them as much, 'no, hindi lang 50 percent . x x x THE CHAIRMAN (REP. VERGARA). Accepted. x x x THE CHAIRMAN (SEN. CAYETANO). Oo. Because this is really in favor of the landowners, e. THE CHAIRMAN (REP. VERGARA). That's why we need to really secure the availability of funds. x x x THE CHAIRMAN (SEN. CAYETANO). No, no. It's the same. It says here: iyong first paragraph, diba? Iyong zonal ' talagang magbabayad muna. In other words, you know, there must be a payment kaagad. (TSN, Bicameral Conference on the Disagreeing Provisions of House Bill 1422 and Senate Bill 2117, August 29, 2000, pp. 14-20) x x x 

THE CHAIRMAN (SEN. CAYETANO). Okay, okay, 'no. Unang-una, it is not deposit, 'no. It's payment. REP. BATERINA. It's payment, ho, payment. (Id., p. 63) [31]

 

 

 

It likewise bears noting that the appropriate standard of just compensation is a substantive matter. It is well within the province of the legislature to fix the standard, which it did through the enactment of Rep. Act No. 8974. Specifically, this prescribes the new standards in determining the amount of just compensation in expropriation cases relating to national government infrastructure projects, as well as the manner of payment thereof. At the same time, Section 14 of the Implementing Rules recognizes the continued applicability of Rule 67 on procedural aspects when it provides 'all matters regarding defenses and objections to the complaint, issues on uncertain ownership and conflicting claims, effects of appeal on the rights of the parties, and such other incidents affecting the complaint shall be resolved under the provisions on expropriation of Rule 67 of the Rules of Court. [32]

 

'Given that the 2004 Resolution militates against the continued use of the norm under Section 2, Rule 67, is it then possible to apply Rep. Act No. 8974? We find that it is, and moreover, its application in this case complements rather than contravenes the prescriptions laid down in the 2004 Resolution.

 

 

 

 

 

Rep. Act No. 8974 Fits

to the Situation at Bar

and Complements the

2004 Agan Resolution

 

Rep. Act No. 8974 is entitled 'An Act To Facilitate The Acquisition Of Right-Of-Way, Site Or Location For National Government Infrastructure Projects And For Other Purposes. Obviously, the law is intended to cover expropriation proceedings intended for national government infrastructure projects. Section 2 of Rep. Act No. 8974 explains what are considered as 'national government projects.

 Sec. 2. National Government Projects . '

The term 'national government projects' shall refer to all national government infrastructure, engineering works and service contracts, including projects undertaken by government-owned and controlled corporations, all projects covered by Republic Act No. 6957, as amended by Republic Act No. 7718, otherwise known as the Build-Operate-and-Transfer Law, and other related and necessary activities, such as site acquisition, supply and/or installation of equipment and materials, implementation,

construction, completion, operation, maintenance, improvement, repair and rehabilitation, regardless of the source of funding.

 

 

As acknowledged in the 2003 Decision, the development of NAIA 3 was made pursuant to a build-operate-and-transfer arrangement pursuant to Republic Act No. 6957, as amended, [33] which pertains to infrastructure or development projects normally financed by the public sector but which are now wholly or partly implemented by the private sector. [34] Under the build-operate-and-transfer scheme, it is the project proponent which undertakes the construction, including the financing, of a given infrastructure facility. [35] In Tatad v. Garcia, [36] the Court acknowledged that the operator of the EDSA Light Rail Transit project under a BOT scheme was the owner of the facilities such as 'the rail tracks, rolling stocks like the coaches, rail stations, terminals and the power plant. [37]

 

There can be no doubt that PIATCO has ownership rights over the facilities which it had financed and constructed. The 2004 Resolution squarely recognized that right when it mandated the payment of just compensation to PIATCO prior to the takeover by the Government of NAIA 3. The fact that the Government resorted to eminent domain proceedings in the first place is a concession on its part of PIATCO's ownership. Indeed, if no such right is recognized, then there should be no impediment for the Government to seize control of NAIA 3 through ordinary ejectment proceedings.

 

 

 

 

Since the rights of PIATCO over the NAIA 3 facilities are established, the nature of these facilities should now be determined. Under Section 415(1) of the Civil Code, these facilities are ineluctably immovable or real property, as they constitute buildings, roads and constructions of all kinds adhered to the soil. [38] Certainly, the NAIA 3 facilities are of such nature that they cannot just be packed up and transported by PIATCO like a traveling circus caravan.

 

Thus, the property subject of expropriation, the NAIA 3 facilities, are real property owned by PIATCO. This point is critical, considering the Government's insistence that the NAIA 3 facilities cannot be deemed as the 'right-of-way', 'site or 'location of a national government infrastructure project, within the coverage of Rep. Act No. 8974.

 

There is no doubt that the NAIA 3 is not, under any sensible contemplation, a 'right-of-way. Yet we cannot agree with the Government's insistence that neither could NAIA 3 be a 'site or 'location. The petition quotes the definitions provided in Black's Law Dictionary of 'location as the specific place or position of a person or thing and 'site as pertaining to a place or location or a piece of property set aside for specific use. [39] Yet even Black's Law Dictionary provides that '[t]he term [site] does not of itself necessarily mean a place or tract of land fixed by definite boundaries. [40] One would assume that the Government, to back up its contention, would be able to point to a clear-cut rule that a 'site or 'location exclusively refers to soil, grass, pebbles and weeds. There is none.

 

Indeed, we cannot accept the Government's proposition that the only properties that may be expropriated under Rep. Act No. 8974 are parcels of land. Rep. Act No. 8974 contemplates within its coverage such real property constituting land, buildings, roads and constructions of all kinds adhered to the soil. Section 1 of Rep. Act No. 8974, which sets the declaration of the law's policy, refers to 'real property acquired for national government infrastructure projects are promptly paid just compensation. [41] Section 4 is quite explicit in stating that the scope of the law relates to the acquisition of 'real property, which under civil law includes buildings, roads and constructions adhered to the soil.

 

It is moreover apparent that the law and its implementing rules commonly provide for a rule for the valuation of improvements and/or structures thereupon separate from that of the land on which such are constructed. Section 2 of Rep. Act No. 8974 itself recognizes that the improvements or structures on the land may very well be the subject of expropriation proceedings. Section 4(a), in relation to Section 7 of the law provides for the guidelines for the valuation of the improvements or structures to be expropriated. Indeed, nothing in the law would prohibit the application of Section 7, which provides for the valuation method of the improvements and or structures in the instances wherein it is necessary for the Government to expropriate only the improvements or structures, as in this case.

 

The law classifies the NAIA 3 facilities as real properties just like the soil to which they are adhered. Any sub-classifications of real property and divergent treatment based thereupon for purposes of expropriation must be based on substantial distinctions, otherwise the equal protection clause of the

Constitution is violated. There may be perhaps a molecular distinction between soil and the inorganic improvements adhered thereto, yet there are no purposive distinctions that would justify a variant treatment for purposes of expropriation. Both the land itself and the improvements thereupon are susceptible to private ownership independent of each other, capable of pecuniary estimation, and if taken from the owner, considered as a deprivation of property. The owner of improvements seized through expropriation suffers the same degree of loss as the owner of land seized through similar means. Equal protection demands that all persons or things similarly situated should be treated alike, both as to rights conferred and responsibilities imposed. For purposes of expropriation, parcels of land are similarly situated as the buildings or improvements constructed thereon, and a disparate treatment between those two classes of real property infringes the equal protection clause.

 

Even as the provisions of Rep. Act No. 8974 call for that law's application in this case, the threshold test must still be met whether its implementation would conform to the dictates of the Court in the 2004 Resolution. Unlike in the case of Rule 67, the application of Rep. Act No. 8974 will not contravene the 2004 Resolution, which requires the payment of just compensation before any takeover of the NAIA 3 facilities by the Government. The 2004 Resolution does not particularize the extent such payment must be effected before the takeover, but it unquestionably requires at least some degree of payment to the private property owner before a writ of possession may issue. The utilization of Rep. Act No. 8974 guarantees compliance with this bare minimum requirement, as it assures the private property owner the payment of, at the very least, the proffered value of the property to be seized. Such payment of the proffered value to the owner, followed by the issuance of the writ of possession in favor of the Government, is precisely the schematic under Rep. Act No. 8974, one which facially

complies with the prescription laid down in the 2004 Resolution.

 

Clearly then, we see no error on the part of the RTC when it ruled that Rep. Act No. 8974 governs the instant expropriation proceedings.

The Proper Amount to be Paid

under Rep. Act No. 8974

 

 

Then, there is the matter of the proper amount which should be paid to PIATCO by the Government before the writ of possession may issue, consonant to Rep. Act No. 8974.

 

At this juncture, we must address the observation made by the Office of the Solicitor General in behalf of the Government that there could be no 'BIR zonal valuations' on the NAIA 3 facility, as provided in Rep. Act No. 8974, since zonal valuations are only for parcels of land, not for airport terminals. The Court agrees with this point, yet does not see it as an impediment for the application of Rep. Act No. 8974.

 

It must be clarified that PIATCO cannot be reimbursed or justly compensated for the value of the parcel of land on which NAIA 3 stands. PIATCO is not the owner of the land on which the NAIA 3 facility is constructed, and it should not be entitled to just compensation that is inclusive of the value of the land itself. It would be highly disingenuous to compensate PIATCO for the value of land it does not own. Its entitlement to just

compensation should be limited to the value of the improvements and/or structures themselves. Thus, the determination of just compensation cannot include the BIR zonal valuation under Section 4 of Rep. Act No. 8974.

 

 

 

Under Rep. Act No. 8974, the Government is required to 'immediately pay the owner of the property the amount equivalent to the sum of (1) one hundred percent (100%) of the value of the property based on the current relevant zonal valuation of the [BIR]; and (2) the value of the improvements and/or structures as determined under Section 7. As stated above, the BIR zonal valuation cannot apply in this case, thus the amount subject to immediate payment should be limited to 'the value of the improvements and/or structures as determined under Section 7, with Section 7 referring to the 'implementing rules and regulations for the equitable valuation of the improvements and/or structures on the land. Under the present implementing rules in place, the valuation of the improvements/structures are to be based using 'the replacement cost method.[42] However, the replacement cost is only one of the factors to be considered in determining the just compensation.

 

In addition to Rep. Act No. 8974, the 2004 Resolution in Agan also mandated that the payment of just compensation should be in accordance with equity as well. Thus, in ascertaining the ultimate amount of just compensation, the duty of the trial court is to ensure that such amount conforms not only to the law, such as Rep. Act No. 8974, but to principles of equity as well.

 

Admittedly, there is no way, at least for the present, to immediately ascertain the value of the improvements and structures since such valuation is a matter for factual determination. [43] Yet Rep. Act No. 8974 permits an expedited means by which the Government can immediately take possession of the property without having to await precise determination of the valuation. Section 4(c) of Rep. Act No. 8974 states that 'in case the completion of a government infrastructure project is of utmost urgency and importance, and there is no existing valuation of the area concerned, the implementing agency shall immediately pay the owner of the property itsproferred value, taking into consideration the standards prescribed in Section 5 [of the law]. [44]The 'proffered value may strike as a highly subjective standard based solely on the intuition of the government, but Rep. Act No. 8974 does provide relevant standards by which 'proffered value should be based, [45] as well as the certainty

 

of judicial determination of the propriety of the proffered value. [46]

 

In filing the complaint for expropriation, the Government alleged to have deposited the amount ofP3 Billion earmarked for expropriation, representing the assessed value of the property. The making of the deposit, including the determination of the amount of the deposit, was undertaken under the erroneous notion that Rule 67, and not Rep. Act No. 8974, is the applicable law. Still, as regards the amount, the Court sees no impediment to recognize this sum of P3 Billion as the proffered value under Section 4(b) of Rep. Act No. 8974. After all, in the initial determination of the proffered value, the Government is not strictly required to adhere to any predetermined standards, although its proffered value may later

be subjected to judicial review using the standards enumerated under Section 5 of Rep. Act No. 8974.

 

How should we appreciate the questioned order of Hon. Gingoyon, which pegged the amount to be immediately paid to PIATCO at around $62.3 Million? The Order dated 4 January 2005, which mandated such amount, proves problematic in that regard. While the initial sum of P3 Billion may have been based on the assessed value, a standard which should not however apply in this case, the RTC cites without qualification Section 4(a) of Rep. Act No. 8974 as the basis for the amount of $62.3 Million, thus leaving the impression that the BIR zonal valuation may form part of the basis for just compensation, which should not be the case. Moreover, respondent judge made no attempt to apply the enumerated guidelines for determination of just compensation under Section 5 of Rep. Act No. 8974, as required for judicial review of the proffered value.

 

The Court notes that in the 10 January 2005 Omnibus Order , the RTC noted that the concessions agreement entered into between the Government and PIATCO stated that the actual cost of building NAIA 3 was 'not less than US$350 Million. [47] The RTC then proceeded to observe that while Rep. Act No. 8974 required the immediate payment to PIATCO the amount equivalent to 100% of the value of NAIA 3, the amount deposited by the Government constituted only 18% of this value. At this point, no binding import should be given to this observation that the actual cost of building NAIA 3 was 'not less than US$350 Million, as the final conclusions on the amount of just compensation can come only after due ascertainment in accordance with the standards set under Rep. Act No. 8974, not the declarations of the parties. At the same time, the expressed linkage between the BIR zonal valuation

and the amount of just compensation in this case, is revelatory of erroneous thought on the part of the RTC.

 

We have already pointed out the irrelevance of the BIR zonal valuation as an appropriate basis for valuation in this case, PIATCO not being the owner of the land on which the NAIA 3 facilities stand. The subject order is flawed insofar as it fails to qualify that such standard is inappropriate.

 

It does appear that the amount of US$62.3 Million was based on the certification issued by the LBP-Baclaran that the Republic of the Philippines maintained a total balance in that branch amounting to such amount. Yet the actual representation of the $62.3 Million is not clear. The Land Bank Certification expressing such amount does state that it was issued upon request of the International Airport Authority 'purportedly as guaranty deposit for the expropriation complaint. [48]The Government claims in its Memorandum that the entire amount was made available as a guaranty fund for the final and executory judgment of the trial court, and not merely for the issuance of the writ of possession. [49] One could readily conclude that the entire amount of US$62.3 Million was intended by the Government to answer for whatever guaranties may be required for the purpose of the expropriation complaint.

 

Still, such intention the Government may have had as to the entire US$62.3 Million is only inferentially established. In ascertaining the proffered value adduced by the Government, the amount of P3 Billion as the amount deposited characterized in the complaint as 'to be held by [Land Bank] subject to the [RTC's ] orders, [50] should be deemed as controlling. There is no clear evidence that the Government intended to offer

US$62.3 Million as the initial payment of just compensation, the wording of the Land Bank Certification notwithstanding, and credence should be given to the consistent position of the Government on that aspect.

 

In any event, for the RTC to be able to justify the payment of US$62.3 Million to PIATCO and notP3 Billion Pesos, he would have to establish that the higher amount represents the valuation of the structures/improvements, and not the BIR zonal valuation on the land wherein NAIA 3 is built. TheOrder dated 5 January 2005 fails to establish such integral fact, and in the absence of contravening proof, the proffered value of P3 Billion, as presented by the Government, should prevail.

 

Strikingly, the Government submits that assuming that Rep. Act No. 8974 is applicable, the deposited amount of P3 Billion should be considered as the proffered value, since the amount was based on comparative values made by the City Assessor. [51] Accordingly, it should be deemed as having faithfully complied with the requirements of the statute. [52] While the Court agrees that P3 Billion should be considered as the correct proffered value, still we cannot deem the Government as having faithfully complied with Rep. Act No. 8974. For the law plainly requires direct payment to the property owner, and not a mere deposit with the authorized government depositary. Without such direct payment, no writ of possession may be obtained.

 

Writ of Possession May Not

Be Implemented Until Actual

Receipt by PIATCO of Proferred

Value

 

The Court thus finds another error on the part of the RTC. The RTC authorized the issuance of the writ of possession to the Government notwithstanding the fact that no payment of any amount had yet been made to PIATCO, despite the clear command of Rep. Act No. 8974 that there must first be payment before the writ of possession can issue. While the RTC did direct the LBP-Baclaran to immediately release the amount of US$62 Million to PIATCO, it should have likewise suspended the writ of possession, nay, withdrawn it altogether, until the Government shall have actually paid PIATCO. This is the inevitable consequence of the clear command of Rep. Act No. 8974 that requires immediate payment of the initially determined amount of just compensation should be effected. Otherwise, the overpowering intention of Rep. Act No. 8974 of ensuring payment first before transfer of repossession would be eviscerated.

 

Rep. Act No. 8974 represents a significant change from previous expropriation laws such as Rule 67, or even Section 19 of the Local Government Code. Rule 67 and the Local Government Code merely provided that the Government deposit the initial amounts [53] antecedent to acquiring possession of the property with, respectively, an authorized

Government depositary [54] or the proper court. [55] In both cases, the private owner does not receive compensation prior to the deprivation of property. On the other hand, Rep. Act No. 8974 mandates immediate payment of the initial just compensation prior to the issuance of the writ of possession in favor of the Government.

 

Rep. Act No. 8974 is plainly clear in imposing the requirement of immediate prepayment, and no amount of statutory deconstruction can evade such requisite. It enshrines a new approach towards eminent domain that reconciles the inherent unease attending expropriation proceedings with a position of fundamental equity. While expropriation proceedings have always demanded just compensation in exchange for private property, the previous deposit requirement impeded immediate compensation to the private owner, especially in cases wherein the determination

of the final amount of compensation would prove highly disputed. Under the new modality prescribed by Rep. Act No. 8974, the private owner sees immediate monetary recompense with the same degree of speed as the taking of his/her property.

 

 

While eminent domain lies as one of the inherent powers of the State, there is no requirement that it undertake a prolonged procedure, or that the payment of the private owner be protracted as far as practicable. In fact, the expedited procedure of payment, as highlighted under Rep. Act No. 8974, is inherently more fair, especially to the layperson who would be hard-pressed to fully comprehend the social value of expropriation in the first place. Immediate payment placates to some degree whatever ill-will that arises from expropriation, as well as satisfies the demand of basic fairness.

 

The Court has the duty to implement Rep. Act No. 8974 and to direct compliance with the requirement of immediate payment in this case. Accordingly, the Writ of Possession dated 21 December 2004 should be held in abeyance, pending proof of

actual payment by the Government to PIATCO of the proffered value of the NAIA 3 facilities, which totals P3,002,125,000.00.

 

 

Rights of the Government

upon Issuance of the Writ

of Possession

 

 

Once the Government pays PIATCO the amount of the proffered value of P3 Billion, it will be entitled to the Writ of Possession. However, the Government questions the qualification imposed by the RTC in its 4 January 2005 Order consisting of the prohibition on the Government from performing acts of ownership such as awarding concessions or leasing any part of NAIA 3 to other parties. To be certain, the RTC, in its 10 January 2005 Omnibus Order , expressly stated that it was not affirming 'the superfluous part of the Order [of 4 January 2005] prohibiting the plaintiffs from awarding concessions or leasing any part of NAIA [3] to other parties. [56] Still, such statement was predicated on the notion that since the Government was not yet the owner of NAIA 3 until final payment of just compensation, it was obviously incapacitated to perform such acts of ownership.

 

In deciding this question, the 2004 Resolution in Agan cannot be ignored, particularly the declaration that '[f]or the government to take over the said facility, it has to compensate

respondent PIATCO as builder of the said structures. The obvious import of this holding is that unless PIATCO is paid just compensation, the Government is barred from 'taking over, a phrase which in the strictest sense could encompass even a bar of physical possession of NAIA 3, much less operation of the facilities.

 

There are critical reasons for the Court to view the 2004 Resolution less stringently, and thus allow the operation by the Government of NAIA 3 upon the effectivity of the Writ of Possession. For one, the national prestige is diminished every day that passes with the NAIA 3 remaining mothballed. For another, the continued non-use of the facilities contributes to its physical deterioration, if it has not already. And still for another, the economic benefits to the Government and the country at large are beyond dispute once the NAIA 3 is put in operation.

 

Rep. Act No. 8974 provides the appropriate answer for the standard that governs the extent of the acts the Government may be authorized to perform upon the issuance of the writ of possession. Section 4 states that 'the court shall immediately issue to the implementing agency an order to take possession of the property and start the implementation of the project. We hold that accordingly, once the Writ of Possession is effective, the Government itself is authorized to perform the acts that are essential to the operation of the NAIA 3 as an international airport terminal upon the effectivity of the Writ of Possession. These would include the repair, reconditioning and improvement of the complex, maintenance of the existing facilities and equipment, installation of new facilities and equipment, provision of services and facilities pertaining to the facilitation of air traffic and transport, and other services that are integral to a modern-day international airport.

The Government's position is more expansive than that adopted by the Court. It argues that with the writ of possession, it is enabled to perform acts de jure on the expropriated property. It citesRepublic v. Tagle , [57] as well as the statement therein that 'the expropriation of real property does not include mere physical entry or occupation of land, and from them concludes that 'its mere physical entry and occupation of the property fall short of the taking of title, which includes all the rights that may be exercised by an owner over the subject property.

 

This conclusion is indeed lifted directly from statements in Tagle , [58] but not from the ratio decidendi of that case. Tagle concerned whether a writ of possession in favor of the Government was still necessary in light of the fact that it was already in actual possession of the property. In ruling that the Government was entitled to the writ of possession, the Court in Tagle explains that such writ vested not only physical possession, but also the legal right to possess the property. Continues the Court, such legal right to possess was particularly important in the case, as there was a pending suit against the Republic for unlawful detainer, and the writ of possession would serve to safeguard the Government from eviction. [59]

 

At the same time, Tagle conforms to the obvious, that there is no transfer of ownership as of yet by virtue of the writ of possession. Tagle may concede that the Government is entitled to exercise more than just the right of possession by virtue of the writ of possession, yet it cannot be construed to grant the Government the entire panoply of rights that are available to the owner. Certainly, neither Tagle nor any other case or law, lends support to the Government's proposition that it acquires beneficial or equitable ownership of the expropriated property

merely through the writ of possession.

 

Indeed, this Court has been vigilant in defense of the rights of the property owner who has been validly deprived of possession, yet retains legal title over the expropriated property pending payment of just compensation. We reiterated the various doctrines of such import in our recent holding in Republic v. Lim: [60]

 

The recognized rule is that title to the property

expropriated shall pass from the owner to the

expropriator only upon full payment of the just

compensation. Jurisprudence on this settled principle is

consistent both here and in other democratic

jurisdictions. In Association of Small Landowners in the

Philippines, Inc. et al., vs. Secretary of Agrarian

Reform [ [61] ] , thus:

 

Title to property which is the

subject of condemnation proceedings

does not vest the condemnor until the

judgment fixing just compensation is

entered and paid, but the condemnor's title relates back to the date on which the petition under the Eminent Domain Act, or the commissioner's report under the Local Improvement Act, is filed.

x x x Although the right to

appropriate and use land taken for a

canal is complete at the time of entry,

title to the property taken remains in

the owner until payment is actually

made. (Emphasis supplied.)

In Kennedy v. Indianapolis , the

US Supreme Court cited several cases

holding that title to property does not

pass to the condemnor until just

compensation had actually been made.

In fact, the decisions appear to be

uniform to this effect. As early as 1838,

in Rubottom v. McLure , it was held that

'actual payment to the owner of the

condemned property was a condition

precedent to the investment of the

title to the property in the State albeit

'not to the appropriation of it to

public use. In Rexford v. Knight , the

Court of Appeals of New Yorksaid that

the construction upon the statutes was

that the fee did not vest in the State until

the payment of the compensation

although the authority to enter upon and

appropriate the land was complete prior

to the payment. Kennedy further said

that 'both on principle and authority

the rule is . . . that the right to enter

on and use the property is complete,

as soon as the property is actually

appropriated under the authority of

law for a public use, but that the title

does not pass from the owner without

his consent, until just compensation

has been made to him.

Our own Supreme Court has

held in Visayan Refining Co. v. Camus

and Paredes , that:

 

If the laws which we have

exhibited or cited in the preceding

discussion are attentively examined it

will be apparent that the method of

expropriation adopted in this

jurisdiction is such as to afford

absolute reassurance that no piece of

land can be finally and irrevocably

taken from an unwilling owner until

compensation is paid.... (Emphasis supplied.)

 

Clearly, without full payment of just

compensation, there can be no transfer of title from the

landowner to the expropriator. Otherwise stated, the

Republic's acquisition of ownership is conditioned upon

the full payment of just compensation within a

reasonable time.

Significantly, in Municipality of Bian v.

Garcia [ [62]] this Court ruled that the expropriation of

lands consists of two stages, to wit:

x x x 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 x  x 

x.

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. x  x  x.

 

It is only upon the completion of these two

stages that expropriation is said to have been

completed.  In Republic v. Salem Investment

Corporation [ [63]] , we ruled that, 'the process is not

completed until payment of just compensation. Thus,

here, the failure of the Republic to pay respondent and

his predecessors-in-interest for a period of 57 years

rendered the expropriation process incomplete.

 

Lim serves fair warning to the Government and its agencies who consistently refuse to pay just compensation due to the private property owner whose property had been

expropriated. At the same time, Lim emphasizes the fragility of the rights of the Government as possessor pending the final payment of just compensation, without diminishing the potency of such rights. Indeed, the public policy, enshrined foremost in the Constitution, mandates that the Government must pay for the private property it expropriates. Consequently, the proper judicial attitude is to guarantee compliance with this primordial right to just compensation.

Final Determination of Just

Compensation Within 60 Days

 

 

The issuance of the writ of possession does not write finis to

the expropriation proceedings. As earlier pointed out, expropriation is not completed until payment to the property owner of just compensation. The proffered value stands as' merely a provisional determination of the amount of just compensation, the payment of which is sufficient to transfer possession of the property to the Government. However, to effectuate the transfer of ownership, it is necessary for the Government to pay the property owner the final just compensation.

 

 

 

In Lim, the Court went as far as to countenance, given the exceptional circumstances of that case, the reversion of the validly expropriated property to private ownership due to the failure of the Government to pay just compensation in that case. [64] It was noted in that case that the Government deliberately refused to pay just compensation. The Court went on to rule that 'in cases where the government failed to pay just compensation within five (5) years from the finality of the judgment in the expropriation proceedings, the owners concerned shall have the right to recover possession of their property. [65]

 

Rep. Act No. 8974 mandates a speedy method by which the final determination of just compensation may be had. Section 4 provides:

 

In the event that the owner of the property contests the implementing agency's proffered value, the court shall determine the just compensation to be

paid the owner within sixty (60) days from the date of filing of the expropriation case. When the decision of the court becomes final and executory, the implementing agency shall pay the owner the difference between the amount already paid and the just compensation as determined by the court.

 

 

We hold that this provision should apply in this case. The sixty (60)-day period prescribed in Rep. Act No. 8974 gives teeth to the law's avowed policy 'to ensure that owners of real property acquired for national government infrastructure projects are promptly paid just compensation.[66] In this case, there already has been irreversible delay in the prompt payment of PIATCO of just compensation, and it is no longer possible for the RTC to determine the just compensation due PIATCO within sixty (60) days from the filing of the complaint last 21 December 2004, as contemplated by the law. Still, it is feasible to effectuate the spirit of the law by requiring the trial court to make such determination within sixty (60) days from finality of this decision, in accordance with the guidelines laid down in Rep. Act No. 8974 and its Implementing Rules.

 

Of course, once the amount of just compensation has been finally determined, the Government is obliged to pay PIATCO the said amount. As shown in Lim and other like-minded cases, the Government's refusal to make such payment is indubitably actionable in court.

 

 

 

 

 

Appointment of Commissioners

 

The next argument for consideration is the claim of the Government that the RTC erred in appointing the three commissioners in its 7 January 2005 Order without prior consultation with either the Government or PIATCO, or without affording the Government the opportunity to object to the appointment of these commissioners. We can dispose of this argument without complication.

 

It must be noted that Rep. Act No. 8974 is silent on the appointment of commissioners tasked with the ascertainment of just compensation. [67] This protocol though is sanctioned under Rule 67. We rule that the appointment of commissioners under Rule 67 may be resorted to, even in expropriation proceedings under Rep. Act No. 8974, since the application of the provisions of Rule 67 in that regard do not conflict with the statute. As earlier stated, Section 14 of the Implementing Rules does allow such other incidents affecting the complaint to be resolved under the provisions on expropriation of Rule 67 of the Rules of Court. Even without Rule 67, reference during trial to a commissioner of the examination of an issue of fact is sanctioned under Rule 32 of the Rules of Court.

 

But while the appointment of commissioners under the aegis of Rule 67 may be sanctioned in expropriation proceedings under Rep. Act No. 8974, the standards to be observed for the determination of just compensation are provided not in Rule 67 but in the statute. In particular, the governing standards for the

determination of just compensation for the NAIA 3 facilities are found in Section 10 of the Implementing Rules for Rep. Act No. 8974, which provides for the replacement cost method in the valuation of improvements and structures. [68]

 

Nothing in Rule 67 or Rep. Act No. 8974 requires that the RTC consult with the parties in the expropriation case on who should be appointed as commissioners. Neither does the Court feel that such a requirement should be imposed in this case. We did rule in Municipality of Talisay v. Ramirez[69] that 'there is nothing to prevent [the trial court] from seeking the recommendations of the parties on [the] matter [of appointment of commissioners], the better to ensure their fair representation. [70] At the same time, such solicitation of recommendations is not obligatory on the part of the court, hence we cannot impute error on the part of the RTC in its exercise of solitary discretion in the appointment of the commissioners.

 

What Rule 67 does allow though is for the parties to protest the appointment of any of these commissioners, as provided under Section 5 of the Rule. These objections though must be made filed within ten (10) days from service of the order of appointment of the commissioners. [71] In this case, the proper recourse of the Government to challenge the choice of the commissioners is to file an objection with the trial court, conformably with Section 5, Rule 67, and not as it has done, assail the same through a special civil action for certiorari. Considering that the expropriation proceedings in this case were effectively halted seven (7) days after the Order appointing the commissioners, [72] it is permissible to allow the parties to file their objections with the RTC within five (5) days from finality of this decision.

 

 

 

 

 

Insufficient Ground for Inhibition

of Respondent Judge

 

The final argument for disposition is the claim of the Government is that Hon. Gingoyon has prejudged the expropriation case against the Government's cause and, thus, should be required to inhibit himself. This grave charge is predicated on facts which the Government characterizes as 'undeniable. In particular, the Government notes that the 4 January 2005 Order was issued motu proprio , without any preceding motion, notice or hearing. Further, such order, which directed the payment of US$62 Million to PIATCO, was attended with error in the computation of just compensation. The Government also notes that the said Order was issued even before summons had been served on PIATCO.

 

The disqualification of a judge is a deprivation of his/her judicial power [73] and should not be allowed on the basis of mere speculations and surmises. It certainly cannot be predicated on the adverse nature of the judge's rulings towards the movant for inhibition, especially if these rulings are in accord with law. Neither could inhibition be justified merely on the erroneous nature of the rulings of the judge. We emphasized in Webb v. People : [74]

 

To prove bias and prejudice on the part of respondent judge, petitioners harp on the alleged adverse and erroneous rulings of respondent judge on their various motions. By themselves, however, they do not sufficiently prove bias and prejudice to disqualify respondent judge. To be disqualifying, the bias and prejudice must be shown to have stemmed from an extrajudicial source and result in an opinion on the merits on some basis other than what the judge learned from his participation in the case. Opinions formed in the course of judicial proceedings, although erroneous, as long as they are based on the evidence presented and conduct observed by the judge, do not prove personal bias or prejudice on the part of the judge. As a general rule, repeated rulings against a litigant, no matter how erroneous and vigorously and consistently expressed, are not a basis for disqualification of a judge on grounds of bias and prejudice. Extrinsic evidence is required to establish bias, bad faith, malice or corrupt purpose, in addition to the palpable error which may be inferred from the decision or order itself. Although the decision may seem so erroneous as to raise doubts concerning a judge's integrity, absent extrinsic evidence, the decision itself would be insufficient to establish a case against the judge. The only exception to the rule is when the error is so gross and patent as to produce an ineluctable inference of bad faith or malice. [75]

 

The Government's contentions against Hon. Gingoyon are severely undercut by the fact that the 21 December

2004 Order , which the 4 January 2005 Order sought to rectify, was indeed severely flawed as it erroneously applied the provisions of Rule 67 of the Rules of Court, instead of Rep. Act No. 8974, in ascertaining compliance with the requisites for the issuance of the writ of possession. The 4 January

 

2005 Order , which according to the Government establishes Hon. Gingoyon's bias, was promulgated precisely to correct the previous error by applying the correct provisions of law. It would not speak well of the Court if it sanctions a judge for wanting or even attempting to correct a previous erroneous' order which precisely is the right move to take.

 

Neither are we convinced that the motu proprio issuance of the 4 January 2005 Order , without the benefit of notice or hearing, sufficiently evinces bias on the part of Hon. Gingoyon. The motu proprio amendment by a court of an erroneous order previously issued may be sanctioned depending on the circumstances, in line with the long-recognized principle that every court has inherent power to do all things reasonably necessary for the administration of justice within the scope of its jurisdiction. [76] Section 5(g), Rule 135 of the Rules of Court further recognizes the inherent power of courts 'to amend and control its process and orders so as to make them conformable to law and justice, [77] a power which Hon. Gingoyon noted in his 10 January 2005Omnibus Order. [78] This inherent power includes the right of the court to reverse itself, especially when in its honest opinion it has committed an error or mistake in judgment, and that to adhere to its decision will cause injustice to a party litigant. [79]

 

Certainly, the 4 January 2005 Order was designed to make the RTC's previous order conformable to law and justice,

particularly to apply the correct law of the case. Of course, as earlier established, this effort proved incomplete, as the 4 January 2005 Order did not correctly apply Rep. Act No. 8974 in several respects. Still, at least, the 4 January 2005 Order correctly reformed the most basic premise of the case that Rep. Act No. 8974 governs the expropriation proceedings.

Nonetheless, the Government belittles Hon. Gingoyon's invocation of Section 5(g), Rule 135 as 'patently without merit. Certainly merit can be seen by the fact that the 4 January 2005 Orderreoriented the expropriation proceedings towards the correct governing law. Still, the Government claims that the unilateral act of the RTC did not conform to law or justice, as it was not afforded the right to be heard.

 

The Court would be more charitably disposed towards this argument if not for the fact that the earlier order with the 4 January 2005 Order sought to correct was itself issued without the benefit of any hearing. In fact, nothing either in Rule 67 or Rep. Act No. 8975 requires the conduct of a hearing prior to the issuance of the writ of possession, which by design is available immediately upon the filing of the complaint provided that the requisites attaching thereto are present. Indeed, this expedited process for the obtention of a writ of possession in expropriation cases comes at the expense of the rights of the property owner to be heard or to be deprived of possession. Considering these predicates, it would be highly awry to demand that an order modifying the earlier issuance of a writ of possession in an expropriation case be barred until the staging of a hearing, when the issuance of the writ of possession itself is not subject to hearing. Perhaps the conduct of a hearing under these circumstances would be prudent. However, hearing is not mandatory, and the failure to conduct one does not establish the manifest bias required for the

inhibition of the judge.

 

The Government likewise faults Hon. Gingoyon for using the amount of US$350 Million as the basis for the 100% deposit under Rep. Act No. 8974. The Court has noted that this statement was predicated on the erroneous belief that the BIR zonal valuation applies as a standard for determination of just compensation in this case. Yet this is manifest not of bias, but merely of error on the part of the judge. Indeed, the Government was not the only victim of the errors of the RTC in the assailed orders. PIATCO itself was injured by the issuance by the RTC of the writ of possession, even though the former had yet to be paid any amount of just compensation. At the same time, the Government was also prejudiced by the erroneous ruling of the RTC that the amount of US$62.3 Million, and not P3 Billion, should be released to PIATCO.

 

The Court has not been remiss in pointing out the multiple errors committed by the RTC in its assailed orders, to the prejudice of both parties. This attitude of error towards all does not ipso facto negate the charge of bias. Still, great care should be had in requiring the inhibition of judges simply because the magistrate did err. Incompetence may be a ground for administrative sanction, but not for inhibition, which requires lack of objectivity or impartiality to sit on a case.

 

The Court should necessarily guard against adopting a standard that a judge should be inhibited from hearing the case if one litigant loses trust in the judge. Such loss of trust on the part of the Government may be palpable, yet inhibition cannot be grounded merely on the feelings of the party-litigants. Indeed, every losing litigant in any case can resort to claiming that the judge was biased, and he/she will gain a sympathetic ear from

friends, family, and people who do not understand the judicial process. The test in believing such a proposition should not be the vehemence of the litigant's claim of bias, but the Court's judicious estimation, as people who know better than to believe any old cry of 'wolf!', whether such bias has been irrefutably exhibited.

 

 

 

 

The Court acknowledges that it had been previously held that 'at the very first sign of lack of faith and trust in his actions, whether well-grounded or not, the judge has no other alternative but to inhibit himself from the case. [80] But this doctrine is qualified by the entrenched rule that 'a judge may not be legally prohibited from sitting in a litigation, but when circumstances appear that will induce doubt to his honest actuations and probity in favor of either party, or incite such state of mind, he should conduct a careful self-

examination. He should exercise his discretion in a way that the people's faith in the Courts of Justice is not impaired. [81] And a self-assessment by the judge that he/she is not impaired to hear the case will be respected by the Court absent any evidence to the contrary. As held in Chin v. Court of Appeals :

 

An allegation of prejudgment, without more, constitutes mere conjecture and is not one of the "just and valid reasons" contemplated in the second paragraph of Rule 137 of the Rules of Court for which a judge may inhibit himself from hearing the

case. We have repeatedly held that mere suspicion that a judge is partial to a party is not enough. Bare allegations of partiality and prejudgment will not suffice in the absence of clear and convincing evidence to overcome the presumption that the judge will undertake his noble role to dispense justice according to law and evidence and without fear or favor. There should be adequate evidence to prove the allegations, and there must be showing that the judge had an interest, personal or otherwise, in the prosecution of the case. To be a disqualifying circumstance, the bias and prejudice must be shown to have stemmed from an extrajudicial source and result in an opinion on the merits on some basis other than what the judge learned from his participation in the case. [82]

 

The mere vehemence of the Government's claim of bias does not translate to clear and convincing evidence of impairing bias. There is no sufficient ground to direct the inhibition of Hon. Gingoyon from hearing the expropriation case.

 

In conclusion, the Court summarizes its rulings as follows:

 

(1) The 2004 Resolution in Agan sets the base requirement that has to be observed before the Government may take over the NAIA 3, that there must be payment to PIATCO of just compensation in accordance with law and equity. Any ruling in the present expropriation case must be conformable to the dictates of the Court as pronounced in the Agan cases.

 

(2) Rep. Act No. 8974 applies in this case, particularly insofar

as it requires the immediate payment by the Government of at least the proffered value of the NAIA 3 facilities to PIATCO and provides certain valuation standards or methods for the determination of just compensation.

 

(3) Applying Rep. Act No. 8974, the implementation of Writ of Possession in favor of the Government over NAIA 3 is held in abeyance until PIATCO is directly paid the amount of P3 Billion, representing the proffered value of NAIA 3 under Section 4(c) of the law.

 

(4) Applying Rep. Act No. 8974, the Government is authorized to start the implementation of the NAIA 3 Airport terminal project by performing the acts that are essential to the operation of the NAIA 3 as an international airport terminal upon the effectivity of the Writ of Possession, subject to the conditions above-stated. As prescribed by the Court, such authority encompasses 'the repair, reconditioning and improvement of the complex, maintenance of the existing facilities and equipment, installation of new facilities and equipment, provision of services and facilities pertaining to the facilitation of air traffic and transport, and other services that are integral to a modern-day international airport. [83]

 

(5) The RTC is mandated to complete its determination of the just compensation within sixty (60) days from finality of this Decision. In doing so, the RTC is obliged to comply with 'law and equity as ordained in Again and the standard set under Implementing Rules of Rep. Act No. 8974 which is the 'replacement cost method as the standard of valuation of structures and improvements.

 

(6) There was no grave abuse of discretion attending the RTC Order appointing the commissioners for the purpose of determining just compensation. The provisions on commissioners under Rule 67 shall apply insofar as they are not inconsistent with Rep. Act No. 8974, its Implementing Rules, or the rulings of the Court in Agan .

 

(7) The Government shall pay the just compensation fixed in the decision of the trial court to PIATCO immediately upon the finality of the said decision.

 

(8) There is no basis for the Court to direct the inhibition of Hon. Gingoyon.

 

All told, the Court finds no grave abuse of discretion on the part of the RTC to warrant the nullification of the questioned orders. Nonetheless, portions of these orders should be modified to conform with law and the pronouncements made by the Court herein.

 

WHEREFORE, the Petition is GRANTED in PART with respect to the orders dated 4 January 2005and 10 January 2005 of the lower court. Said orders are AFFIRMED with the following MODIFICATIONS:

 

1)     The implementation of the Writ of Possession dated 21 December

2005 is HELD IN ABEYANCE, pending payment by petitioners to

PIATCO of the amount of Three Billion Two Million One Hundred

Twenty Five Thousand Pesos (P3,002,125,000.00), representing the

proffered value of the NAIA 3 facilities;

2)     Petitioners, upon the effectivity of the Writ of Possession, are

authorized start the implementation of the Ninoy Aquino International

Airport Pasenger Terminal III project by performing the acts that are

essential to the operation of the said International Airport Passenger

Terminal project;

3)     RTC Branch 117 is hereby directed, within sixty (60) days from finality

of this Decision, to determine the just compensation to be paid to

PIATCO by the Government.

 

The Order dated 7 January 2005 is AFFIRMED in all respects subject to the qualification that the parties are given ten (10) days from finality of this Decision to file, if they so choose, objections to the appointment of the commissioners decreed therein.

 

The Temporary Restraining Order dated 14 January 2005 is hereby LIFTED.

 

No pronouncement as to costs.

 

SO ORDERED.

ASIAS EMERGING DRAGON CORPORATION,Petitioner, - versus - DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS, SECRETARY LEANDRO R. MENDOZA

  G.R. No. 169914         

andMANILA INTERNATIONAL AIRPORT AUTHORITY,Respondents.x ----------------------------------------- x REPUBLIC OF THE PHILIPPINES, represented by the DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS and MANILA INTERNATIONAL AIRPORT AUTHORITY,Petitioners,      - versus -      HON. COURT OF APPEALS and SALACNIB BATERINA,Respondents.

      

G.R. No. 174166 

Present: 

PUNO, C.J.,QUISUMBING,

YNARES-SANTIAGO,CARPIO,*

AUSTRIA-MARTINEZ,CORONA,

CARPIO MORALES,AZCUNA,TINGA,

CHICO-NAZARIO,VELASCO, JR.,

NACHURA,REYES,

DE CASTRO, andBRION, JJ.

 Promulgated:

 April 18, 2008

   

DECISION  

CHICO-NAZARIO, J.:

 

This Court is still continuously besieged by Petitions arising from the

awarding of the Ninoy Aquino International Airport International

Passenger Terminal III (NAIA IPT III) Project to the Philippine International

Air Terminals Co., Inc. (PIATCO), despite the promulgation by this Court of

Decisions and Resolutions in two cases, Agan, Jr. v. Philippine

International Air Terminals Co., Inc.[1] and Republic v. Gingoyon,[2] which

already resolved the more basic and immediate issues arising from the

said award. The sheer magnitude of the project, the substantial cost of its

building, the expected high profits from its operations, and its remarkable

impact on the Philippine economy, consequently raised significant interest

in the project from various quarters.

 

cralawOnce more, two new Petitions concerning the NAIA IPT III Project are

before this Court.It is only appropriate, however, that the Court first

recounts its factual and legal findings in Agan and Gingoyon to ascertain

that its ruling in the Petitions at bar shall be consistent and in accordance

therewith.

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

Already established and incontrovertible are the following facts in Agan:

 In August 1989, the [Department of Trade and

Communications (DOTC)] engaged the services of Aeroport de Paris (ADP) to conduct a comprehensive study of the Ninoy Aquino International Airport (NAIA) and determine whether the present airport can cope with the traffic development up to the year 2010. The study consisted of two parts: first, traffic forecasts, capacity of existing facilities, NAIA future requirements, proposed master plans and development plans; and second, presentation of the preliminary design of the passenger terminal building. The ADP submitted a Draft Final Report to the DOTC in December 1989.

 Some time in 1993, six business leaders consisting of John

Gokongwei, Andrew Gotianun, Henry Sy, Sr., Lucio Tan, George Ty and Alfonso Yuchengco met with then President Fidel V. Ramos to explore the possibility of investing in the construction and operation of a new international airport terminal. To signify their commitment to pursue the project, they formed the Asias Emerging Dragon Corp. (AEDC) which was registered with the Securities and Exchange Commission (SEC) on September 15, 1993.

 On October 5, 1994, AEDC submitted an unsolicited

proposal to the Government through the DOTC/[Manila International Airport Authority (MIAA)] for the development of NAIA International Passenger Terminal III (NAIA IPT III) under a build-operate-and-transfer arrangement pursuant to RA 6957 as amended by RA 7718 (BOT Law).

 On December 2, 1994, the DOTC issued Dept. Order No. 94-

832 constituting the Prequalification Bids and Awards

Committee (PBAC) for the implementation of the NAIA IPT III project.

 On March 27, 1995, then DOTC Secretary Jose Garcia

endorsed the proposal of AEDC to the National Economic and Development Authority (NEDA). A revised proposal, however, was forwarded by the DOTC to NEDA on December 13, 1995. On January 5, 1996, the NEDA Investment Coordinating Council (NEDA ICC) - Technical Board favorably endorsed the project to the ICC - Cabinet Committee which approved the same, subject to certain conditions, on January 19, 1996. On February 13, 1996, the NEDA passed Board Resolution No. 2 which approved the NAIA IPT III project.

 On June 7, 14, and 21, 1996, DOTC/MIAA caused the

publication in two daily newspapers of an invitation for competitive or comparative proposals on AEDCs unsolicited proposal, in accordance with Sec. 4-A of RA 6957, as amended. The alternative bidders were required to submit three (3) sealed envelopes on or before 5:00 p.m. of September 20, 1996. The first envelope should contain the Prequalification Documents, the second envelope the Technical Proposal, and the third envelope the Financial Proposal of the proponent.

 On June 20, 1996, PBAC Bulletin No. 1 was issued,

postponing the availment of the Bid Documents and the submission of the comparative bid proposals. Interested firms were permitted to obtain the Request for Proposal Documents beginning June 28, 1996, upon submission of a written application and payment of a non-refundable fee of P50,000.00 (US$2,000).

 The Bid Documents issued by the PBAC provided among

others that the proponent must have adequate capability to sustain the financing requirement for the detailed engineering, design, construction, operation, and maintenance phases of the project. The proponent would be evaluated based on its ability to provide a minimum amount of equity to the project, and its capacity to secure external financing for the project.

 On July 23, 1996, the PBAC issued PBAC Bulletin No. 2

inviting all bidders to a pre-bid conference on July 29, 1996. On August 16, 1996, the PBAC issued PBAC Bulletin No. 3

amending the Bid Documents. The following amendments were made on the Bid Documents:

 a. cralawAside from the fixed Annual Guaranteed

Payment, the proponent shall include in its

financial proposal an additional percentage of gross revenue share of the Government, as follows:

 i.cralawFirst 5 years 5.0% ii.cralawNext 10 years 7.5% iii.cralawNext 10 years 10.0% b. cralawThe amount of the fixed Annual Guaranteed

Payment shall be subject of the price challenge. Proponent may offer an Annual Guaranteed Payment which need not be of equal amount, but payment of which shall start upon site possession.

 c. cralawThe project proponent must have adequate

capability to sustain the financing requirement for the detailed engineering, design, construction, and/or operation and maintenance phases of the project as the case may be. For purposes of pre-qualification, this capability shall be measured in terms of:

 i. cralawProof of the availability of the project

proponent and/or the consortium to provide the minimum amount of equity for the project; and

 ii. cralawa letter testimonial from reputable

banks attesting that the project proponent and/or the members of the consortium are banking with them, that the project proponent and/or the members are of good financial standing, and have adequate resources.

 d. cralawThe basis for the prequalification shall be the

proponents compliance with the minimum technical and financial requirements provided in the Bid Documents and the [Implementing Rules and Regulations (IRR)] of the BOT Law. The minimum amount of equity shall be 30% of the Project Cost.

 e. cralawAmendments to the draft Concession Agreement

shall be issued from time to time. Said amendments shall only cover items that would not

materially affect the preparation of the proponents proposal.

 On August 29, 1996, the Second Pre-Bid Conference was

held where certain clarifications were made. Upon the request of prospective bidder Peoples Air Cargo & Warehousing Co., Inc (Paircargo), the PBAC warranted that based on Sec. 11.6, Rule 11 of the Implementing Rules and Regulations of the BOT Law, only the proposed Annual Guaranteed Payment submitted by the challengers would be revealed to AEDC, and that the challengers technical and financial proposals would remain confidential. The PBAC also clarified that the list of revenue sources contained in Annex 4.2a of the Bid Documents was merely indicative and that other revenue sources may be included by the proponent, subject to approval by DOTC/MIAA. Furthermore, the PBAC clarified that only those fees and charges denominated as Public Utility Fees would be subject to regulation, and those charges which would be actually deemed Public Utility Fees could still be revised, depending on the outcome of PBACs query on the matter with the Department of Justice.

 In September 1996, the PBAC issued Bid Bulletin No. 5,

entitled Answers to the Queries of PAIRCARGO as Per Letter Dated September 3 and 10, 1996. Paircargos queries and the PBACs responses were as follows:

 1. It is difficult for Paircargo and Associates to meet the required minimum equity requirement as prescribed in Section 8.3.4 of the Bid Documents considering that the capitalization of each member company is so structured to meet the requirements and needs of their current respective business undertaking/activities. In order to comply with this equity requirement, Paircargo is requesting PBAC to just allow each member of (sic) corporation of the Joint Venture to just execute an agreement that embodies a commitment to infuse the required capital in case the project is awarded to the Joint Venture instead of increasing each corporations current authorized capital stock just for prequalification purposes. In prequalification, the agency is interested in ones financial capability at the time of prequalification, not future or potential capability. A commitment to put up equity once awarded the project is not enough to establish that present financial capability. However, total financial capability of all member companies of the Consortium, to be established

by submitting the respective companies audited financial statements, shall be acceptable. 2. At present, Paircargo is negotiating with banks and other institutions for the extension of a Performance Security to the joint venture in the event that the Concessions Agreement (sic) is awarded to them.However, Paircargo is being required to submit a copy of the draft concession as one of the documentary requirements. Therefore, Paircargo is requesting that theyd (sic) be furnished copy of the approved negotiated agreement between the PBAC and the AEDC at the soonest possible time. A copy of the draft Concession Agreement is included in the Bid Documents. Any material changes would be made known to prospective challengers through bid bulletins. However, a final version will be issued before the award of contract. 

The PBAC also stated that it would require AEDC to sign Supplement C of the Bid Documents (Acceptance of Criteria and Waiver of Rights to Enjoin Project) and to submit the same with the required Bid Security.

 On September 20, 1996, the consortium composed of

Peoples Air Cargo and Warehousing Co., Inc. (Paircargo), Phil. Air and Grounds Services, Inc. (PAGS) and Security Bank Corp. (Security Bank) (collectively, Paircargo Consortium) submitted their competitive proposal to the PBAC. On September 23, 1996, the PBAC opened the first envelope containing the prequalification documents of the Paircargo Consortium. On the following day, September 24, 1996, the PBAC prequalified the Paircargo Consortium.

 On September 26, 1996, AEDC informed the PBAC in writing

of its reservations as regards the Paircargo Consortium, which include:

 a. cralawThe lack of corporate approvals and financial

capability of PAIRCARGO; b. cralawThe lack of corporate approvals and financial

capability of PAGS; c. cralawThe prohibition imposed by RA 337, as amended

(the General Banking Act) on the amount that Security Bank could legally invest in the project;

 

d. cralawThe inclusion of Siemens as a contractor of the PAIRCARGO Joint Venture, for prequalification purposes; and

 e. cralawThe appointment of Lufthansa as the facility

operator, in view of the Philippine requirement in the operation of a public utility.

 The PBAC gave its reply on October 2, 1996, informing

AEDC that it had considered the issues raised by the latter, and that based on the documents submitted by Paircargo and the established prequalification criteria, the PBAC had found that the challenger, Paircargo, had prequalified to undertake the project. The Secretary of the DOTC approved the finding of the PBAC.

 The PBAC then proceeded with the opening of the second

envelope of the Paircargo Consortium which contained its Technical Proposal.

 On October 3, 1996, AEDC reiterated its objections,

particularly with respect to Paircargos financial capability, in view of the restrictions imposed by Section 21-B of the General Banking Act and Sections 1380 and 1381 of the Manual Regulations for Banks and Other Financial Intermediaries. OnOctober 7, 1996, AEDC again manifested its objections and requested that it be furnished with excerpts of the PBAC meeting and the accompanying technical evaluation report where each of the issues they raised were addressed.

 On October 16, 1996, the PBAC opened the third envelope

submitted by AEDC and the Paircargo Consortium containing their respective financial proposals. Both proponents offered to build the NAIA Passenger Terminal III for at least $350 million at no cost to the government and to pay the government: 5% share in gross revenues for the first five years of operation, 7.5% share in gross revenues for the next ten years of operation, and 10% share in gross revenues for the last ten years of operation, in accordance with the Bid Documents. However, in addition to the foregoing, AEDC offered to pay the government a total of P135 million as guaranteed payment for 27 years while Paircargo Consortium offered to pay the government a total ofP17.75 billion for the same period.

 Thus, the PBAC formally informed AEDC that it had

accepted the price proposal submitted by the Paircargo Consortium, and gave AEDC 30 working days or until November 28, 1996 within which to match the said bid, otherwise, the project would be awarded to Paircargo.

 As AEDC failed to match the proposal within the 30-day

period, then DOTC Secretary Amado Lagdameo, on December 11, 1996, issued a notice to Paircargo Consortium regarding AEDCs failure to match the proposal.

 On February 27, 1997, Paircargo Consortium incorporated

into Philippine International Airport Terminals Co., Inc. (PIATCO).

 AEDC subsequently protested the alleged undue preference

given to PIATCO and reiterated its objections as regards the prequalification of PIATCO.

 On April 11, 1997, the DOTC submitted the concession

agreement for the second-pass approval of the NEDA-ICC. On April 16, 1997, AEDC filed with the Regional Trial Court

of Pasig a Petition for Declaration of Nullity of the Proceedings, Mandamus and Injunction against the Secretary of the DOTC, the Chairman of the PBAC, the voting members of the PBAC and Pantaleon D. Alvarez, in his capacity as Chairman of the PBAC Technical Committee.

 x x x x On July 9, 1997, the DOTC issued the notice of award for

the project to PIATCO. On July 12, 1997, the Government, through then DOTC

Secretary Arturo T. Enrile, and PIATCO, through its President, Henry T. Go, signed the Concession Agreement for the Build-Operate-and-Transfer Arrangement of the Ninoy Aquino International Airport Passenger Terminal III (1997 Concession Agreement). x x x.

 On November 26, 1998, the Government and PIATCO signed

an Amended and Restated Concession Agreement (ARCA). x x x.

 Subsequently, the Government and PIATCO signed three

Supplements to the ARCA. The First Supplement was signed on August 27, 1999; the Second Supplement on September 4, 2000; and the Third Supplement on June 22, 2001 (collectively, Supplements).

 x x x x Meanwhile, the MIAA which is charged with the

maintenance and operation of the NAIA Terminals I and II, had

existing concession contracts with various service providers to offer international airline airport services, such as in-flight catering, passenger handling, ramp and ground support, aircraft maintenance and provisions, cargo handling and warehousing, and other services, to several international airlines at the NAIA. x x x.

 On September 17, 2002, the workers of the international

airline service providers, claiming that they stand to lose their employment upon the implementation of the questioned agreements, filed before this Court a petition for prohibition to enjoin the enforcement of said agreements.

 On October 15, 2002, the service providers, joining the

cause of the petitioning workers, filed a motion for intervention and a petition-in-intervention.

 On October 24, 2002, Congressmen Salacnib Baterina,

Clavel Martinez and Constantino Jaraula filed a similar petition with this Court.

 On November 6, 2002, several employees of the MIAA

likewise filed a petition assailing the legality of the various agreements.

 On December 11, 2002, another group of Congressmen,

Hon. Jacinto V. Paras, Rafael P. Nantes, Eduardo C. Zialcita, Willie B. Villarama, Prospero C. Nograles, Prospero A. Pichay, Jr., Harlin Cast Abayon and Benasing O. Macaranbon, moved to intervene in the case as Respondents-Intervenors.They filed their Comment-In-Intervention defending the validity of the assailed agreements and praying for the dismissal of the petitions.

 During the pendency of the case before this Court,

President Gloria Macapagal Arroyo, on November 29, 2002, in her speech at the 2002 Golden Shell Export Awards at Malacaang Palace, stated that she will not honor (PIATCO) contracts which the Executive Branchs legal offices have concluded (as) null and void.[3]

  

The Court first dispensed with the procedural issues raised in Agan, ruling

that (a) the MIAA service providers and its employees, petitioners in G.R.

Nos. 155001 and 155661, had the requisite standing since they had a

direct and substantial interest to protect by reason of the implementation

of the PIATCO Contracts which would affect their source of livelihood;[4] and (b) the members of the House of Representatives, petitioners in

G.R. No. 155547, were granted standing in view of the serious legal

questions involved and their impact on public interest.[5]

 

As to the merits of the Petitions in Agan, the Court concluded that:

 In sum, this Court rules that in view of the absence of the

requisite financial capacity of the Paircargo Consortium, predecessor of respondent PIATCO, the award by the PBAC of the contract for the construction, operation and maintenance of the NAIA IPT III is null and void. Further, considering that the 1997 Concession Agreement contains material and substantial amendments, which amendments had the effect of converting the 1997 Concession Agreement into an entirely different agreement from the contract bidded upon, the 1997 Concession Agreement is similarly null and void for being contrary to public policy. The provisions under Sections 4.04(b) and (c) in relation to Section 1.06 of the 1997 Concession Agreement and Section 4.04(c) in relation to Section 1.06 of the ARCA, which constitute a direct government guarantee expressly prohibited by, among others, the BOT Law and its Implementing Rules and Regulations are also null and void. The Supplements, being accessory contracts to the ARCA, are likewise null and void.[6]

  

Hence, the fallo of the Courts Decision in Agan reads:

 WHEREFORE, the 1997 Concession Agreement, the

Amended and Restated Concession Agreement and the Supplements thereto are set aside for being null and void.[7]

  

In a Resolution[8] dated 21 January 2004, the Court denied with finality the

Motions for Reconsideration of its 5 May 2003 Decision in Agan filed by therein

respondents PIATCO and Congressmen Paras, et al., and respondents-intervenors.[9] Significantly, the Court declared in the same Resolution that:

 This Court, however, is not unmindful of the reality that the

structures comprising the NAIA IPT III facility are almost complete and that funds have been spent by PIATCO in their construction. For the government to take over the said facility, it has to compensate respondent PIATCO as builder of the said structures. Thecompensation must be just and in accordance with law and equity for the government can not unjustly enrich itself at the expense of PIATCO and its investors.[10] (Emphasis ours.)

  

It is these afore-quoted pronouncements that gave rise to the Petition in Gingoyon.

 Republic v. Gingoyon (G.R. No. 166429)  

According to the statement of facts in Gingoyon:

 After the promulgation of the rulings in Agan, the NAIA 3

facilities have remained in the possession of PIATCO, despite the avowed intent of the Government to put the airport terminal into immediate operation. The Government and PIATCO conducted several rounds of negotiation regarding the NAIA 3 facilities. It also appears that arbitral proceedings were commenced before the International Chamber of Commerce International Court of Arbitration and the International Centre for the Settlement of Investment Disputes, although the Government has raised jurisdictional questions before those two bodies.          cralawThen, on 21 December 2004, the Government filed a Complaint for expropriation with the Pasay City Regional Trial Court (RTC), together with anApplication for Special Raffle seeking the immediate holding of a special raffle. The Government sought upon the filing of the complaint the issuance of a writ of possession authorizing it to take immediate possession and control over the NAIA 3 facilities. The Government also declared that it had deposited the amount of P3,002,125,000.00 (3 Billion) in Cash with the Land Bank of thePhilippines, representing the NAIA 3 terminals assessed value for taxation purposes. The case was raffled to Branch 117 of the Pasay City RTC, presided by respondent judge Hon. Henrick F. Gingoyon (Hon. Gingoyon). On the same day that the Complaint was filed, the RTC issued an Order directing the issuance of a writ of possession to the Government, authorizing it to take or enter upon the possession of the NAIA 3 facilities. Citing the case of City of Manila v. Serrano, the RTC noted that it had the ministerial duty to issue the writ of possession upon the filing of a complaint for expropriation sufficient in form and substance, and upon deposit made by the government of the amount equivalent to the assessed value of the property subject to expropriation. The RTC found these requisites present, particularly noting that [t]he case record shows that [the Government has] deposited the assessed value of the [NAIA 3 facilities] in the Land Bank of the Philippines, an authorized depositary, as shown by the certification attached to their complaint. Also on the same day, the RTC issued a Writ of Possession. According to PIATCO, the Government was able

to take possession over the NAIA 3 facilities immediately after theWrit of Possession was issued. cralawHowever, on 4 January 2005, the RTC issued another Order designed to supplement its 21 December 2004 Order and the Writ of Possession. In the 4 January 2005 Order, now assailed in the present petition, the RTC noted that its earlier issuance of its writ of possession was pursuant to Section 2, Rule 67 of the 1997 Rules of Civil Procedure. However, it was observed that Republic Act No. 8974 (Rep. Act No. 8974), otherwise known as An Act to Facilitate the Acquisition of Right-of-Way, Site or Location for National Government Infrastructure Projects and For Other Purposes and its Implementing Rules and Regulations (Implementing Rules) had amended Rule 67 in many respects. There are at least two crucial differences between the respective procedures under Rep. Act No. 8974 and Rule 67. Under the statute, the Government is required to make immediate payment to the property owner upon the filing of the complaint to be entitled to a writ of possession, whereas in Rule 67, the Government is required only to make an initial deposit with an authorized government depositary. Moreover, Rule 67 prescribes that the initial deposit be equivalent to the assessed value of the property for purposes of taxation, unlike Rep. Act No. 8974 which provides, as the relevant standard for initial compensation, the market value of the property as stated in the tax declaration or the current relevant zonal valuation of the Bureau of Internal Revenue (BIR), whichever is higher, and the value of the improvements and/or structures using the replacement cost method. Accordingly, on the basis of Sections 4 and 7 of Rep. Act No. 8974 and Section 10 of the Implementing Rules, the RTC made key qualifications to its earlier issuances. First, it directed the Land Bank of the Philippines, Baclaran Branch (LBP-Baclaran), to immediately release the amount of US$62,343,175.77 to PIATCO, an amount which the RTC characterized as that which the Government specifically made available for the purpose of this expropriation; and such amount to be deducted from the amount of just compensation due PIATCO as eventually determined by the RTC. Second, the Government was directed to submit to the RTC a Certificate of Availability of Funds signed by authorized officials to cover the payment of just compensation. Third, the Government was directed to maintain, preserve and safeguard the NAIA 3 facilities or perform such as acts or activities in preparation for their direct operation of the airport terminal, pending expropriation proceedings and full payment of just compensation. However, the Government was prohibited from performing acts of

ownership like awarding concessions or leasing any part of [NAIA 3] to other parties. The very next day after the issuance of the assailed 4 January 2005 Order, the Government filed an Urgent Motion for Reconsideration, which was set for hearing on 10 January 2005. On 7 January 2005, the RTC issued anotherOrder, the second now assailed before this Court, which appointed three (3) Commissioners to ascertain the amount of just compensation for the NAIA 3 Complex. That same day, the Government filed a Motion for Inhibition of Hon. Gingoyon. The RTC heard the Urgent Motion for Reconsideration and Motion for Inhibition on 10 January 2005. On the same day, it denied these motions in an Omnibus Order dated 10 January 2005. This is the third Order now assailed before this Court. Nonetheless, while the Omnibus Order affirmed the earlier dispositions in the 4 January 2005 Order, it excepted from affirmance the superfluous part of the Order prohibiting the plaintiffs from awarding concessions or leasing any part of [NAIA 3] to other parties.         cralawThus, the present Petition for Certiorari and Prohibition under Rule 65 was filed on 13 January 2005. The petition prayed for the nullification of the RTC orders dated 4 January 2005, 7 January 2005, and 10 January 2005, and for the inhibition of Hon. Gingoyon from taking further action on the expropriation case. A concurrent prayer for the issuance of a temporary restraining order and preliminary injunction was granted by this Court in aResolution dated 14 January 2005.[11]

  

The Court resolved the Petition of the Republic of the Philippines and Manila

International Airport Authority in Gingoyon in this wise:

 In conclusion, the Court summarizes its rulings as follows: (1) The 2004 Resolution in Agan sets the base requirement that has to be observed before the Government may take over the NAIA 3, that there must be payment to PIATCO of just compensation in accordance with law and equity. Any ruling in the present expropriation case must be conformable to the dictates of the Court as pronounced in the Agan cases. (2) Rep. Act No. 8974 applies in this case, particularly insofar as it requires the immediate payment by the Government of at least the proffered value of the NAIA 3 facilities to PIATCO and provides certain valuation standards or methods for the determination of just compensation.

 (3) Applying Rep. Act No. 8974, the implementation of Writ of Possession in favor of the Government over NAIA 3 is held in abeyance until PIATCO is directly paid the amount of P3 Billion, representing the proffered value of NAIA 3 under Section 4(c) of the law. (4) Applying Rep. Act No. 8974, the Government is authorized to start the implementation of the NAIA 3 Airport terminal project by performing the acts that are essential to the operation of the NAIA 3 as an international airport terminal upon the effectivity of the Writ of Possession, subject to the conditions above-stated. As prescribed by the Court, such authority encompasses the repair, reconditioning and improvement of the complex, maintenance of the existing facilities and equipment, installation of new facilities and equipment, provision of services and facilities pertaining to the facilitation of air traffic and transport, and other services that are integral to a modern-day international airport. 5) The RTC is mandated to complete its determination of the just compensation within sixty (60) days from finality of this Decision. In doing so, the RTC is obliged to comply with the standards set under Rep. Act No. 8974 and its Implementing Rules. Considering that the NAIA 3 consists of structures and improvements, the valuation thereof shall be determined using the replacements cost method, as prescribed under Section 10 of the Implementing Rules. (6) There was no grave abuse of discretion attending the RTC Orderappointing the commissioners for the purpose of determining just compensation. The provisions on commissioners under Rule 67 shall apply insofar as they are not inconsistent with Rep. Act No. 8974, its Implementing Rules, or the rulings of the Court in Agan. (7) The Government shall pay the just compensation fixed in the decision of the trial court to PIATCO immediately upon the finality of the said decision. (8) There is no basis for the Court to direct the inhibition of Hon. Gingoyon. All told, the Court finds no grave abuse of discretion on the part of the RTC to warrant the nullification of the questioned orders. Nonetheless, portions of these orders should be modified to conform with law and the pronouncements made by the Court herein.[12]

  

The decretal portion of the Courts Decision in Gingoyon thus reads:  

WHEREFORE, the Petition is GRANTED in PART with respect to the orders dated 4 January 2005 and 10 January 2005 of the lower court.  Said orders are AFFIRMED with the following MODIFICATIONS: 1) The implementation of the Writ of Possession dated 21 December 2004 is HELD IN ABEYANCE, pending payment by petitioners to PIATCO of the amount of Three Billion Two Million One Hundred Twenty Five Thousand Pesos (P3,002,125,000.00),  representing the proffered value of the NAIA 3 facilities; 2) Petitioners, upon the effectivity of the Writ of Possession, are authorized [to] start the implementation of the Ninoy Aquino International Airport Pasenger Terminal III project by performing the acts that are essential to the operation of the said International Airport Passenger Terminal project; 3) RTC Branch 117 is hereby directed, within sixty (60) days from finality of this Decision, to determine the just compensation to be paid to PIATCO by the Government. The Order dated 7 January 2005 is AFFIRMED in all respects subject to the qualification that the parties are given ten (10) days from finality of thisDecision to file, if they so choose, objections to the appointment of the commissioners decreed therein. The Temporary Restraining Order dated 14 January 2005 is hereby LIFTED. No pronouncement as to costs.[13]

  

Motions for Partial Reconsideration of the foregoing Decision were filed by thereinpetitioners Republic and MIAA, as well as the three other parties who sought to intervene, namely, Asakihosan Corporation, Takenaka Corporation, and Congressman Baterina. In a Resolution dated 1 February 2006, this Court denied with finality the Motion for Partial Reconsideration of therein petitioners and remained faithful to its assailed Decision based on the following ratiocination: 

Admittedly, the 2004 Resolution in Agan could be construed as mandating the full payment of the final amount of just compensation before the Government may be permitted to

take over the NAIA 3. However, the Decision ultimately rejected such a construction, acknowledging the public good that would result from the immediate operation of the NAIA 3. Instead, the Decision adopted an interpretation which is in consonance with Rep. Act No. 8974 and with equitable standards as well, that allowed the Government to take possession of the NAIA 3 after payment of the proffered value of the facilities to PIATCO. Such a reading is substantially compliant with the pronouncement in the 2004Agan Resolution, and is in accord with law and equity. In contrast, the Governments position, hewing to the strict application of Rule 67, would permit the Government to acquire possession over the NAIA 3 and implement its operation without having to pay PIATCO a single centavo, a situation that is obviously unfair. Whatever animosity the Government may have towards PIATCO does not acquit it from settling its obligations to the latter, particularly those which had already been previously affirmed by this Court.[14]

  

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

 We now turn to the three (3) motions for intervention all of which were filed after the promulgation of the Courts Decision. All three (3) motions must be denied. Under Section 2, Rule 19 of the 1997 Rules of Civil Procedure the motion to intervene may be filed at any time before rendition of judgment by the court. Since this case originated from an original action filed before this Court, the appropriate time to file the motions-in-intervention in this case if ever was before and not after resolution of this case.  To allow intervention at this juncture would be highly irregular. It is extremely improbable that the movants were unaware of the pendency of the present case before the Court, and indeed none of them allege such lack of knowledge.             Takenaka and Asahikosan rely on Mago v. Court of Appeals wherein the Court took the extraordinary step of allowing the motion for intervention even after the challenged order of the trial court had already become final. Yet it was apparent in Mago that the movants therein were not impleaded despite being indispensable parties, and had not even known of the existence of the case before the trial court, and the effect of the final order was to deprive the movants of their land. In this case, neither Takenaka nor Asahikosan stand to be dispossessed by reason of the Courts Decision. There is

no palpable due process violation that would militate the suspension of the procedural rule. cralawMoreover, the requisite legal interest required of a party-

in-intervention has not been established so as to warrant the

extra-ordinary step of allowing intervention at this late stage.

As earlier noted, the claims of Takenaka and Asahikosan have

not been judicially proved or conclusively established as fact

by any trier of facts in this jurisdiction. Certainly, they could

not be considered as indispensable parties to the petition for

certiorari. In the case of Representative Baterina, he invokes

his prerogative as legislator to curtail the disbursement

without appropriation of public funds to compensate PIATCO,

as well as that as a taxpayer, as the basis of his legal standing

to intervene. However, it should be noted that the amount

which the Court directed to be paid by the Government to

PIATCO was derived from the money deposited by the Manila

International Airport Authority, an agency which enjoys

corporate autonomy and possesses a legal

personality separate and distinct from those of the National

Government and agencies thereof whose budgets have to be

approved by Congress.

             It is also observed that the interests of the movants-in-intervention may be duly litigated in proceedings which are extant before lower courts. There is no compelling reason to disregard the established rules and permit the interventions belatedly filed after the promulgation of the Courts Decision.[15]

  

Asias Emerging Dragon Corporation v. Department of Transportation and Communications and   ManilaInternational   Airport   Authori ty (G.R. No. 169914)

  

cralawBanking on this Courts declaration in Agan that the award of the NAIA

IPT III Project to PIATCO is null and void, Asias Emerging Dragon

Corporation (AEDC) filed before this Court the present Petition

for Mandamus and Prohibition (with Application for Temporary Restraining

Order), praying of this Court that:

 (1)cralawAfter due hearing, judgment be rendered commanding the Respondents, their officers, agents, successors, representatives or persons or entities acting on their behalf, to formally award the NAIA-APT [sic] III PROJECT to Petitioner AEDC and to execute and formalize with Petitioner AEDC the approved Draft Concession Agreement embodying the agreed terms and conditions for the operation of the NAIA-IPT III Project and directing Respondents to cease and desist from awarding the NAIA-IPT Project to third parties or negotiating into any concession contract with third parties. (2)cralawPending resolution on the merits, a Temporary Restraining Order be issued enjoining Respondents, their officers, agents, successors or representatives or persons or entities acting on their behalf from negotiating, re-bidding, awarding or otherwise entering into any concession contract with PIATCO and other third parties for the operation of the NAIA-IPT III Project. Other relief and remedies, just and equitable under the premises, are likewise prayed for.[16]

  

AEDC bases its Petition on the following grounds:

 I.    PETITIONER AEDC, BEING THE RECOGNIZED AND

UNCHALLENGED ORIGINAL PROPONENT, HAS THE EXCLUSIVE, CLEAR AND VESTED STATUTORY RIGHT TO THE AWARD OF THE NAIA-IPT III PROJECT;

 II.                 RESPONDENTS HAVE A STATUTORY DUTY TO PROTECT

PETITIONER AEDC AS THE UNCHALLENGED ORIGINAL PROPONENT AS A RESULT OF THE SUPREME COURTS NULLIFICATION OF THE AWARD OF THE NAIA-IPT III PROJECT TO PIATCO[; and]

 III.               RESPONDENTS HAVE NO LEGAL BASIS OR AUTHORITY

TO TAKE OVER THE NAIA-IPT III PROJECT, TO THE EXCLUSION OF PETITIONER AEDC, OR TO AWARD THE PROJECT TO THIRD PARTIES.[17]

  

cralawAt the crux of the Petition of AEDC is its claim that, being the

recognized and unchallenged original proponent of the NAIA IPT III

Project, it has the exclusive, clear, and vested statutory right to the award

thereof. However, the Petition of AEDC should be dismissed for lack of

merit, being as it is, substantially and procedurally flawed.

 

SUBSTANTIVE INFIRMITY

 

cralawA petition for mandamus is governed by Section 3 of Rule 65 of the

Rules of Civil Procedure, which reads

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

It is well-established in our jurisprudence that only specific legal rights are

enforceable bymandamus, that the right sought to be enforced must be

certain and clear, and that the writ will not issue in cases where the right

is doubtful. Just as fundamental is the principle governing the issuance

of mandamus that the duties to be performed must be such as are clearly

and peremptorily enjoined by law or by reason of official station.[18]

cralaw

cralawA rule long familiar is that mandamus never issues in doubtful cases.

It requires a showing of a complete and clear legal right in the petitioner

to the performance of ministerial acts. In varying language, the principle

echoed and reechoed is that legal rights may be enforced

by mandamus only if those rights are well-defined, clear and

certain.Otherwise, the mandamus petition must be dismissed.[19]

 

cralawThe right that AEDC is seeking to enforce is supposedly enjoined by

Section 4-A of Republic Act No. 6957,[20] as amended by Republic Act No.

7718, on unsolicited proposals, which provides

 SEC. 4-A. Unsolicited proposals. Unsolicited proposals for projects may be accepted by any government agency or local government unit on a negotiated basis: Provided, That, all the following conditions are met: (1) such projects involve a new concept or technology and/or are not part of the list of priority projects, (2) no direct government guarantee, subsidy or equity is required, and (3) the government agency or local government unit has invited by publication, for three (3) consecutive weeks, in a newspaper of general circulation, comparative or competitive proposals and no other proposal is received for a period of sixty (60) working days: Provided, further, That in the event another proponent submits a lower price proposal, the original proponent shall have the right to match the price within thirty (30) working days.  

In furtherance of the afore-quoted provision, the Implementing Rules and

Regulations (IRR) of Republic Act No. 6957, as amended by Republic Act

No. 7718, devoted the entire Rule 10 to Unsolicited Proposals, pertinent

portions of which are reproduced below

 Sec. 10.1. Requisites for Unsolicited Proposals. Any Agency/LGU may accept unsolicited proposals on a negotiated basis provided that all the following conditions are met: a.the project involves a new concept or technology and/or is not part of the list of priority projects; b.no direct government guarantee, subsidy or equity is required; and c.the Agency/LGU concerned has invited by publication, for three (3) consecutive weeks, in a newspaper of general circulation, comparative or competitive proposals and no other proposal is received for a period of sixty (60) working days. In the event that another project proponent submits a price proposal lower than that submitted by the original proponent,

the latter shall have the right to match said price proposal within thirty (30) working days. Should the original proponent fail to match the lower price proposal submitted within the specified period, the contract shall be awarded to the tenderer of the lowest price. On the other hand, if the original project proponent matches the submitted lowest price within the specified period, he shall be immediately be awarded the project. x x x x Sec. 10.6.cralawEvaluation of Unsolicited Proposals. The Agency/LGU is tasked with the initial evaluation of the proposal. The Agency/LGU shall: 1) appraise the merits of the project; 2) evaluate the qualification of the proponent; and 3) assess the appropriateness of the contractual arrangement and reasonableness of the risk allocation. The Agency/LGU is given sixty (60) days to evaluate the proposal from the date of submission of the complete proposal. Within this 60-day period, the Agency/LGU, shall advise the proponent in writing whether it accepts or rejects the proposal. Acceptance means commitment of the Agency/LGU to pursue the project and recognition of the proponent as the original proponent. At this point, the Agency/LGU will no longer entertain other similar proposals until the solicitation of comparative proposals. The implementation of the project, however, is still contingent primarily on the approval of the appropriate approving authorities consistent with Section 2.7 of these IRR, the agreement between the original proponent and the Agency/LGU of the contract terms, and the approval of the contract by the [Investment Coordination Committee (ICC)] or Local Sanggunian. x x x x Sec. 10.9. Negotiation With the Original Proponent. Immediately after ICC/Local Sanggunians clearance of the project, the Agency/LGU shall proceed with the in-depth negotiation of the project scope, implementation arrangements and concession agreement, all of which will be used in the Terms of Reference for the solicitation of comparative proposals. The Agency/LGU and the proponent are given ninety (90) days upon receipt of ICCs approval of the project to conclude negotiations. The Agency/LGU and the original proponent shall negotiate in good faith. However, should there be unresolvable differences during the negotiations, the Agency/LGU shall have the option to reject the proposal and bid out the project. On the other hand, if the negotiation is successfully concluded, the original proponent shall then be required to reformat and resubmit its proposal in

accordance with the requirements of the Terms of Reference to facilitate comparison with the comparative proposals. The Agency/LGU shall validate the reformatted proposal if it meets the requirements of the TOR prior to the issuance of the invitation for comparative proposals. x x x x Sec. 10.11. Invitation for Comparative Proposals. The Agency/LGU shall publish the invitation for comparative or competitive proposals only after ICC/Local Sanggunian issues a no objection clearance of the draft contract.The invitation for comparative or competitive proposals should be published at least once every week for three (3) weeks in at least one (1) newspaper of general circulation. It shall indicate the time, which should not be earlier than the last date of publication, and place where tender/bidding documents could be obtained. It shall likewise explicitly specify a time of sixty (60) working days reckoned from the date of issuance of the tender/bidding documents upon which proposals shall be received. Beyond said deadline, no proposals shall be accepted. A pre-bid conference shall be conducted ten (10) working days after the issuance of the tender/bidding documents. Sec. 10.12. Posting of Bid Bond by Original Proponent. The original proponent shall be required at the date of the first date of the publication of the invitation for comparative proposals to submit a bid bond equal to the amount and in the form required of the challengers. Sec. 10.13. Simultaneous Qualification of the Original Proponent. The Agency/LGU shall qualify the original proponent based on the provisions of Rule 5 hereof, within thirty (30) days from start of negotiation. For consistency, the evaluation criteria used for qualifying the original proponent should be the same criteria used for qualifying the original proponent should be the criteria used in the Terms of Reference for the challengers. x x x x Sec. 10.16. Disclosure of the Price Proposal. The disclosure of the price proposal of the original proponent in the Tender Documents will be left to the discretion of the Agency/LGU. However, if it was not disclosed in the Tender Documents, the original proponents price proposal should be revealed upon the opening of the financial proposals of the challengers. The right of the original proponent to match the best proposal within thirty (30) working days starts upon

official notification by the Agency/LGU of the most advantageous financial proposal. (Emphasis ours.)

 cralaw

cralawIn her sponsorship speech on Senate Bill No. 1586 (the precursor of

Republic Act No. 7718), then Senator (now President of the Republic of

the Philippines) Gloria Macapagal-Arroyo explained the reason behind the

proposed amendment that would later become Section 4-A of Republic Act

No. 6957, as amended by Republic Act No. 7718:

 The object of the amendment is to protect proponents which have already incurred costs in the conceptual design and in the preparation of the proposal, and which may have adopted an imaginative method of construction or innovative concept for the proposal. The amendment also aims to harness the ingenuity of the private sector to come up with solutions to the countrys infrastructure problems.[21]

  

cralawIt is irrefragable that Section 4-A of Republic Act No. 6957, as

amended by Republic Act No. 7718, and Section 10 of its IRR, accord

certain rights or privileges to the original proponent of an unsolicited

proposal for an infrastructure project. They are meant to encourage

private sector initiative in conceptualizing infrastructure projects that

would benefit the public. Nevertheless, none of these rights or privileges

would justify the automatic award of the NAIA IPT III Project to AEDC after

its previous award to PIATCO was declared null and void by this Court

in Agan.

 

The rights or privileges of an original proponent of an unsolicited proposal

for an infrastructure project are never meant to be absolute. Otherwise,

the original proponent can hold the Government hostage and secure the

award of the infrastructure project based solely on the fact that it was the

first to submit a proposal. The absurdity of such a situation becomes even

more apparent when considering that the proposal is unsolicited by the

Government. The rights or privileges of an original proponent depends on

compliance with the procedure and conditions explicitly provided by the

statutes and their IRR.

 

An unsolicited proposal is subject to evaluation, after which, the

government agency or local government unit (LGU) concerned may accept

or reject the proposal outright.

 

Under Section 10.6 of the IRR, the acceptance of the unsolicited proposal

by the agency/LGU is limited to the commitment of the [a]gency/LGU to

pursue the project and recognition of the proponent as the original

proponent. Upon acceptance then of the unsolicited proposal, the original

proponent is recognized as such but no award is yet made to

it. The commitment of the agency/LGU upon acceptance of the unsolicited

proposal is to the pursuit of the project, regardless of to whom it shall

subsequently award the same. The acceptance of the unsolicited proposal

only precludes the agency/LGU from entertaining other similar

proposals until the solicitation of comparative proposals.

 

Consistent in both the statutes and the IRR is the requirement that

invitations be published for comparative or competitive

proposals. Therefore, it is mandatory that a public bidding be held before

the awarding of the project. The negotiations between the agency/LGU

and the original proponent, as provided in Section 10.9 of the IRR, is for

the sole purpose of coming up with draft agreements, which shall be used

in the Terms of Reference (TOR) for the solicitation of comparative

proposals. Even at this point, there is no definite commitment made to the

original proponent as to the awarding of the project.In fact, the same IRR

provision even gives the concerned agency/LGU, in case of unresolvable

differences during the negotiations, the option to reject the original

proponents proposal and just bid out the project.

 

Generally, in the course of processing an unsolicited proposal, the original

proponent is treated in much the same way as all other prospective

bidders for the proposed infrastructure project. It is required to reformat

and resubmit its proposal in accordance with the requirements of the TOR.[22] It must submit a bid bond equal to the amount and in the form required

of the challengers.[23] Its qualification shall be evaluated by the concerned

agency/LGU, using evaluation criteria in accordance with Rule 5[24] of the

IRR, and which shall be the same criteria to be used in the TOR for the

challengers.[25] These requirements ensure that the public bidding under

Rule 10 of IRR on Unsolicited Proposals still remain in accord with the

three principles in public bidding, which are: the offer to the public, an

opportunity for competition, and a basis for exact comparison of bids.[26]

 

The special rights or privileges of an original proponent thus come into

play only when there are other proposals submitted during the public

bidding of the infrastructure project.As can be gleaned from the plain

language of the statutes and the IRR, the original proponent has: (1) the

right to match the lowest or most advantageous proposal within 30

working days from notice thereof, and (2) in the event that the original

proponent is able to match the lowest or most advantageous proposal

submitted, then it has the right to be awarded the project. The second

right or privilege is contingent upon the actual exercise by the original

proponent of the first right or privilege. Before the project could be

awarded to the original proponent, he must have been able to match the

lowest or most advantageous proposal within the prescribed

period. Hence, when the original proponent is able to timely match the

lowest or most advantageous proposal, with all things being equal, it shall

enjoy preference in the awarding of the infrastructure project.

 

This is the extent of the protection that Legislature intended to afford the

original proponent, as supported by the exchange between Senators

Neptali Gonzales and Sergio Osmea during the Second Reading of Senate

Bill No. 1586: Senator Gonzales: x x x x cralawThe concept being that in case of an unsolicited proposal and nonetheless public bidding has been held, then [the original proponent] shall, in effect, be granted what is the equivalent of the right of first refusal by offering a bid which shall equal or better the bid of the winning bidder within a period of, let us say, 30 days from the date of bidding. Senator Osmea: x x x x cralawTo capture the tenor of the proposal of the distinguished Gentleman, a subsequent paragraph has to be added which says, IF THERE IS A COMPETITIVE PROPOSAL, THE ORIGINAL PROPONENT SHALL HAVE THE RIGHT TO EQUAL THE TERMS AND CONDITIONS OF THE COMPETITIVE PROPOSAL. cralawIn other words, if there is nobody who will submit a competitive proposal, then nothing is lost. Everybody knows it,

and it is open and transparent. But if somebody comes in with another proposal and because it was the idea of the original proponent that proponent now has the right to equal the terms of the original proposal. SENATOR GONZALES: cralawThat is the idea, Mr. President. Because it seems to me that it is utterly unfair for one who has conceived an idea or a concept, spent and invested in feasibility studies, in the drawing of plans and specifications, and the project is submitted to a public bidding, then somebody will win on the basis of plans and specifications and concepts conceived by the original proponent. He should at least be given the right to submit an equalizing bid. x x x.[27] (Emphasis ours.)cralaw

  

As already found by this Court in the narration of facts in Agan, AEDC

failed to match the more advantageous proposal submitted by PIATCO by

the time the 30-day working period expired on 28 November 1996;[28] and,

without exercising its right to match the most advantageous proposal, it

cannot now lay claim to the award of the project.

 

The bidding process as to the NAIA IPT III Project was already over after

the award thereof to PIATCO, even if eventually, the said award was

nullified and voided. The nullification of the award to PIATCO did not

revive the proposal nor re-open the bidding.AEDC cannot insist that this

Court turn back the hands of time and award the NAIA IPT III Project to it,

as if the bid of PIATCO never existed and the award of the project to

PIATCO did not take place. Such is a simplistic approach to a very complex

problem that is the NAIA IPT III Project.

 

In his separate opinion in Agan, former Chief Justice Artemio V.

Panganiban noted that [T]here was effectively no public bidding to speak

of, the entire bidding process having been flawed and tainted from the

very outset, therefore, the award of the concession to Paircargos

successor Piatco was void, and the Concession Agreement executed with

the latter was likewise void ab initio. x x x.[29] (Emphasis ours.) In

consideration of such a declaration that the entire bidding process was

flawed and tainted from the very beginning, then, it would be senseless to

re-open the same to determine to whom the project should have been

properly awarded to. The process and all proposals and bids submitted in

participation thereof, and not just PIATCOs, were placed in doubt, and it

would be foolhardy for the Government to rely on them again. At the very

least, it may be declared that there was a failure of public bidding.[30]

 

In addition, PIATCO is already close to finishing the building of the

structures comprising NAIA IPT III,[31] a fact that this Court cannot simply

ignore. The NAIA IPT III Project was proposed, subjected to bidding, and

awarded as a build-operate-transfer (BOT) project. A BOT project is

defined as A contractual arrangement whereby the project proponent undertakes theconstruction, including financing, of a given infrastructure facility, and theoperation and maintenance thereof. The project proponent operates the facility over a fixed term during which it is allowed to charge facility users appropriate tolls, fees, rentals, and charges not exceeding those proposed in its bid or as negotiated and incorporated in the contract to enable the project proponent to recover its investment, and operating and maintenance expenses in the project. The project proponent transfers the facility to the government agency or local government unit concerned at the end of the fixed term that shall not exceed fifty (50) years. This shall include a supply-and-operate situation which is a contractual arrangement whereby the supplier of equipment and machinery for a given infrastructure facility, if the interest of the Government so requires, operates the facility providing in the process technology transfer and training to Filipino nationals.[32] (Emphasis ours.)  

The original proposal of AEDC is for a BOT project, in which it undertook

to build, operate, and transfer to the Government the NAIA IPT III

facilities. This is clearly no longer applicable or practicable under the

existing circumstances. It is undeniable that the physical structures

comprising the NAIA IPT III Project are already substantially built, and

there is almost nothing left for AEDC to construct. Hence, the project

could no longer be awarded to AEDC based on the theory of legal

impossibility of performance.

 

Neither can this Court revert to the original proposal of AEDC and award

to it only the unexecuted components of the NAIA IPT III Project. Whoever

shall assume the obligation to operate and maintain NAIA IPT III and to

subsequently transfer the same to the Government (in case the operation

is not assumed by the Government itself) shall have to do so on terms and

conditions that would necessarily be different from the original proposal

of AEDC. It will no longer include any undertaking to build or construct the

structures. An amendment of the proposal of AEDC to address the present

circumstances is out of the question since such an amendment would be

substantive and tantamount to an entirely new proposal, which must

again be subjected to competitive bidding.

 

AEDCs offer to reimburse the Government the amount it shall pay to

PIATCO for the NAIA IPT III Project facilities, as shall be determined in the

ongoing expropriation proceedings before the RTC of Pasay City, cannot

restore AEDC to its status and rights as the project proponent. It must be

stressed that the law requires the project proponent to undertake the

construction of the project, including financing; financing, thus, is but a

component of the construction of the structures and not the entirety

thereof.

 

Moreover, this reimbursement arrangement may even result in the unjust

enrichment of AEDC. In its original proposal, AEDC offered to construct the

NAIA IPT III facilities for $350 million or P9 billion at that time. In

exchange, AEDC would share a certain percentage of the gross revenues

with, and pay a guaranteed annual income to the Government upon

operation of the NAIA IPT III. In Gingoyon, the proferred value of the NAIA

IPT III facilities was already determined to be P3 billion. It seems

improbable at this point that the balance of the value of said facilities for

which the Government is still obligated to pay PIATCO shall reach or

exceed P6 billion. There is thus the possibility that the Government shall

be required to pay PIATCO an amount less than P9 billion. If AEDC is to

reimburse the Government only for the said amount, then it shall acquire

the NAIA IPT III facilities for a price less than its original proposal of P9

billion. Yet, per the other terms of its original proposal, it may still recoup

a capital investment of P9 billion plus a reasonable rate of return of

investment. A change in the agreed value of the NAIA IPT III facilities

already built cannot be done without a corresponding amendment in the

other terms of the original proposal as regards profit sharing and length

of operation; otherwise, AEDC will be unjustly enriched at the expense of

the Government.

 

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

opinion in Agan:

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

 

 

The claim of AEDC to the award of the NAIA IPT III Project, after the award

thereof to PIATCO was set aside for being null and void, grounded solely

on its being the original proponent of the project, is specious and an

apparent stretch in the interpretation of Section 4-A of Republic Act No.

6957, as amended by Republic Act No. 7718, and Rule 10 of the IRR.

 

In all, just as AEDC has no legal right to the NAIA IPT III Project, corollarily,

it has no legal right over the NAIA IPT III facility. AEDC does not own the

NAIA IPT III facility, which this Court already recognized in Gingoyon as

owned by PIATCO; nor does AEDC own the land on which NAIA IPT III

stands, which is undisputedly owned by the Republic through the Bases

Conversion Development Authority (BCDA). AEDC did not fund any portion

of the construction of NAIA IPT III, which was entirely funded by

PIATCO. AEDC also does not have any kind of lien over NAIA IPT III or any

kind of legal entitlement to occupy the facility or the land on which it

stands. Therefore, nothing that the Government has done or will do in

relation to the project could possibly prejudice or injure AEDC. AEDC then

does not possess any legal personality to interfere with or restrain the

activities of the Government as regards NAIA IPT III. Neither does it have

the legal personality to demand that the Government deliver or sell to it

the NAIA IPT III facility despite the express willingness of AEDC to

reimburse the Government the proferred amount it had paid PIATCO and

complete NAIA IPT III facility at its own cost.

 

AEDC invokes the Memorandum of Agreement, purportedly executed

between the DOTC and AEDC on 26 February 1996, following the approval

of the NAIA IPT III Project by the National Economic Development

Authority Board in a Resolution dated 13 February 1996, which provided

for the following commitments by the parties:

 

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

 b.cralawcommitment of Respondent DOTC to pursue the project

envisioned in the unsolicited proposal and commence and conclude as soon as possible negotiations with Petitioner AEDC on the BOT contract;

 c.cralawcommitment of Respondent DOTC to make appropriate

arrangements through which the formal award of the project can be affected[;]

 d.cralawcommitment of Petitioner AEDC to a fast track approach

to project implementation and to commence negotiations with its financial partners, investors and creditors;

 e.cralawcommitment of Respondent DOTC and Petitioner AEDC to

fast track evaluation of competitive proposals, screening and eliminating nuisance comparative bids;[34]

  

cralawIt is important to note, however, that the document attached as

Annex E to the Petition of AEDC is a certified photocopy of records on

file. This Court cannot give much weight to said document considering

that its existence and due execution have not been established. It is not

notarized, so it does not enjoy the presumption of regularity of a public

document. It is not even witnessed by anyone. It is not certified true by its

supposed signatories, Secretary Jesus B. Garcia, Jr. for DOTC and

Chairman Henry Sy, Sr. for AEDC, or by any government agency having its

custody. It is certified as a photocopy of records on file by an Atty. Cecilia

L. Pesayco, the Corporate Secretary, of an unidentified corporation.

 

Even assuming for the sake of argument, that the said Memorandum of

Agreement, is in existence and duly executed, it does little to support the

claim of AEDC to the award of the NAIA IPT III Project. The commitments

undertaken by the DOTC and AEDC in the Memorandum of Agreement may

be simply summarized as a commitment to comply with the procedure and

requirements provided in Rules 10 and 11 of the IRR. It bears no

commitment on the part of the DOTC to award the NAIA IPT III Project to

AEDC. On the contrary, the document includes express stipulations that

negate any such government obligation. Thus, in the first clause,[35] the

DOTC affirmed its commitment to pursue, implement and complete the

NAIA IPT III Project on or before 1998, noticeably without mentioning that

such commitment was to pursue the project specifically with

AEDC.Likewise, in the second clause,[36] it was emphasized that the DOTC

shall pursue the project under Rules 10 and 11 of the IRR of Republic Act

No. 6957, as amended by Republic Act No. 7718. And most significantly,

the tenth clause of the same document provided:

 10.cralawNothing in this Memorandum of Understanding shall be

understood, interpreted or construed as permitting, allowing or authorizing the circumvention of, or non-compliance with, or as waiving, the provisions of, and requirements and procedures under, existing laws, rules and regulations.[37]

  

AEDC further decries that:

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

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

 b.appointed a consortium of six (6) local banks as its

financial advisor in June 1996; c.hired the services of GAIA South, Inc. to prepare the

Project Description Report and to obtain the Environmental Clearance Certificate (ECC) for the NAIA-IPT III Project;

 d.coordinated with the Airline Operators Association,

Bases Conversion Development Authority, Philippine Air Force, Bureau of Customs, Bureau of Immigration, relative to their particular requirements regarding the NAIA-IPT III [P]roject; and

 e.negotiated and entered into firm commitments with Ital

Thai, Marubeni Corporation and Mitsui Corporation as equity partners.[38]

  

While the Court may concede that AEDC, as the original proponent,

already expended resources in its preparation and negotiation of its

unsolicited proposal, the mere fact thereof does not entitle it to the

instant award of the NAIA IPT III Project. AEDC was aware that the said

project would have to undergo public bidding, and there existed the

possibility that another proponent may submit a more advantageous bid

which it cannot match; in which case, the project shall be awarded to the

other proponent and AEDC would then have no means to recover the costs

and expenses it already incurred on its unsolicited proposal. It was a given

business risk that AEDC knowingly undertook.

 

Additionally, the very defect upon which this Court nullified the award of

the NAIA IPT III Project to PIATCO similarly taints the unsolicited proposal

of AEDC. This Court found Paircargo Consortium financially disqualified

after striking down as incorrect the PBACs assessment of the consortiums

financial capability. According to the Courts ratio in Agan:

 As the minimum project cost was estimated to be

US$350,000,000.00 or roughly P9,183,650,000.00, the Paircargo Consortium had to show to the satisfaction of the PBAC that it had the ability to provide the minimum equity for the project in the amount of at least P2,755,095,000.00.

 x x x x Thus, the maximum amount that Security Bank could

validly invest in the Paircargo Consortium is only P528,525,656.55, representing 15% of its entire net worth. The total net worth therefore of the Paircargo Consortium, after considering the maximum amounts that may be validly invested by each of its members is P558,384,871.55 or only 6.08% of the project cost, an amount substantially less than the prescribed minimum equity investment required for the project in the amount of P2,755,095,000.00 or 30% of the project cost.

 The purpose of pre-qualification in any public bidding is to

determine, at the earliest opportunity, the ability of the bidder to undertake the project. Thus, with respect to the bidders financial capacity at the pre-qualification stage, the law requires the government agency to examine and determine the ability of the bidder to fund the entire cost of the project by considering the maximum amounts that each bidder may invest in the project at the time of pre-qualification.

 x x x x 

Thus, if the maximum amount of equity that a bidder may invest in the project at the time the bids are submitted falls short of the minimum amounts required to be put up by the bidder, said bidder should be properly disqualified. Considering that at the pre-qualification stage, the maximum amounts which the Paircargo Consortium may invest in the project fell short of the minimum amounts prescribed by the PBAC, we hold that Paircargo Consortium was not a qualified bidder. Thus the award of the contract by the PBAC to the Paircargo Consortium, a disqualified bidder, is null and void.[39]

  

Pursuant to the above-quoted ruling, AEDC, like the Paircargo Consortium,

would not be financially qualified to undertake the NAIA IPT III

Project. Based on AEDCs own submissions to the Government, it had then

a paid-in capital of onlyP150,000,000.00,[40] which was less than

the P558,384,871.55 that Paircargo Consortium was capable of investing

in the NAIA IPT III Project, and even far less that what this Court

prescribed as the minimum equity investment required for the project in

the amount of P2,755,095,000.00 or 30% of the project cost. AEDC had not

sufficiently demonstrated that it would have been financially qualified to

undertake the project at the time of submission of the bids.

 

Instead, AEDC took pains to present to this Court that allowing it to take

over and operate NAIA IPT III at present would be beneficial to the

Government. This Court must point out, however, that AEDC is precisely

making a new proposal befitting the current status of the NAIA IPT III

Project, contrary to its own argument that it is merely invoking its original

BOT proposal. And it is not for this Court to evaluate AEDCs new proposal

and assess whether it would truly be most beneficial for the Government,

for the same is an executive function rather than judicial, for which the

statutes and regulations have sufficiently provided standards and

procedures for evaluation.

 

It can even be said that if the award of the NAIA IPT III Project was merely

a matter of choosing between PIATCO and AEDC (which it is not), there

could be no doubt that PIATCO is more qualified to operate the structure

that PIATCO itself built and PIATCOs offer of P17.75 Billion in annual

guaranteed payments to the Government is far better that AEDCs offer

of P135 Million.

 

Hence, AEDC is not entitled to a writ of mandamus, there being no

specific, certain, and clear legal right to be enforced, nor duty to be

performed that is clearly and peremptorily enjoined by law or by reason of

official station.

 

PROCEDURAL LAPSES

 

In addition to the substantive weaknesses of the Petition of AEDC, the

said Petition also suffers from procedural defects.

 

AEDC revived its hope to acquire the NAIA IPT III Project when this Court

promulgated its Decision in Agan on 5 May 2003. The said Decision

became final and executory on 17 February 2004 upon the denial by this

Court of the Motion for Leave to File Second Motion for Reconsideration

submitted by PIATCO. It is this Decision that declared the award of the

NAIA IPT III Project to PIATCO as null and void; without the same, then the

award of the NAIA IPT III Project to PIATCO would still subsist and other

persons would remain precluded from acquiring rights thereto, including

AEDC. Irrefutably, the present claim of AEDC is rooted in the Decision of

this Court in Agan. However, AEDC filed the Petition at bar only 20 months

after the promulgation of the Decision in Agan on 5 May 2003.

 

It must be emphasized that under Sections 2 and 3, Rule 65 of the revised

Rules of Civil Procedure, petitions for prohibition and mandamus, such as

in the instant case, can only be resorted to when there is no other plain,

speedy and adequate remedy for the party in the ordinary course of law.

 

In Cruz v. Court of Appeals,[41] this Court elucidates that

 Although Rule 65 does not specify any period for the filing of a petition for certiorari and mandamus, it must, nevertheless, be filed within a reasonable time. In certiorari cases, the definitive rule now is that such reasonable time iswithin three months from the commission of the complained act. The same rule should apply to mandamus cases. The unreasonable delay in the filing of the petitioner's mandamus suit unerringly negates any claim that the application for the said extraordinary remedy was the most expeditious and speedy available to the petitioner.(Emphasis ours.) 

 

As the revised Rules now stand, a petition for certiorari may be filed

within 60 days from notice of the judgment, order or resolution sought to

be assailed.[42] Reasonable time for filing a petition for mandamus should

likewise be for the same period. The filing by the AEDC of its petition

for mandamus 20 months after its supposed right to the project arose is

evidently beyond reasonable time and negates any claim that the said

petition for the extraordinary writ was the most expeditious and speedy

remedy available to AEDC.

 

AEDC contends that the reasonable time within which it should have filed

its petition should be reckoned only from 21 September 2005, the date

when AEDC received the letter from the Office of the Solicitor General

refusing to recognize the rights of AEDC to provide the available funds for

the completion of the NAIA IPT III Project and to reimburse the costs of the

structures already built by PIATCO. It has been unmistakable that even

long before said letter especially when the Government instituted with the

RTC of Pasay City expropriation proceedings for the NAIA IPT III on 21

December 2004 that the Government would not recognize any right that

AEDC purportedly had over the NAIA IPT III Project and that the

Government is intent on taking over and operating the NAIA IPT III itself.

 

Another strong argument against the AEDCs Petition is that it is already

barred by res judicata.

 

In Agan,[43] it was noted that on 16 April 1997, the AEDC instituted before

the RTC of Pasig City Civil Case No. 66213, a Petition for the Declaration of

Nullity of the Proceedings, Mandamus and Injunction, against the DOTC

Secretary and the PBAC Chairman and members.

 

In Civil Case No. 66213, AEDC prayed for:

 i)the nullification of the proceedings before the DOTC-PBAC,

including its decision to qualify Paircargo Consortium and to deny Petitioner AEDCs access to Paircargo Consortiums technical and financial bid documents;

 ii)the protection of Petitioner AEDCs right to match

considering the void challenge bid of the Paircargo Consortium and the denial by DOTC-PBAC of access to

information vital to the effective exercise of its right to match;

 iii)the declaration of the absence of any other qualified

proponent submitting a competitive bid in an unsolicited proposal.[44]

  

Despite the pendency of Civil Case No. 66213, the DOTC issued the notice

of award for the NAIA IPT III Project to PIATCO on 9 July 1997. The DOTC

and PIATCO also executed on 12 July 1997 the 1997 Concession

Agreement. AEDC then alleges that:

 k)cralawOn September 3, 1998, then Pres. Joseph Ejercito Estrada convened a meeting with the members of the Board of Petitioner AEDC to convey his desire for the dismissal of the mandamus case filed by Petition AEDC and in fact urged AEDC to immediately withdraw said case. l)cralawThe Presidents direct intervention in the disposition of this mandamus case was a clear imposition that Petitioner AEDC had not choice but to accept. To do otherwise was to take a confrontational stance against the most powerful man in the country then under the risk of catching his ire, which could have led to untold consequences upon the business interests of the stakeholders in AEDC. Thus, Petitioner AEDC was constrained to agree to the signing of a Joint Motion to Dismiss and to the filing of the same in court. m)cralawUnbeknownst to AEDC at that time was that simultaneous with the signing of the July 12, 1997 Concession Agreement, the DOTC and PIATCO executed a secret side agreement grossly prejudicial and detrimental to the interest of Government. It stipulated that in the event that the Civil Case filed by AEDC on April 16, 1997 is not resolved in a manner favorable to the Government, PIATCO shall be entitled to full reimbursement for all costs and expenses it incurred in order to obtain the NAIA IPT III BOT project in an amount not less than One Hundred Eighty Million Pesos (Php 180,000,000.00). This was apparently the reason why the President was determined to have AEDCs case dismissed immediately. n)cralawOn February 9, 1999, after the Amended and Restated Concession Agreement (hereinafter referred to as ARCA) was signed without Petitioner AEDCs knowledge, Petitioner AEDC signed a Joint Motion to Dismiss upon the representation of the DOTC that it would provide AEDC with a copy of the 1997 Concession Agreement. x x x.[45]

  

On 30 April 1999, the RTC of Pasig City issued an Order dismissing with

prejudice Civil Case No. 66213 upon the execution by the parties of a Joint

Motion to Dismiss. According to the Joint Motion to Dismiss

 The parties, assisted by their respective counsel, respectfully state: 1.Philippine International Air Terminals Company, Inc. (PIATCO) and the respondents have submitted to petitioner, through the Office of the Executive Secretary, Malacaang, a copy of the Concession Agreement which they executed for the construction and operation of the Ninoy Aquino International Airport International Passenger Terminal III Project (NAIA IPT III Project), which petitioner requested. 2.Consequently, the parties have decided to amicably settle the instant case and jointly move for the dismissal thereof without any of the parties admitting liability or conceding to the position taken by the other in the instant case. 3.Petitioner, on the other hand, and the respondents, on the other hand, hereby release and forever discharge each other from any and all liabilities, direct or indirect, whether criminal or civil, which arose in connection with the instant case. 4.The parties agree to bear the costs, attorneys fees and other expenses they respectively incurred in connection with the instant case. (Emphasis ours.)  

AEDC, however, invokes the purported pressure exerted upon it by then

President Joseph E. Estrada, the alleged fraud committed by the DOTC,

and paragraph 2 in the afore-quoted Joint Motion to Dismiss to justify the

non-application of the doctrine of res judicatato its present Petition.

 

The elements of res judicata, in its concept as a bar by former judgment,

are as follows: (1) the former judgment or order must be final; (2) it must

be a judgment or order on the merits, that is, it was rendered after a

consideration of the evidence or stipulations submitted by the parties at

the trial of the case; (3) it must have been rendered by a court having

jurisdiction over the subject matter and the parties; and (4) there must

be, between the first and second actions, identity of parties, of subject

matter and of cause of action.[46] All of the elements are present herein so

as to bar the present Petition.

 

First, the Order of the RTC of Pasig City, dismissing Civil Case No. 66213,

was issued on30 April 1999. The Joint Motion to Dismiss, deemed a

compromise agreement, once approved by the court is immediately

executory and not appealable.[47]

 

Second, the Order of the RTC of Pasig City dismissing Civil Case No. 66213

pursuant to the Joint Motion to Dismiss filed by the parties constitutes a

judgment on the merits.

 

The Joint Motion to Dismiss stated that the parties were willing to settle

the case amicably and, consequently, moved for the dismissal thereof. It

also contained a provision in which the parties the AEDC, on one hand,

and the DOTC Secretary and PBAC, on the other released and forever

discharged each other from any and all liabilities, whether criminal or

civil, arising in connection with the case. It is undisputable that the

parties entered into a compromise agreement, defined as a contract

whereby the parties, by making reciprocal concessions, avoid a litigation

or put an end to one already commenced.[48] Essentially, it is a contract

perfected by mere consent, the latter being manifested by the meeting of

the offer and the acceptance upon the thing and the cause which are to

constitute the contract. Once an agreement is stamped with judicial

approval, it becomes more than a mere contract binding upon the parties;

having the sanction of the court and entered as its determination of the

controversy, it has the force and effect of any other judgment.[49] Article

2037 of the Civil Code explicitly provides that a compromise has upon the

parties the effect and authority of res judicata.

 

Because of the compromise agreement among the parties, there was

accordingly a judicial settlement of the controversy, and the Order, dated

30 April 1999, of the RTC of Pasig City was no less a judgment on the

merits which may be annulled only upon the ground of extrinsic fraud.[50] Thus, the RTC of Pasig City, in the same Order, correctly granted the

dismissal of Civil Case No. 66213 with prejudice.

 

A scrutiny of the Joint Motion to Dismiss submitted to the RTC of Pasig

City would reveal that the parties agreed to discharge one another from

any and all liabilities, whether criminal or civil, arising from the case, after

AEDC was furnished with a copy of the 1997 Concession Agreement

between the DOTC and PIATCO. This complete waiver was the reciprocal

concession of the parties that puts to an end the present litigation,

without any residual right in the parties to litigate the same in the

future. Logically also, there was no more need for the parties to admit to

any liability considering that they already agreed to absolutely discharge

each other therefrom, without necessarily conceding to the others

position. For AEDC, it was a declaration that even if it was not conceding

to the Governments position, it was nonetheless waiving any legal

entitlement it might have to sue the Government on account of the NAIA

IPT III Project. Conversely, for the Government, it was an avowal that even

if it was not accepting AEDCs stance, it was all the same relinquishing its

right to file any suit against AEDC in connection with the same

project. That none of the parties admitted liability or conceded its position

is without bearing on the validity or binding effect of the compromise

agreement, considering that these were not essential to the said

compromise.

 

Third, there is no question as to the jurisdiction of the RTC of Pasig City

over the subject matter and parties in Civil Case No. 66213. The RTC can

exercise original jurisdiction over cases involving the issuance of writs

of certiorari, prohibition, mandamus, quo warranto,habeas corpus and

injunction.[51] To recall, the Petition of AEDC before the RTC of Pasig City

was for the declaration of nullity of proceedings, mandamus and

injunction. The RTC of Pasig City likewise had jurisdiction over the parties,

with the voluntary submission by AEDC and proper service of summons on

the DOTC Secretary and the PBAC Chairman and members.

 

Lastly, there is, between Civil Case No. 66213 before the RTC of Pasig City

and the Petition now pending before this Court, an identity of parties, of

subject matter, and of causes of action.

 

There is an identity of parties. In both petitions, the AEDC is the

petitioner. The respondents in Civil Case No. 66213 are the DOTC

Secretary and the PBAC Chairman and members. The respondents in the

instant Petition are the DOTC, the DOTC Secretary, and the Manila

International Airport Authority (MIAA). While it may be conceded that

MIAA was not a respondent and did not participate in Civil Case No. 66213,

it may be considered a successor-in-interest of the PBAC. When Civil Case

No. 66213 was initiated, PBAC was then in charge of the NAIA IPT III

Project, and had the authority to evaluate the bids and award the project

to the one offering the lowest or most advantageous bid.Since the bidding

is already over, and the structures comprising NAIA IPT III are now built,

then MIAA has taken charge thereof. Furthermore, it is clear that it has

been the intention of the AEDC to name as respondents in their two

Petitions the government agency/ies and official/s who, at the moment

each Petition was filed, had authority over the NAIA IPT III Project.

 

There is an identity of subject matter because the two Petitions involve

none other than the award and implementation of the NAIA IPT III Project.

 

There is an identity of cause of action because, in both Petitions, AEDC is

asserting the violation of its right to the award of the NAIA IPT III Project

as the original proponent in the absence of any other qualified bidders. As

early as in Civil Case No. 66213, AEDC already sought a declaration by the

court of the absence of any other qualified proponent submitting a

competitive bid for the NAIA IPT III Project, which, ultimately, would result

in the award of the said project to it.

 

AEDC attempts to evade the effects of its compromise agreement by

alleging that it was compelled to enter into such an agreement when

former President Joseph E. Estrada asserted his influence and intervened

in Civil Case No. 66213. This allegation deserves scant

consideration. Without any proof that such events did take place, such

statements remain mere allegations that cannot be given weight. One who

alleges any defect or the lack of a valid consent to a contract must

establish the same by full, clear and convincing evidence, not merely by

preponderance thereof.[52] And, even assuming arguendo, that the consent

of AEDC to the compromise agreement was indeed vitiated, then President

Estrada was removed from office in January 2001. AEDC filed the present

Petition only on20 October 2005. The four-year prescriptive period, within

which an action to annul a voidable contract may be brought, had already

expired.[53]

 

The AEDC further claims that the DOTC committed fraud when, without

AEDCs knowledge, the DOTC entered into an Amended and Restated

Concession Agreement (ARCA) with PIATCO. The fraud on the part of the

DOTC purportedly also vitiated AEDCs consent to the compromise

agreement. It is true that a judicial compromise may be set aside if fraud

vitiated the consent of a party thereof; and that the extrinsic fraud, which

nullifies a compromise, likewise invalidates the decision approving it.[54] However, once again, AEDCs allegations of fraud are

unsubstantiated. There is no proof that the DOTC and PIATCO willfully and

deliberately suppressed and kept the information on the execution of the

ARCA from AEDC. The burden of proving that there indeed was fraud lies

with the party making such allegation. Each party must prove his own

affirmative allegations. The burden of proof lies on the party who would be

defeated if no evidence were given on either side. In this jurisdiction,

fraud is never presumed.[55]

 

Moreover, a judicial compromise may be rescinded or set aside on the

ground of fraud in accordance with Rule 38 of the Rules on Civil Procedure

on petition for relief from judgment. Section 3 thereof prescribes the

periods within which the petition for relief must be filed:SEC. 3. Time for filing petition; contents and verification. A petition provided for in either of the preceding sections of this Rule must be verified, filed within sixty (60) days after the petitioner learns of the judgment, final order or other proceeding to be set aside, and not more than six (6) months after such judgment or final order was entered, or such proceeding was taken, and must be accompanied with affidavits showing the fraud, accident, mistake or excusable negligence relied upon, and the facts constituting the petitioners good and substantial cause of action or defense, as the case may be.  

According to this Courts ruling in Argana v. Republic,[56] as applied to a

judgment based on compromise, both the 60-day and six-month

reglementary periods within which to file a petition for relief should be

reckoned from the date when the decision approving the compromise

agreement was rendered because such judgment is considered

immediately executory and entered on the date that it was approved by

the court. In the present case, the Order of the RTC of Pasig City granting

the Joint Motion to Dismiss filed by the parties in Civil Case No. 66213 was

issued on 30 April 1999, yet AEDC only spoke of the alleged fraud which

vitiated its consent thereto in its Petition before this Court filed on 20

October 2005, more than six years later.

 

It is obvious that the assertion by AEDC of its vitiated consent to the Joint

Motion to Dismiss Civil Case No. 66213 is nothing more than an after-

thought and a desperate attempt to escape the legal implications thereof,

including the barring of its present Petition on the ground of res judicata.

 

It is also irrelevant to the legal position of AEDC that the Government

asserted in Aganthat the award of the NAIA IPT III Project to PIATCO was

void. That the Government eventually took such a position, which this

Court subsequently upheld, does not affect AEDCs commitments and

obligations under its judicially-approved compromise agreement in Civil

Case No. 66213, which AEDC signed willingly, knowingly, and ably assisted

by legal counsel.

 

In addition, it cannot be said that there has been a fundamental change in

the Governments position since Civil Case No. 66213, contrary to the

allegation of AEDC. The Government then espoused that AEDC is not

entitled to the award of the NAIA IPT III Project. The Government still

maintains the exact same position presently. That the Government

eventually reversed its position on the validity of its award of the project

to PIATCO is not inconsistent with its position that neither should AEDC be

awarded the project.

 

For the foregoing substantive and procedural reasons, the instant Petition

of AEDC should be dismissed.

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

As mentioned in Gingoyon, expropriation proceedings for the NAIA IPT III

was instituted by the Government with the RTC of Pasay City, docketed as

Case No. 04-0876CFM.Congressman Baterina, together with other

members of the House of Representatives, sought intervention in Case No.

04-0876CFM by filing a Petition for Prohibition in Intervention (with

Application for Temporary Restraining Order and Writ of Preliminary

Injunction). Baterina, et al. believe that the Government need not file

expropriation proceedings to gain possession of NAIA IPT III and that

PIATCO is not entitled to payment of just compensation, arguing thus

 

A) Respondent PIATCO does not own Terminal III because BOT Contracts do not vest ownership in PIATCO. As such, neither PIATCO nor FRAPORT are entitled to compensation. B) Articles 448, ET SEQ., of the New Civil Code, as regards builders in good faith/bad faith, do not apply to PIATCOs Construction of Terminal III. C) Article 1412(2) of the New Civil Code allows the Government to demand the return of what it has given without any obligation to comply with its promise. D) The payment of compensation to PIATCO is unconstitutional, violative of the Build-Operate-Transfer Law, and violates the Civil Code and other laws.[57]

  

On 27 October 2005, the RTC of Pasay City issued an Order admitting the

Petition in Intervention of Baterina, et al., as well as the Complaint in

Intervention of Manuel L. Fortes, Jr. and the Answer in Intervention of Gina

B. Alnas, et al. The Republic sought reconsideration of the 27 October

2005 Order of the RTC of Pasay City, which, in an Omnibus Order dated 13

December 2005, was denied by the RTC of Pasay City as regards the

intervention of Baterina, et al. and Fortes, but granted as to the

intervention of Alnas, et al. On 22 March 2006, Baterina, et al. filed with

the RTC of Pasay City a Motion to Declare in Default and/or Motion for

Summary Judgment considering that the Republic and PIATCO failed to file

an answer or any responsive pleading to their Petition for Prohibition in

Intervention.

 

In the meantime, on 19 December 2005, the Courts Decision

in Gingoyon was promulgated. Baterina also filed a Motion for Intervention

in said case and sought reconsideration of the Decision therein. However,

his Motion for Intervention was denied by this Court in a Resolution

dated 1 February 2006.

 

On 27 March 2006, the RTC of Pasay City issued an Order and Writ of

Execution, the dispositive portion of which reads

 WHEREFORE, let a writ of execution be issued in this case directing the Sheriff of this court to immediately implement the Order dated January 4, 2005 and January 10, 2005, as affirmed by the Decision of the Supreme Court in G.R. No.

166429 in the above-entitled case dated December 19, 2005, in the following manner: 1.Ordering the General Manager, the Senior Assistant General Manager and the Vice President of Finance of the Manila International Airport Authority (MIAA) to immediately withdraw the amount of P3,002,125,000.00 from the above-mentioned Certificates of US Dollar Time Deposits with the Land Bank of the Philippines, Baclaran Branch; 2.Ordering the Branch Manager, Land Bank of the Philippines, Baclaran Branch to immediately release the sum of P3,002,125,000.00 to PIATCO; Return of Service of the Writs shall be made by the Sheriff of this court immediately thereafter;[58]

  

The RTC of Pasay City, in an Order, dated 15 June 2006, denied the

Motions for Reconsideration of its Order and Writ of Execution filed by the

Government and Fortes.Baterina, meanwhile, went before the Court of

Appeals via a Petition for Certiorari and Prohibition (With Urgent Prayer

for the Issuance of a Temporary Restraining Order and Writ of Preliminary

Injunction), docketed as CA-G.R. No. 95539, assailing the issuance, in

grave abuse of discretion, by the RTC of Pasay City of its Orders dated 27

March 2006 and 15 June 2006 and Writ of Execution dated 27 March 2006.

 

During the pendency of CA-G.R. No. 95539 with the Court of Appeals, the

RTC of Pasay City issued an Order, dated 7 August 2006, denying the

Urgent Manifestation and Motion filed by the Republic in which it relayed

willingness to comply with the Order and Writ of Execution dated 27 March

2006, provided that the trial court shall issue an Order expressly

authorizing the Republic to award concessions and lease portions of the

NAIA IPT III to potential users. The following day, on 8 August 2006, the

RTC of Pasay City issued an Order denying the intervention of Baterina, et

al. and Fortes in Case No. 04-0876CFM. In a third Order, dated 9 August

2006, the RTC of Pasay City directed PIATCO to receive the amount

of P3,002,125,000.00 from the Land Bank of the Philippines, Baclaran

Branch.

 

By 24 August 2006, the Republic was all set to comply with the 9 August

2006 Order of the RTC of Pasay City. Hence, the representatives of the

Republic and PIATCO met before the RTC of Pasay City for the supposed

payment by the former to the latter of the proferred amount. However, on

the same day, the Court of Appeals, in CA G.R. No. 95539, issued a

Temporary Restraining Order (TRO) enjoining, among other things, the

RTC of Pasay City from implementing the questioned Orders, dated 27

March 2006 and 15 June 2006, or from otherwise causing payment and

from further proceeding with the determination of just compensation in

the expropriation case involved herein, until such time that petitioners

motion to declare in default and motion for partial summary judgment

shall have been resolved by the trial court; or it is clarified that PIATCO

categorically disputes the proferred value for NAIA Terminal 3. The TRO

was to be effective for 30 days. Two days later, on 26 August 2006, the

Republic filed with the Court of Appeals an Urgent Motion to Lift

Temporary Restraining Order, which the appellate court scheduled for

hearing on 5 September 2006.

 

While the Urgent Motion to lift the TRO was still pending with the Court of

Appeals, the Republic already filed the present Petition for Certiorari and

Prohibition With Urgent Application for a Temporary Restraining Order

and/or Writ of Preliminary Injunction, attributing to the Court of Appeals

grave abuse of discretion in granting the TRO and seeking a writ of

prohibition against the Court of Appeals to enjoin it from giving due

course to Baterinas Petition in CA-G.R. No. 95539. The Republic thus raises

before this Court the following arguments:

 I

 THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO AN EXCESS OR LACK OF JURISDICTION WHEN IT GRANTED THE TEMPORARY RESTRAINING ORDER. 

A.                 THIS HONORABLE COURTS DECISION IN GINGOYON CONSTITUTES THE LAW OF THE CASE.

 B.                 THE TRO IS IN DIRECT CONTRAVENTION OF THIS

COURTS DECISION WICH HAD ATTAINED FINALITY. 

II THE REPUBLIC IS SUFFERING IRREPARABLE DAMAGE. 

III 

THE COURT OF APPEALS MUST BE PROHIBITED FROM GIVING DUE COURSE TO A PETITION THAT IS DEFECTIVE IN FORM AND SUBSTANCE. 

A.                 PRIVATE RESPONDENT HAS NO LEGAL STANDING. 

1. THIS HONORABLE COURT HAS RULED THAT PRIVATE RESPONDENT HAS NO LEGAL STANDING.

 2. PRIVATE RESPONDENT HAS LOST HIS STANDING

AS AN INTERVENOR. 

B.                 PRIVATE RESPONDENT FAILED TO DEMONSTRATE THAT HE IS ENTITLED TO THE INJUNCTIVE RELIEFS PRAYED FOR.

 C.                 THE BOND POSTED IS INSUFFICIENT.

 IV

 GRANTING ARGUENDO THAT PRIVATE RESPONDENTS PETITION IS SUFFICIENT IN FORM AND SUBSTANCE, THE SAME HAS BECOME MOOT AND ACADEMIC. 

A.                 THE MOTION TO DECLARE IN DEFAULT AND/OR MOTION FOR PARTIAL SUMMARY JUDGMENT HAS ALREADY BEEN RESOLVED.

 B.                 PIATCO HAS CATEGORICALLY DISPUTED THE

PROFFERED VALUE FOR NAIA TERMINAL III.[59]

  

The Republic prays of this Court that:

 (a)Pending the determination of the merits of this petition, a temporary restraining order and/or a writ of preliminary injunction be ISSUED restraining the Court of Appeals from implementing the writ of preliminary injunction in CA-G.R. SP No. 95539 and proceeding in said case such as hearing it onSeptember 5, 2006. After both parties have been heard, the preliminary injunction be MADE PERMANENT; (b)The Resolution date 24 August 2006 of the Court of Appeals be SET ASIDE; and (c)CA-G.R. SP No. 95539 be ORDERED DISMISSED. Other just and equitable reliefs are likewise prayed for.[60]

 

 

On 4 September 2006, the Republic filed a Manifestation and Motion to

Withdraw Urgent Motion to Lift Temporary Restraining Order with the

Court of Appeals stating, among other things, that it had decided to

withdraw the said Motion as it had opted to avail of other options and

remedies. Despite the Motion to Withdraw filed by the Government, the

Court of Appeals issued a Resolution, dated 8 September 2006, lifting the

TRO it issued, on the basis of the following

 In view of the pronouncement of the Supreme Court in the Gingoyon case upholding the right of PIATCO to be paid the proferred value in the amount ofP3,002,125,000.00 prior to the implementation of the writ of possession issued by the trial court on December 21, 2004 over the NAIA Passenger Terminal III, and directing the determination of just compensation, there is no practical and logical reason to maintain the effects of the Temporary Restraining Order contained in our Resolution dated August 24, 2006. Thus, We cannot continue restraining what has been mandated in a final and executory decision of the Supreme Court. WHEREFORE, Our Resolution dated 24 August 2006 be SET ASIDE.Consequently, the Motion to Withdraw the Motion to Lift the Temporary Restraining Order is rendered moot and academic.[61]

  

There being no more legal impediment, the Republic tendered on 11

September 2006 Land Bank check in the amount of P3,002,125,000.00

representing the proferred value of NAIA IPT III, which was received by a

duly authorized representative of PIATCO.

 

On 27 December 2006, the Court of Appeals rendered a Decision in CA G.R.

No. 95539 dismissing Baterinas Petition.

 

The latest developments before the Court of Appeals and the RTC of Pasay

City render the present Petition of the Republic moot.

 

cralawNonetheless, Baterina, as the private respondent in the instant

Petition, presented his own prayer that a judgment be rendered as

follows:

 

A.For this Honorable Court, in the exercise of its judicial discretion to relax procedural rules consistent with Metropolitan Traffic Command v. Gonong and deem that justice would be better served if all legal issues involved in the expropriation case and in Baterina are resolved in this case once and for all, toDECLARE that: 

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

 ii.   PIATCO, as a matter of law, is merely the builder of

TERMINAL 3 and, as such, it may file a claim for recovery on quantum meruit with the Commission on Audi[t] for determination of the amount thereof, if any.

 B.To DIRECT the Regional Trial Court of Pasay City, Branch 117 to dismiss the expropriation case; C.To DISMISS the instant Petition and DENY The Republics application for TRO and/or writ of preliminary injunction for lack of merit; D.To DECLARE that the P3 Billion (representing the proferred value of TERMINAL 3) paid to PIATCO on 11 September 2006 as funds held in trust by PIATCO for the benefit of the Republic and subject to the outcome of the proceedings for the determination of recovery on quantum meruit due to PIATCO, if any. E. cralawTo DIRECT the Solicitor General to disclose the evidence it has gathered on corruption, bribery, fraud, bad faith, etc., to this Honorable Court and the Commission on Audit, and to DECLARE such evidence to be admissible in any proceeding for the determination of any compensation due to PIATCO, if any. [F].In the alternative, to: 

i.     SET ASIDE the trial courts Order dated 08 August 2006 denying Private Respondents motion for intervention in the expropriation case, and

 ii.   Should this Honorable Court lend credence to the

argument of the Solicitor General in its Comment dated 20 April 2006 that there are issues as to material fact that require presentation of evidence, to REMAND the resolution of the legal issues raised by Private Respondent to the trial

court consistent with this Honorable Courts holding in the Gingoyon Resolution that the interests of the movants-in-intervention [meaning Takenaka, Asahikosan, and herein Private Respondent] may be duly litigated in proceedings which are extant before the lower courts.[62]

  

In essence, Baterina is opposing the expropriation proceedings on the

ground that NAIA IPT III is already public property. Hence, PIATCO is not

entitled to just compensation for NAIA IPT III. He is asking the Court to

make a definitive ruling on this matter considering that it was not settled

in either Agan or Gingoyon.

 

We disagree. Contrary to Baterinas stance, PIATCOs entitlement to just

and equitable consideration for its construction of NAIA IPT III and the

propriety of the Republics resort to expropriation proceedings were

already recognized and upheld by this Court in Aganand Gingoyon.

 

The Courts Decisions in both Agan and Gingoyon had attained finality, the

former on 17 February 2004 and the latter on 17 March 2006.

 

This Court already made an unequivocal pronouncement in its Resolution

dated 21 January 2004 in Agan that for the Government of the Republic to

take over the NAIA IPT III facility, it has to compensate PIATCO as a

builder of the structures; and that [t]he compensation must be just and in

accordance with law and equity for the government cannot unjustly enrich

itself at the expense of PIATCO and its investors.[63] As between the

Republic and PIATCO, the judgment on the need to compensate PIATCO

before the Government may take over NAIA IPT III is already conclusive

and beyond question.

 

Hence, in Gingoyon, this Court declared that:

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

The pronouncement in the 2004 Resolution is especially significant to this case in two aspects, namely: (i) that PIATCO must receive payment of just compensation determined in accordance with law and equity; and (ii) that the government is barred from taking over NAIA 3 until such just compensation is paid. The parties cannot be allowed to evade the directives laid down by this Court through any mode of judicial action, such as the complaint for eminent domain. It cannot be denied though that the Court in the 2004 Resolution prescribed mandatory guidelines which the Government must observe before it could acquire the NAIA 3 facilities. Thus, the actions of respondent judge under review, as well as the arguments of the parties must, to merit affirmation, pass the threshold test of whether such propositions are in accord with the 2004 Resolution.[64]

  

The Court then, in Gingoyon, directly addressed the issue on the

appropriateness of the Republics resort to expropriation proceedings:

 The Government has chosen to resort to expropriation, a remedy available under the law, which has the added benefit of an integrated process for the determination of just compensation and the payment thereof to PIATCO. We appreciate that the case at bar is a highly unusual case, whereby the Government seeks to expropriate a building complex constructed on land which the State already owns. There is an inherent illogic in the resort to eminent domain on property already owned by the State. At first blush, since the State already owns the property on which NAIA 3 stands, the proper remedy should be akin to an action for ejectment.         However, the reason for the resort by the Government to expropriation proceedings is understandable in this case. The 2004 Resolution, in requiring the payment of just compensation prior to the takeover by the Government of NAIA 3, effectively precluded it from acquiring possession or ownership of the NAIA 3 through the unilateral exercise of its rights as the owner of the ground on which the facilities stood. Thus, as things stood after the 2004 Resolution, the right of the Government to take over the NAIA 3 terminal was preconditioned by lawful order on the payment of just compensation to PIATCO as builder of the structures. cralawx x x x The right of eminent domain extends to personal and real property, and the NAIA 3 structures, adhered as they are to

the soil, are considered as real property. The public purpose for the expropriation is also beyond dispute. It should also be noted that Section 1 of Rule 67 (on Expropriation) recognizes the possibility that the property sought  to  be  expropriated  may be titled in the name of the Republic of the Philippines, although occupied by private individuals, and in such case an averment to that effect should be made in the complaint. The instant expropriation complaint did aver that the NAIA 3 complex stands on a parcel of land owned by the Bases Conversion Development Authority, another agency of [the Republic of the Philippines]. Admittedly, eminent domain is not the sole judicial recourse by which the Government may have acquired the NAIA 3 facilities while satisfying the requisites in the 2004 Resolution. Eminent domain though may be the most effective, as well as the speediest means by which such goals may be accomplished. Not only does it enable immediate possession after satisfaction of the requisites under the law, it also has a built-in procedure through which just compensation may be ascertained. Thus, there should be no question as to the propriety of eminent domain proceedings in this case. Still, in applying the laws and rules on expropriation in the case at bar, we are impelled to apply or construe these rules in accordance with the Courts prescriptions in the 2004 Resolution to achieve the end effect that the Government may validly take over the NAIA 3 facilities. Insofar as this case is concerned, the 2004 Resolution is effective not only as a legal precedent, but as the source of rights and prescriptions that must be guaranteed, if not enforced, in the resolution of this petition. Otherwise, the integrity and efficacy of the rulings of this Court will be severely diminished.[65] (Emphasis ours.)   

The Court, also in Gingoyon, categorically recognized PIATCOs ownership

over the structures it had built in NAIA IPT III, to wit:

 There can be no doubt that PIATCO has ownership rights over the facilities which it had financed and constructed. The 2004 Resolution squarely recognized that right when it mandated the payment of just compensation to PIATCO prior to the takeover by the Government of NAIA 3. The fact that the Government resorted to eminent domain proceedings in the first place is a concession on its part of PIATCOs ownership. Indeed, if no such right is recognized, then there should be no impediment for the Government to seize control of NAIA 3 through ordinary ejectment proceedings. 

x x x x Thus, the property subject of expropriation, the NAIA 3 facilities, are real property owned by PIATCO. x x x (Emphasis ours.)[66]

  

It was further settled in Gingoyon that the expropriation proceedings shall

be held inaccordance with Republic Act No. 8974,[67] thus:

 Unlike in the case of Rule 67, the application of Rep. Act No. 8974 will not contravene the 2004 Resolution, which requires the payment of just compensation before any takeover of the NAIA 3 facilities by the Government. The 2004 Resolution does not particularize the extent such payment must be effected before the takeover, but it unquestionably requires at least some degree of payment to the private property owner before a writ of possession may issue. The utilization of Rep. Act No. 8974 guarantees compliance with this bare minimum requirement, as it assures the private property owner the payment of, at the very least, the proffered value of the property to be seized. Such payment of the proffered value to the owner, followed by the issuance of the writ of possession in favor of the Government, is precisely the schematic under Rep. Act No. 8974, one which facially complies with the prescription laid down in the 2004 Resolution.  

And finally, as to the determination of the amount due PIATCO, this Court

ruled inGingoyon that:

 Under Rep. Act No. 8974, the Government is required to immediately pay the owner of the property the amount equivalent to the sum of (1) one hundred percent (100%) of the value of the property based on the current relevant zonal valuation of the [BIR]; and (2) the value of the improvements and/or structures as determined under Section 7. As stated above, the BIR zonal valuation cannot apply in this case, thus the amount subject to immediate payment should be limited to the value of the improvements and/or structures as determined under Section 7, with Section 7 referring to the implementing rules and regulations for the equitable valuation of the improvements and/or structures on the land. Under the present implementing rules in place, the valuation of the improvements/structures are to be based using the replacement cost method.  However, the replacement cost is only one of the factors to be considered in determining the just compensation.

 In addition to Rep. Act No. 8974, the 2004 Resolution in Agan also mandated that the payment of just compensation should be in accordance with equity as well. Thus, in ascertaining the ultimate amount of just compensation, the duty of the trial court is to ensure that such amount conforms not only to the law, such as Rep. Act No. 8974, but to principles of equity as well. Admittedly, there is no way, at least for the present, to immediately ascertain the value of the improvements and structures since such valuation is a matter for factual determination. Yet Rep. Act No. 8974 permits an expedited means by which the Government can immediately take possession of the property without having to await precise determination of the valuation. Section 4(c) of Rep. Act No. 8974 states that in case the completion of a government infrastructure project is of utmost urgency and importance, and there is no existing valuation of the area concerned, the implementing agency shall immediately pay the owner of the property its proferred value, taking into consideration the standards prescribed in Section 5 [of the law].  The proffered value may strike as a highly subjective standard based solely on the intuition of the government, but Rep. Act No. 8974 does provide relevant standards by which proffered value should be based, as well as the certaintyof judicial determination of the propriety of the proffered value. In filing the complaint for expropriation, the Government alleged to have deposited the amount of P3 Billion earmarked for expropriation, representing the assessed value of the property. The making of the deposit, including the determination of the amount of the deposit, was undertaken under the erroneous notion that Rule 67, and not Rep. Act No. 8974, is the applicable law. Still, as regards the amount, the Court sees no impediment to recognize this sum of P3 Billion as the proffered value under Section 4(b) of Rep. Act No. 8974. After all, in the initial determination of the proffered value, the Government is not strictly required to adhere to any predetermined standards, although its proffered value may later be subjected to judicial review using the standards enumerated under Section 5 of Rep. Act No. 8974.[68]

  

Gingoyon constitutes as the law of the case for the expropriation

proceedings, docketed as Case No. 04-0876CFM, before the RTC of Pasay

City. Law of the case has been defined in the following manner

 

By "law of the case" is meant that "whatever is once irrevocably established as the controlling legal rule or decision between the same parties in the same case continues to be the law of the case" so long as the "facts on which such decision was predicated continue to be the facts of the case before the court" (21 C.J.S. 330). And once the decision becomes final, it is binding on all inferior courts and hence beyond their power and authority to alter or modify (Kabigting vs. Acting Director of Prisons, G.R. L-15548, October 30, 1962).[69]

  

A ruling rendered on the first appeal, constitutes the law of the case, and,

even if erroneous, it may no longer be disturbed or modified since it has

become final long ago.[70]

 

The extensive excerpts from Gingoyon demonstrate and emphasize that

the Court had already adjudged the issues raised by Baterina, which he

either conveniently overlooked or stubbornly refused to accept.

 

The general rule precluding the relitigation of material facts or questions

which were in issue and adjudicated in former action are commonly

applied to all matters essentially connected with the subject matter of the

litigation. Thus, it extends to questions necessarily involved in an issue,

and necessarily adjudicated, or necessarily implied in the final judgment,

although no specific finding may have been made in reference thereto,

and although such matters were directly referred to in the pleadings and

were not actually or formally presented. Under this rule, if the record of

the former trial shows that the judgment could not have been rendered

without deciding the particular matter, it will be considered as having

settled that matter as to all future actions between the parties and if a

judgment necessarily presupposes certain premises, they are

as conclusive as the judgment itself. Reasons for the rule are that a

judgment is an adjudication on all the matters which are essential to

support it, and that every proposition assumed or decided by the court

leading up to the final conclusion and upon which such conclusion is based

is as effectually passed upon as the ultimate question which is finally

solved.[71]

 

Since the issues Baterina wishes to raise as an intervenor in Case No. 04-

0876CFM were already settled with finality in both Agan and Gingoyon,

then there is no point in still allowing his intervention. His Petition-in-

Intervention would only be a relitigation of matters that had been

previously adjudicated by no less than the Highest Court of the land. And,

in no manner can the RTC of Pasay City in Case No. 04-0876CFM grant the

reliefs he prayed for without departing from or running afoul of the final

and executory Decisions of this Court in Agan and Gingoyon.

 

While it is true that when this Court, in a Resolution dated 1 February

2006, dismissed the Motions for Intervention in Gingoyon, including that

of Baterina, it also observed that the interests of the movants-in-

intervention may be duly litigated in proceedings which are extant before

the lower courts. This does not mean, however, that the said movants-in-

interest were assured of being allowed as intervenors or that the reliefs

they sought as such shall be granted by the trial courts. The fate of their

intervention still rests on their interest or legal standing in the case and

the merits of their arguments.

 

cralawWHEREFORE, in view of the foregoing:

 

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

merit; and

 

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

being moot and academic. 

No costs.  

cralawSO ORDERED.

G.R. No. 140160 - January 13, 2004

LAND BANK OF THE PHILIPPINES, Petitioner, vs. FELICIANO F. WYCOCO, Respondent.

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

G.R. No. 146733 January 13, 2004

FELICIANO F. WYCOCO, Petitioner, vs. THE HONORABLE RODRIGO S. CASPILLO, Pairing Judge of the Regional Trial Court, Third Judicial Region, Branch 23, Cabanatuan City and the

Department of Agrarian Reform,Respondents.

D E C I S I O N

YNARES-SANTIAGO, J.:

Before the Court are consolidated petitions, the first seeking the review of the February 9, 1999 Decision1 and the September 22, 1999 Resolution2 of the Court of Appeals in CA-G.R. No. SP No. 39913, which modified the Decision3of Regional Trial Court of Cabanatuan City, Branch 23, acting as a Special Agrarian Court in Agrarian Case No. 91 (AF); and the second for mandamus to compel the said trial court to issue a writ of execution and to direct Judge Rodrigo S. Caspillo to inhibit himself from Agrarian Case No. 91 (AF).

The undisputed antecedents show that Feliciano F. Wycoco is the registered owner of a 94.1690 hectare unirrigated and untenanted rice land, covered by Transfer Certificate of Title No. NT-206422 and situated in the Sitios of Ablang, Saguingan and Pinamunghilan, Barrio of San Juan, Licab, Nueva Ecija.4

In line with the Comprehensive Agrarian Reform Program (CARP) of the government, Wycoco voluntarily offered to sell the land to the Department of Agrarian Reform (DAR) for P14.9 million.5 In November 1991, after the DARs evaluation of the application and the determination of the just compensation by the Land Bank of the Philippines (LBP), a notice of intention to acquire 84.5690 hectares of the property for P1,342,667.466 was sent to Wycoco. The amount offered was later raised to P2,594,045.39 and, upon review, was modified to P2,280,159.82.7 The area which the DAR offered to acquire excluded idle lands, river and road located therein. Wycoco rejected the offer, prompting the DAR to indorse the case to the Department of Agrarian Reform Adjudication Board (DARAB) for the purpose of fixing the just compensation in a summary administrative proceeding.8 The case was docketed as DARAB VOS Case No. 232 NE 93. Thereafter, the DARAB requested LBP to open a trust account in the name of Wycoco and deposited the compensation offered by DAR.9 In the meantime, the property was distributed to farmer-beneficiaries.

On March 29, 1993, DARAB required the parties to submit their respective memoranda or position papers in support of their claim.10 Wycoco, however, decided to forego with the filing of the required pleadings, and instead filed on April 13, 1993, the instant case for determination of just compensation with the Regional Trial Court of Cabanatuan City, Branch 23, docketed as Agrarian Case No. 91 (AF).11 Impleaded as party-defendants therein were DAR and LBP.

On April 30, 1993, Wycoco filed a manifestation in VOS Case No. 232 NE 93, informing the DARAB of the pendency of Agrarian Case No. 91 (AF) with the Cabanatuan court, acting as a special agrarian court.12 On March 9, 1994, the DARAB issued an order dismissing the case to give way to the determination of just compensation by the Cabanatuan court. Pertinent portion thereof states:

Admittedly, this Forum is vested with the jurisdiction to conduct administrative proceeding to determine compensation. [H]owever, a thorough perusal of petitioners complaint showed that he did not only raise the issue of valuation but such other matters which are beyond the competence of the Board. Besides, the petitioner has the option to avail the administrative remedies or bring the matter on just compensation to the Special Agrarian Court for final determination.

WHEREFORE, premises considered, this case is hereby dismissed.

SO ORDERED.13

Meanwhile, DAR and LBP filed their respective answers before the special agrarian court in Agrarian Case No. 91 (AF), contending that the valuation of Wycocos property was in accordance with law and that the latter failed to exhaust administrative remedies by not participating in the summary administrative proceedings before the DARAB which has primary jurisdiction over determination of land valuation.14

After conducting a pre-trial on October 3, 1994, the trial court issued a pre-trial order as follows:

The parties manifested that there is no possibility of amicable settlement, neither are they willing to admit or stipulate on facts, except those contained in the pleadings.

The only issue left is for the determination of just compensation or correct valuation of the land owned by the plaintiff subject of this case.

The parties then prayed to terminate the pre-trial conference.

AS PRAYED FOR, the pre-trial conference is considered terminated, and instead of trial, the parties are allowed to submit their respective memoranda.

WHEREFORE, the parties are given twenty (20) days from today within which to file their simultaneous memoranda, and another ten (10) days from receipt thereof to file their Reply/Rejoinder, if any, and thereafter, this case shall be deemed submitted for decision.

SO ORDERED.15

The evidence presented by Wycoco in support of his claim were the following: (1) Transfer Certificate of Title No. NT-206422; (2) Notice of Land Valuation dated June 18, 1992; and (3) letter dated July 10, 1992 rejecting the counter-offer of LBP and DAR.16 On the other hand, DAR and LBP presented the Land Valuation Worksheets.17

On November 14, 1995, the trial court rendered a decision in favor of Wycoco. It ruled that there is no need to present evidence in support of the land valuation inasmuch as it is of public knowledge that the prevailing market value of agricultural lands sold in Licab, Nueva Ecija is from P135,000.00 to 150,000.00 per hectare. The court thus took judicial notice thereof and fixed the compensation for the entire 94.1690 hectare land at P142,500.00 per hectare or a total of P13,428,082.00. It also awarded Wycoco actual damages for unrealized profits plus legal interest. The dispositive portion thereof states:

WHEREFORE, premises considered, judgment is hereby rendered:

1. Ordering the defendants to pay the amount of P13,419,082.00 to plaintiff as just compensation for the property acquired;

2. Ordering the defendants to pay plaintiff the amount of P29,663,235.00 representing the unrealized profits from the time of acquisition of the subject property and the sum of P8,475,210.00 for every calendar year, until the amount of compensation is fully paid including legal interest which had accrued thereon.

No pronouncement as to costs.

SO ORDERED.18

The DAR and the LBP filed separate petitions before the Court of Appeals. The petition brought by DAR on jurisdictional and procedural issues, docketed as CA-G.R. No. SP No. 39234, was dismissed on May 29, 1997.19 The dismissal became final and executory on June 26, 1997.20 This prompted Wycoco to file a petition for mandamus before this Court, docketed as G.R. No. 146733, praying that the decision of the Regional Trial Court of Cabanatuan City, Branch 23, in Agrarian Case No. 91 (AF) be executed, and that Judge Rodrigo S. Caspillo, the now presiding Judge of said court, be compelled to inhibit himself from hearing the case.

The petition brought by LBP on both substantive and procedural grounds, docketed as CA-G.R. No. SP No. 39913, was likewise dismissed by the Court of Appeals on February 9, 1999.21 On September 22, 1999, however, the Court of Appeals modified its decision by deducting from the compensation due Wycoco the amount corresponding to the 3.3672 hectare portion of the 94.1690 hectare land which was found to have been previously sold by Wycoco to the Republic, thus

WHEREFORE, and conformably with the above, Our decision of February 9, 1999 is hereby MODIFIED in the sense that the value corresponding to the aforesaid 3.3672 hectares and all the awards appertaining thereto in the decision a quo are ordered deducted from the totality of the awards

granted to the private respondent. In all other respects, the decision sought to be reconsidered is hereby RE-AFFIRMED and REITERATED.

SO ORDERED.22

In its petition, LBP contended that the Court of Appeals erred in ruling:

I

THAT THE TRIAL COURT ACTING AS A SPECIAL AGRARIAN COURT MAY ASSUME JURISDICTION OVER AGRARIAN CASE NO. 91 (AF) AND RENDER JUDGMENT THEREON WITHOUT AN INITIAL ADMINISTRATIVE DETERMINATION OF JUST COMPENSATION BY THE DARAB PURSUANT TO SECTION 16 OF RA 6657, OVER THE TIMELY OBJECTION OF THE PETITIONER, AND IN VIOLATION OF THE RULE ON EXHAUSTION OF ADMINISTRATIVE REMEDIES AND ON FORUM SHOPPING;

II

THAT THE JUST COMPENSATION DETERMINED BY THE TRIAL COURT WAS SUPPORTED BY SUBSTANTIAL EVIDENCE, WHEN IT WAS BASED ONLY ON JUDICIAL NOTICE OF THE PREVAILING MARKET VALUE OF LAND BASED ON THE ALLEGED PRICE OF TRANSFER OF TENURAL RIGHTS, TAKEN WITHOUT NOTICE AND HEARING IN VIOLATION OF RULE 129 OF THE RULES OF COURT;

III

THAT THE TRIAL COURT CAN REQUIRE THE PETITIONER TO COMPENSATE THE PORTIONS OF RESPONDENTS PROPERTY WHICH WERE NOT DECLARED BY THE DAR FOR ACQUISITION, NOR SUITABLE FOR AGRICULTURE NOR CAPABLE OF DISTRIBUTION TO FARMER BENEFICIARIES UNDER THE CARP;

IV

THAT THE TRIAL COURT CAN AWARD AS PART OF JUST COMPENSATION LEGAL INTEREST ON THE PRINCIPAL AND ALLEGED UNREALIZED PROFITS OF P29,663,235.00 FROM THE TIME OF ACQUISITION OF THE SUBJECT PROPERTY AND P8,475,210.00 FOR EVERY CALENDAR YEAR THEREAFTER, CONSIDERING THAT THE SAME HAS NO LEGAL BASIS AND THAT THE RESPONDENT RETAINED THE TITLE TO HIS PROPERTY DESPITE THE DARS NOTICE OF ACQUISITION;

V

THAT THE TRIAL COURT HAD VALIDLY GRANTED EXECUTION PENDING APPEAL ON THE ALLEGEDLY GOOD REASON OF THE PETITIONERS ADVANCED AGE AND WEAK HEALTH, CONTRARY TO THE APPLICABLE JURISPRUDENCE AND CONSIDERING THAT THE RESPONDENT IS NOT DESTITUTE.23

The issues for resolution are as follows: (1) Did the Regional Trial Court, acting as Special Agrarian Court, validly acquire jurisdiction over the instant case for determination of just compensation? (2) Assuming that it acquired jurisdiction, was the compensation arrived at supported by evidence? (3) Can Wycoco compel the DAR to purchase the entire land subject of the voluntary offer to sell? (4) Were the awards of interest and damages for unrealized profits valid?

Anent the issue of jurisdiction, the laws in point are Sections 50 and 57 of Republic Act No. 6657 (Comprehensive Agrarian Reform Law of 1988) which, in pertinent part, provide:

Section 50. Quasi-judicial Powers of the DAR. The DAR is hereby vested with primary jurisdiction to determine and adjudicate agrarian reform matters and shall have exclusive original jurisdiction over all matters involving the implementation of agrarian reform, except those falling under the exclusive

jurisdiction of the Department of Agriculture (DA) and the Department of Environment and Natural Resources (DENR).

Section 57. Special Jurisdiction. The Special Agrarian Court shall have original and exclusive jurisdiction over all petitions for the determination of just compensation to landowners, and the prosecution of all criminal offenses under this Act.

The Special Agrarian Courts shall decide all appropriate cases under their special jurisdiction within thirty (30) days from submission of the case for decision.

In Republic v. Court of Appeals,24 it was held that Special Agrarian Courts are given original and exclusive jurisdiction over two categories of cases, to wit: (1) all petitions for the determination of just compensation; and (2) the prosecution of all criminal offenses under R.A. No. 6657. Section 50 must be construed in harmony with Section 57 by considering cases involving the determination of just compensation and criminal cases for violations of R.A. No. 6657 as excepted from the plenitude of power conferred to the DAR. Indeed, there is a reason for this distinction. The DAR, as an administrative agency, cannot be granted jurisdiction over cases of eminent domain and over criminal cases. The valuation of property in eminent domain is essentially a judicial function which is vested with the Special Agrarian Courts and cannot be lodged with administrative agencies.25 In fact, Rule XIII, Section 11 of the New Rules of Procedure of the DARAB acknowledges this power of the court, thus

Section 11. Land Valuation and Preliminary Determination and Payment of Just Compensation. The decision of the Adjudicator on land valuation and preliminary determination and payment of just compensation shall not be appealable to the Board but shall be brought directly to the Regional Trial Courts designated as Special Agrarian Courts within fifteen (15) days from receipt of the notice thereof. Any party shall be entitled to only one motion for reconsideration. (Emphasis supplied)

Under Section 1 of Executive Order No. 405, Series of 1990, the Land Bank of the Philippines is charged with the initial responsibility of determining the value of lands placed under land reform and the just compensation to be paid for their taking.26 Through a notice of voluntary offer to sell (VOS) submitted by the landowner, accompanied by the required documents, the DAR evaluates the application and determines the lands suitability for agriculture. The LBP likewise reviews the application and the supporting documents and determines the valuation of the land. Thereafter, the DAR issues the Notice of Land Valuation to the landowner. In both voluntary and compulsory acquisition, where the landowner rejects the offer, the DAR opens an account in the name of the landowner and conducts a summary administrative proceeding. If the landowner disagrees with the valuation, the matter may be brought to the Regional Trial Court acting as a special agrarian court. This in essence is the procedure for the determination of just compensation.27

In Land Bank of the Philippines v. Court of Appeals,28 the landowner filed an action for determination of just compensation without waiting for the completion of DARABs re-evaluation of the land. This, notwithstanding, the Court held that the trial court properly acquired jurisdiction because of its exclusive and original jurisdiction over determination of just compensation, thus

It is clear from Sec. 57 that the RTC, sitting as a Special Agrarian Court, has "original and exclusive jurisdiction over all petitions for the determination of just compensation to landowners." This "original and exclusive" jurisdiction of the RTC would be undermined if the DAR would vest in administrative officials original jurisdiction in compensation cases and make the RTC an appellate court for the review of administrative decisions. Thus, although the new rules speak of directly appealing the decision of adjudicators to the RTCs sitting as Special Agrarian Courts, it is clear from Sec. 57 that the original and exclusive jurisdiction to determine such cases is in the RTCs. Any effort to transfer such jurisdiction to the adjudicators and to convert the original jurisdiction of the RTCs into an appellate jurisdiction would be contrary to Sec. 57 and therefore would be void. Thus, direct resort to the SAC [Special Agrarian Court] by private respondent is valid. (Emphasis supplied)29

In the case at bar, therefore, the trial court properly acquired jurisdiction over Wycocos complaint for determination of just compensation. It must be stressed that although no summary administrative proceeding was held before the DARAB, LBP was able to perform its legal mandate of initially determining the value of Wycocos land pursuant to Executive Order No. 405, Series of 1990. What is

more, DAR and LBPs conformity to the pre-trial order which limited the issue only to the determination of just compensation estopped them from questioning the jurisdiction of the special agrarian court. The pre-trial order limited the issues to those not disposed of by admission or agreements; and the entry thereof controlled the subsequent course of action.30

Besides, the issue of whether Wycoco violated the rule on exhaustion of administrative remedies was rendered moot and academic in view of the DARABs dismissal31 of the administrative case to give way to and in recognition of the courts power to determine just compensation.32

In arriving at the valuation of Wycocos land, the trial court took judicial notice of the alleged prevailing market value of agricultural lands in Licab, Nueva Ecija without apprising the parties of its intention to take judicial notice thereof. Section 3, Rule 129 of the Rules on Evidence provides:

Sec. 3. Judicial Notice, When Hearing Necessary. During the trial, the court, on its own initiative, or on request of a party, may announce its intention to take judicial notice of any matter and allow the parties to be heard thereon.

After trial and before judgment or on appeal, the proper court, on its own initiative, or on request of a party, may take judicial notice of any matter and allow the parties to be heard thereon if such matter is decisive of a material issue in the case.

Inasmuch as the valuation of the property of Wycoco is the very issue in the case at bar, the trial court should have allowed the parties to present evidence thereon instead of practically assuming a valuation without basis. While market value may be one of the bases of determining just compensation, the same cannot be arbitrarily arrived at without considering the factors to be appreciated in arriving at the fair market value of the property e.g., the cost of acquisition, the current value of like properties, its size, shape, location, as well as the tax declarations thereon.33Since these factors were not considered, a remand of the case for determination of just compensation is necessary. The power to take judicial notice is to be exercised by courts with caution especially where the case involves a vast tract of land. Care must be taken that the requisite notoriety exists; and every reasonable doubt on the subject should be promptly resolved in the negative. To say that a court will take judicial notice of a fact is merely another way of saying that the usual form of evidence will be dispensed with if knowledge of the fact can be otherwise acquired. This is because the court assumes that the matter is so notorious that it will not be disputed. But judicial notice is not judicial knowledge. The mere personal knowledge of the judge is not the judicial knowledge of the court, and he is not authorized to make his individual knowledge of a fact, not generally or professionally known, the basis of his action.34

Anent the third issue, the DAR cannot be compelled to purchase the entire property voluntarily offered by Wycoco. The power to determine whether a parcel of land may come within the coverage of the Comprehensive Agrarian Reform Program is essentially lodged with the DAR. That Wycoco will suffer damages by the DARs non-acquisition of the approximately 10 hectare portion of the entire land which was found to be not suitable for agriculture is no justification to compel DAR to acquire the whole area.

We find Wycocos claim for payment of interest partly meritorious. In Land Bank of the Philippines v. Court of Appeals,35this Court struck down as void DAR Administrative Circular No. 9, Series of 1990, which provides for the opening of trust accounts in lieu of the deposit in cash or in bonds contemplated in Section 16 (e) of RA 6657.

"It is very explicit from [Section 16 (e)] that the deposit must be made only in cash or in LBP bonds. Nowhere does it appear nor can it be inferred that the deposit can be made in any other form. If it were the intention to include a trust account among the valid modes of deposit, that should have been made express, or at least, qualifying words ought to have appeared from which it can be fairly deduced that a trust account is allowed. In sum, there is no ambiguity in Section 16(e) of RA 6657 to warrant an expanded construction of the term deposit.

x x x - x x x - x x x

"In the present suit, the DAR clearly overstepped the limits of its powers to enact rules and regulations when it issued Administrative Circular No. 9. There is no basis in allowing the opening of a trust account in behalf of the landowner as compensation for his property because, as heretofore discussed, Section 16(e) of RA 6657 is very specific that the deposit must be made only in cash or in LBP bonds. In the same vein, petitioners cannot invoke LRA Circular Nos. 29, 29-A and 54 because these implementing regulations can not outweigh the clear provision of the law. Respondent court therefore did not commit any error in striking down Administrative Circular No. 9 for being null and void."36

Pursuant to the forgoing decision, DAR issued Administrative Order No. 2, Series of 1996, converting trust accounts in the name of landowners into deposit accounts. The transitory provision thereof states

VI. TRANSITORY PROVISIONS

All trust accounts issued pursuant to Administrative Order No. 1, S. 1993 covering landholdings not yet transferred in the name of the Republic of the Philippines as of July 5, 1996 shall immediately be converted to deposit accounts in the name of the landowners concerned.

All Provincial Agrarian Reform Officers and Regional Directors are directed to immediately inventory the claim folders referred to in the preceding paragraph, wherever they may be found and request the LBP to establish the requisite deposit under this Administrative Order and to issue a new certification to that effect. The Original Certificate of Trust Deposit previously issued should be attached to the request of the DAR in order that the same may be replaced with a new one.

All previously established Trust Deposits which served as the basis for the transfer of the landowners title to the Republic of the Philippines shall likewise be converted to deposits in cash and in bonds. The Bureau of Land Acquisition and Distribution shall coordinate with the LBP for this purpose.

In light of the foregoing, the trust account opened by LBP in the name of Wycoco as the mode of payment of just compensation should be converted to a deposit account. Such conversion should be retroactive in application in order to rectify the error committed by the DAR in opening a trust account and to grant the landowners the benefits concomitant to payment in cash or LBP bonds prior to the ruling of the Court in Land Bank of the Philippines v. Court of Appeals. Otherwise, petitioners right to payment of just and valid compensation for the expropriation of his property would be violated.37 The interest earnings accruing on the deposit account of landowners would suffice to compensate them pending payment of just compensation.

In some expropriation cases, the Court imposed an interest of 12% per annum on the just compensation due the landowner. It must be stressed, however, that in these cases, the imposition of interest was in the nature of damages for delay in payment which in effect makes the obligation on the part of the government one of forbearance.38 It follows that the interest in the form of damages cannot be applied where there was prompt and valid payment of just compensation. Conversely, where there was delay in tendering a valid payment of just compensation, imposition of interest is in order. This is because the replacement of the trust account with cash or LBP bonds did not ipso facto cure the lack of compensation; for essentially, the determination of this compensation was marred by lack of due process.39

Accordingly, the just compensation due Wycoco should bear 12% interest per annum from the time LBP opened a trust account in his name up to the time said account was actually converted into cash and LBP bonds deposit accounts. The basis of the 12% interest would be the just compensation that would be determined by the Special Agrarian Court upon remand of the instant case. In the same vein, the amount determined by the Special Agrarian Court would also be the basis of the interest income on the cash and bond deposits due Wycoco from the time of the taking of the property up to the time of actual payment of just compensation.

The award of actual damages for unrealized profits should be deleted. The amount of loss must not only be capable of proof, but must be proven with a reasonable degree of certainty. The claim must be premised upon competent proof or upon the best evidence obtainable, such as receipts or other

documentary proof.40 None having been presented in the instant case, the claim for unrealized profits cannot be granted.

From the foregoing discussion, it is clear that Wycocos petition for mandamus in G.R. No. 146733 should be dismissed. The decision of the Regional Trial Court of Cabanatuan City, Branch 23, acting as Special Agrarian Court in Agrarian Case No. 91 (AF), cannot be enforced because there is a need to remand the case to the trial court for determination of just compensation. Likewise, the prayer for the inhibition of Judge Rodrigo S. Caspillo in Agrarian Case No. 91 (AF) is denied for lack of basis.

WHEREFORE, in view of all the foregoing, the petition in G.R. No. 140160 is PARTIALLY GRANTED. Agrarian Case No. 91 (AF) is REMANDED to the Regional Trial Court of Cabanatuan City, Branch 23, for the determination of just compensation. The petition for mandamus in G.R. No. 146733 is dismissed.

SO ORDERED