TYPES OF JURISDICTION

ORIGINAL CONCURRENT JURISDICTION vis-a-vis ORIGINAL EXCLUSIVE JURISDICTION

Vivas vs. Monetary Board of the BSP, August 7, 2013

This is a petition for prohibition with prayer for the issuance of a status quo ante order or writ of preliminary injunction
ordering the respondents to desist from closing EuroCredit Community Bank, Incorporated (ECBI) and from pursuing the
receivership thereof. The petition likewise prays that the management and operation of ECBI be restored to its Board of
Directors (BOD) and its officers.

Facts: The Rural Bank of Faire, Incorporated (RBFI) was a duly registered rural banking institution with principal office in
Centro Sur, Sto. Niño, Cagayan. Record shows that the corporate life of RBFI expired on May 31, 2005. Notwithstanding,
petitioner Alfeo D. Vivas (Vivas) and his principals acquired the controlling interest in RBFI sometime in January 2006. On
December 8, 2006, the Bangko Sentral ng Pilipinas (BSP) issued the Certificate of Authority extending the corporate life of
RBFI for another fifty (50) years. Pursuant to Section 28 of Republic Act (R.A.) No. 7653, otherwise known as The New
Central Bank Act, the Integrated Supervision Department II (ISD II) of the BSP conducted a general examination on ECBI with
the cut-off date of December 31, 2007. Sometime in April 2008, the examiners from the Department of Loans and Credit of
the BSP arrived at the ECBI and cancelled the rediscounting line of the bank. Vivas appealed the cancellation to BSP.
Thereafter, the Monetary Board (MB) issued Resolution No. 1255, dated September 25, 2008, placing ECBI under Prompt
Corrective Action (PCA). The BSP furnished ECBI with a copy of the Report of Examination. The BSP directed the bank’s BOD
and senior management to take appropriate action necessary to address the violations/exceptions noted in the
examination. Vivas moved for a reconsideration of Resolution No. 1255 on the grounds of non-observance of due process
and arbitrariness. Vivas believed that he was being treated unfairly because the letter of authority to examine allegedly
contained a clause which pertained to the Anti-Money Laundering Law and the Bank Secrecy Act. The MB, on the other
hand, posited that ECBI unjustly refused to allow the BSP examiners from examining and inspecting its books and records, in
violation of Sections 25 and 34 of R.A. No. 7653. In view of ECBI’s refusal to comply with the required examination, the MB
issued Resolution No. 726, imposing monetary penalty/fine on ECBI. Thereafter, the MB issued Resolution No. 823,
approving the issuance of a cease and desist order against ECBI, which enjoined it from pursuing certain acts and
transactions that were considered unsafe or unsound banking practices.

DOJ: The Office of Special Investigation filed with the Department of Justice (DOJ) a complaint for Estafa Through
Falsification of Commercial Documents against certain officials and employees of ECBI. The Integrated Supervision
Department II reminded ECBI of the non-submission of its financial audit reports for the years 2007 and 2008 with a
warning that failure to submit those reports and the written explanation for such omission shall result in the imposition of a
monetary penalty. The MB issued Resolution No. 276 placing ECBI under receivership (placed in the custodial responsibility
for the property of others, including tangible and intangible assets and rights"—especially in cases where a company cannot
meet financial obligations or enters bankruptcy.) Assailing MB Resolution No. 276, Vivas filed this petition for prohibition
before this Court, ascribing grave abuse of discretion to the MB for prohibiting ECBI from continuing its banking business
and for placing it under receivership. The petitioner presents the following:

Issue: It is grave abuse of discretion amounting to loss of jurisdiction to apply the general law embodied in Section 30 of the
New Central Bank Act as opposed to the specific law embodied in Sections 11 and 14 of the Rural Banks Act of 1992.

Even if it assumed that Section 30 of the New Central Bank Act is applicable, it is still the gravest abuse of discretion
amounting to lack or excess of jurisdiction to execute the law with manifest arbitrariness, abuse of discretion, and bad faith,
violation of constitutional rights and to further execute a mandate well in excess of its parameters. The power delegated in
favor of the Bangko Sentral ng Pilipinas to place rural banks under receiverships is unconstitutional for being a diminution
or invasion of the powers of the Supreme Court, in violation of Section 2, Article VIII of the Philippine Constitution. 24

He argues that despite the deficiencies, inadequacies and oversights in the conduct of the affairs of ECBI, it has not
committed any financial fraud and, hence, its placement under receivership was unwarranted and improper.
The Court’s Ruling: The petition must fail.

Vivas Availed of the Wrong Remedy: The MB issued Resolution No. 276, dated March 4, 2010, in the exercise of its power
under R.A. No. 7653. Under Section 30 thereof, “any act of the MB placing a bank under conservatorship, receivership or
liquidation may not be restrained or set aside except on a petition for certiorari (Rule 65).

Indeed, prohibition is a preventive remedy seeking that a judgment be rendered which would direct the defendant to desist
from continuing with the commission of an act perceived to be illegal. As a rule, the proper function of a writ of prohibition
is to prevent the doing of an act which is about to be done. It is not intended to provide a remedy for acts already
accomplished. This petition for prohibition apparently seeks to prevent the acts of closing of ECBI and placing it under
receivership. Resolution No. 276, however, had already been issued by the MB and the closure of ECBI and its placement
under receivership by the PDIC were already accomplished. Apparently, the remedy of prohibition is no longer appropriate.
Settled is the rule that prohibition does not lie to restrain an act that is already a fait accompli (a thing that has already
happened or been decided before those affected hear about it, leaving them with no option but to accept.)

The Petition Should Have Been Filed in the CA: Even if treated as a petition for certiorari, the petition should have been
filed with the CA. If it involves the acts or omissions of a quasi-judicial agency, unless otherwise provided by law or these
Rules, the petition shall be filed in and cognizable only by the Court of Appeals.

Doctrine of Hierarchy of Courts: The petition is also dismissible because it simply ignored the doctrine of hierarchy of
courts. True, the Court, the CA and the RTC have original concurrent jurisdiction to issue writs of certiorari, prohibition and
mandamus. The concurrence of jurisdiction, however, does not grant the party seeking any of the extraordinary writs the
absolute freedom to file a petition in any court of his choice. Under the Rules of Court, a party may directly appeal to this
Court only on pure questions of law. In the case at bench, there are certainly factual issues as Vivas is questioning the
findings of the investigating team.

As a rule, the Court will not entertain direct resort to it unless the redress desired cannot be obtained in the appropriate
lower courts; or where exceptional and compelling circumstances, such as cases of national interest and with serious
implications, justify the availment of the extraordinary remedy of writ of certiorari, prohibition, or mandamus calling for the
exercise of its (SC) primary jurisdiction. The judicial policy must be observed to prevent an imposition on the precious time
and attention of the Court.

The MB Committed No Grave Abuse of Discretion: The Central Bank shall have the power to enforce the laws, orders,
instructions, rules and regulations promulgated by the Monetary Board, applicable to rural banks; to require rural banks,
their directors, officers and agents to conduct and manage the affairs of the rural banks in a lawful and orderly manner;
and, upon proof that the rural bank or its Board of Directors, or officers are conducting and managing the affairs of the
bank in a manner contrary to laws, orders, instructions, rules and regulations promulgated by the Monetary Board or in a
manner substantially prejudicial to the interest of the Government, depositors or creditors, to take over the management
of such bank when specifically authorized to do so by the Monetary Board after due hearing process until a new board of
directors and officers are elected and qualified without prejudice to the prosecution of the persons responsible for such
violations under the provisions of Sections 32, 33 and 34 of Republic Act No. 265, as amended.

WHEREFORE, the petition for prohibition is DENIED.

SO ORDERED.
Pacific Asia Finance vs. Yanizagawa, 2012

Facts: Respondent Eiji Yanagisawa (Eiji), a Japanese national, and Evelyn F. Castañeda (Evelyn), a Filipina, contracted
marriage on in the City Hall of Manila. Evelyn purchased a 152 square-meter townhouse unit. The Registry of Deeds for
Parañaque issued Transfer Certificate of Title to Evelyn P. Castañeda. Eiji filed a complaint for the declaration of nullity of
his marriage with Evelyn on the ground of bigamy (nullity of marriage case). During the pendency of the case, Eiji filed a
Motion for the Issuance of a Restraining Order against Evelyn and an Application for a Writ of a Preliminary Injunction. He
asked that Evelyn be enjoined from disposing or encumbering all of the properties registered in her name. Evelyn and her
lawyer voluntarily undertook not to dispose of the properties registered in her name during the pendency of the case, thus
rendering Eiji’s application and motion moot. The Makati RTC rendered the following Order:

Makati RTC: In view of the commitment made in open court by Atty. Lupo Leyva, counsel for the defendant
[Evelyn], together with his client, the defendant in this case, that the properties registered in the name of the defendant
would not be disposed of, alienated or encumbered in any manner during the pendency of this petition, the Motion for the
Issuance of a Restraining Order and Application for a Writ of a Preliminary Injunction scheduled today is hereby considered
moot and academic. Sometime in March 1997, Evelyn obtained a loan of P500,000.00 from petitioner Pacific Ace Finance
Ltd. (PAFIN). To secure the loan, Evelyn executed a real estate mortgage (REM) in favor of PAFIN over the Parañaque
townhouse unit. At the time of the mortgage, Eiji’s appeal in the nullity of marriage case was pending before the CA. The
Makati RTC had dissolved Eiji and Evelyn’s marriage, and had ordered the liquidation of their registered properties,
including the Parañaque townhouse unit, with its proceeds to be divided between the parties. Deeming the mortgage as a
violation of the Makati RTC’s order, Eiji filed a complaint for the annulment of real estate mortgage.

Parañaque RTC: The Parañaque RTC determined that the only issue before it is "whether x x x [Eiji] has a cause of action
against the defendants despite the fact that he is not the registered owner of the property being a Japanese national. The
Parañaque RTC explained that Eiji, as a foreign national, cannot possibly own the mortgaged property. Without ownership,
or any other law or contract binding the defendants to him, Eiji has no cause of action that may be asserted against them.
Thus, the Parañaque RTC dismissed Eiji’s complaint:

CA: The CA found merit in Eiji’s appeal. The CA noted that the Makati RTC ruled on Eiji’s and Evelyn’s ownership rights over
the properties that were acquired during their marriage, including the Parañaque townhouse unit. It was determined
therein that the registered properties should be sold at public auction and the proceeds thereof to be divided between Eiji
and Evelyn. The appellate court determined that the Parañaque RTC’s Decision was improper because it violated the
doctrine of non-interference.” Courts of equal jurisdiction, such as regional trial courts, have no appellate jurisdiction over
each other.” Thus, the CA annulled the REM executed by Evelyn in favor of PAFIN.

Issue: Whether the Parañaque RTC can rule on the issue of ownership, even as the same issue was already ruled upon by
the Makati RTC and is pending appeal in the CA.

SC:The petition has no merit. The CA did not make any disposition as to who between Eiji and Evelyn owns the Parañaque
townhouse unit. It simply ruled that the Makati RTC had acquired jurisdiction over the said question and should not have
been interfered with by the Parañaque RTC. The CA only clarified that it was improper for the Parañaque RTC to have
reviewed the ruling of a co-equal court. The issue of ownership and liquidation of properties acquired during the
cohabitation of Eiji and Evelyn has been submitted for the resolution of the Makati RTC, and is pending appeal before the
CA. The doctrine of judicial stability or non-interference dictates that the assumption by the Makati RTC over the issue
operates as an "insurmountable barrier" to the subsequent assumption by the Parañaque RTC. It has been held that "even
in cases of concurrent jurisdiction, it is, also, axiomatic that the court first acquiring jurisdiction excludes the other courts. In
addition, it is a familiar principle that when a court of competent jurisdiction acquires jurisdiction over the subject matter of
a case, its authority continues, subject only to the appellate authority, until the matter is finally and completely disposed of,
and that no court of co-ordinate authority is at liberty to interfere with its action. The injuction order must be obeyed
irrespective of the ultimate validity of the order, and no matter how unreasonable and unjust the injunction may be in its
terms. The Petition is DENIED for lack of merit. The August 1, 2006 Decision of the Court of Appeals in CA-G.R. CV No. 78944
is AFFIRMED.
Civil Service Commission vs. Court of Appeals, October 9, 2012

Facts: Respondents Dante G. Guevarra (Guevarra) and Augustus F. Cezar (Cezar) were the Officer-in-Charge/President and
the Vice President for Administration, respectively, of the Polytechnic University of the Philippines (PUP). Petitioner
Honesto L. Cueva (Cueva), then PUP Chief Legal Counsel, filed an administrative case against Guevarra and Cezar for, among
others, violating Section 4 of Republic Act (R.A.) No. 6713. Cueva charged Guevarra with falsification of a public document,
specifically the Application for Bond of Accountable Officials and Employees of the Republic of the Philippines, in which the
latter denied the existence of his pending criminal and administrative cases. As the head of the school, Guevarra was
required to be bonded in order to be able to engage in financial transactions on behalf of PUP. The respondents explained
that they believed "criminal or administrative records" to mean final conviction in a criminal or administrative case. Thus,
because their cases had not yet been decided by the Sandiganbayan, they asserted that Guevarra responded to Question
No. The Civil Service Commission (CSC) issued a resolution formally charging Guevarra with Dishonesty and Cezar with
Conduct Prejudicial to the Best Interest of the Service after a prima facie finding that they had committed acts punishable
under the Civil Service Law and Rules. Cueva filed an Urgent Ex-Parte Motion for the Issuance of Preventive Suspension.

CSC: The CSC denied the motion for reconsideration filed by the respondents for being a non-responsive pleading, akin to a
motion to dismiss, which was a prohibited pleading under Section 16 of the Uniform Rules on Administrative Cases in the
Civil Service Commission. The CSC placed Guevarra under preventive suspension for ninety (90) days, believing it to be
necessary because, as the officer-in-charge of PUP, he was in a position to unduly influence possible witnesses against him.

CA: Aggrieved, Guevarra and Cezar filed a petition for certiorari and prohibition before the CA essentially questioning the
jurisdiction of the CSC over the administrative complaint filed against them by Cueva. On December 29, 2006, the CA
rendered its Decision granting the petition and nullifying and setting aside the questioned resolutions of the CSC for
having been rendered without jurisdiction. According to the CA, The Administrative Code of 1987, states that heads of
agencies and instrumentalities "shall have jurisdiction to investigate and decide matters involving disciplinary action against
officers and employees under their jurisdiction," bestows upon the Board of Regents the jurisdiction to investigate and
decide matters involving disciplinary action against respondents Guevarra and Cezar.

Issue: Whether the CSC has jurisdiction over administrative cases filed directly with it against officials of a chartered state university.

SC: The petitions are meritorious. Both CSC and Cueva contend that because the CSC is the central personnel agency of the
government, it has been expressly granted by Executive Order (E.O.) No. 292 the authority to assume original jurisdiction
over complaints directly filed with it. The CSC explains that under the said law, it has appellate jurisdiction over all
administrative disciplinary proceedings and original jurisdiction over complaints against government officials and employees
filed before it by private citizens. Accordingly, the CSC has concurrent original jurisdiction, together with the PUP Board of
Regents, over the administrative case against Guevarra and Cezar and it can take cognizance of a case filed directly with it,
despite the fact that the Board of Regents is the disciplining authority of university employees.

CSC has jurisdiction over cases filed directly with it, regardless of who initiated the complaint. The CSC, as the central
personnel agency of the government, has the power to appoint and discipline its officials and employees and to hear and
decide administrative cases instituted by or brought before it directly or on appeal.

CSC has concurrent original jurisdiction with the Board of Regents over administrative cases. Except as otherwise provided
by the Constitution or by law, the Civil Service Commission shall have the final authority to pass upon the removal,
separation and suspension of all officers and employees in the civil service and upon all matters relating to the conduct,
discipline and efficiency of such officers and employees. It should be emphasized that the CSC has original concurrent
jurisdiction shared with the governing body in question, in this case, the Board of Regents of PUP. This means that if the
Board of Regents first takes cognizance of the complaint, then it shall exercise jurisdiction to the exclusion of the CSC.

WHEREFORE, the petitions are GRANTED. The Decision of the Court of Appeals is hereby REVERSED and SET ASIDE.
Resolutions of the Civil Service Commission are REINSTATED.
Llamas vs. Court of Appeals, September 29, 2009

Facts: On August 16, 1984, petitioners were charged before the Regional Trial Court (RTC) of Makati with, as aforesaid, the
crime of "other forms of swindling" in the Information. That the above-named accused, conspiring and confederating
together and mutually helping and aiding one another, well knowing that their parcel of land was mortgaged to the Rural
Bank of Imus sell said property to one Conrado P. Avila, falsely representing the same to be free from all liens and
encumbrances whatsoever, and said Conrado P. Avila bought the aforementioned property for the sum of P12,895.00
which was paid to the accused.

RTC rendered its Decision, finding petitioners guilty beyond reasonable doubt of the crime charged and sentencing them to
suffer the penalty of imprisonment for two months and to pay the fine of P18,085.00 each. On appeal, the Court of Appeals
affirmed the decision of the trial court. Assailing the aforesaid issuances of the appellate court, petitioners filed before this
Court, their petition for review. The Court, however, denied the same for petitioners’ failure to state the material dates.
Since it subsequently denied petitioners’ motion for reconsideration, the judgment of conviction became final and
executory. With the consequent issuance by the trial court of the Warrant of Arrest, the police arrested, petitioner
Carmelita C. Llamas for her to serve her 2-month jail term. The police, nevertheless, failed to arrest petitioner Francisco R.
Llamas because he was nowhere to be found. Petitioner Francisco moved for the lifting or recall of the warrant of arrest,
raising for the first time the issue that the trial court had no jurisdiction over the offense charged.

Issue: Whether the RTC has jurisdiction over the case at bar.

SC: The Court denies the petition. The Court explained that the remedy of annulment of judgment cannot be availed of in
criminal cases. This Rule 47 shall govern the annulment by the Court of Appeals of judgments or final orders and resolutions
in civil actions of Regional Trial Courts for which the ordinary remedies of new trial, appeal, petition for relief or other
appropriate remedies are no longer available through fault of the petitioner. The remedy cannot be resorted to when the
RTC judgment being questioned was rendered in a criminal case. The 2000 Revised Rules of Criminal Procedure itself does
not permit such recourse, for it excluded Rule 47 from the enumeration of the provisions of the 1997 Revised Rules of Civil
Procedure which have suppletory application to criminal cases. Here, petitioners are invoking the remedy under Rule 47
(Annulment of Judgments of Final Orders and Resolutions) to assail a decision in a criminal case. Following Bitanga, this
Court cannot allow such recourse, there being no basis in law or in the rules. In substance, the petition must likewise fail.
The trial court which rendered the assailed decision had jurisdiction over the criminal case. Jurisdiction being a matter of
substantive law, the established rule is that the statute in force at the time of the commencement of the action determines
the jurisdiction of the court. In this case, at the time of the filing of the information, the applicable law was Batas Pambansa
Bilang 129,16 approved on August 14, 1981, which pertinently provides:

Section 20. Jurisdiction in criminal cases. — Regional Trial Courts shall exercise exclusive original jurisdiction in all criminal
cases not within the exclusive jurisdiction of any court, tribunal or body, except those now falling under the exclusive and
concurrent jurisdiction of the Sandiganbayan which shall hereafter be exclusively taken cognizance of by the latter.

Article 316(2) of the RPC, the provision which penalizes the crime charged in the information, provides that —

The penalty for the crime charged in this case is arresto mayor in its minimum and medium periods, which has a duration of
1 month and 1 day to 4 months, and a fine of not less than the value of the damage caused and not more than three times
such value. Here, as alleged in the information, the value of the damage caused, or the imposable fine, is P12,895.00.
Clearly, from a reading of the information, the jurisdiction over the criminal case was with the RTC and not the
Metropolitan Trial Court (MeTC). The MeTC could not have acquired jurisdiction over the criminal action because at the
time of the filing of the information, its jurisdiction was limited to offenses punishable with a fine of not more
than P4,000.00.

WHEREFORE, premises considered, the petition is DENIED.

Lastimoso vs. Asayo, March 6, 2007

Facts: Delia Buo filed with the Office of the Inspector General of the PNP an administrative complaint for abuse of
authority/harassment against P/Senior Inspector Jose J. Asayo (respondent). The latter allegedly obstructed police officers
from arresting his brother Lamberto Asayo, one of the suspects in the shooting of Buo's son. The complaint was referred to
the Inspector General for pre-charge investigation. When summoned, respondent did not appear but filed a motion to
dismiss, arguing that it was the People's Law Enforcement Board (PLEB) which had jurisdiction over the case. The
Inspector General submitted a report to the PNP Chief recommending the commencement of summary dismissal
proceedings against respondent. Upon approval of said recommendation, the administrative complaint was referred to the
PNP Legal Service for summary hearing. At the hearing before the designated summary hearing officer, respondent was
furnished with copies of the pre-charge investigation report of the Inspector General and the affidavits of Buo and her
witnesses. Respondent was asked by the hearing officer if he wanted to cross-examine Buo and her witnesses but he
declined and instead agreed to submit the case for resolution based on the pleadings. The hearing officer recommended
that respondent be dismissed from police service for grave misconduct. The PNP Chief, then Deputy Director General
Roberto Lastimoso, rendered a decision dismissing respondent from police service. Respondent filed a motion for
reconsideration of the PNP Chief's Decision but withdrew the same and instead filed a petition for certiorari and
prohibition, with prayer for the issuance of a temporary restraining order and writ of preliminary injunction with the
Regional Trial Court of Manila (RTC): WHEREFORE, the subject petition of petitioner Asayo is GRANTED. The assailed
decision of the public respondents dated 22 January 1999 (Exhibit J) is annulled and set aside for having been rendered with
grave abuse of discretion amounting to lack and or excess of jurisdiction.

CA: Petitioners then appealed the case to the CA. The CA promulgated its Decision nullifying the RTC Decision and holding
that (1) the PNP Chief had jurisdiction to try the civilian complaint filed against respondent; and, (2) respondent's failure to
exhaust the administrative remedy of filing an appeal with the National Appellate Board was fatal to his cause. Respondent
moved for reconsideration thereof. (Reversed itself) The CA ruled that since the offense charged is punishable by dismissal,
then it was the PLEB which had jurisdiction over the case. The CA further held that the principle of exhaustion of
administrative remedies was not applicable to the case since the issue involved was purely legal in nature. The RTC Decision
was then affirmed. The CA denied petitioners motion for reconsideration.

ISSUES: RESPONDENT FAILED TO EXHAUST ALL THE AVAILABLE ADMINISTRATIVE REMEDIES PRIOR TO THE FILING OF HIS PETITION
BEFORE THE COURT A QUO.

THE CHIEF OF THE PHILIPPINE NATIONAL POLICE HAS THE AUTHORITY OR JURISDICTION UNDER REPUBLIC ACT NO. 6975 TO HEAR AND
TRY THE CITIZEN'S COMPLAINT AGAINST RESPONDENT.

SC: With regard to the first issue, the respondent rightfully invoked the jurisdiction of the courts without first going through
all the administrative remedies because the principle of exhaustion of administrative remedies admits of exceptions, such
as when the issue involved is a purely legal question. The only issue presented by respondent in his petition
for certiorari and prohibition before the RTC was whether or not the PNP Chief had jurisdiction to take cognizance of the
complaint filed by a private citizen against him. Said issue being a purely legal one, the principle of exhaustion of
administrative remedies did not apply to the case.

However, as to the question of whether the PNP Chief had jurisdiction to act on a private citizen's complaint against
respondent, the Court finds merit in petitioners' position. Republic Act (R.A.) No. 6975 or the Department of the Interior
and Local Government Act of 1990, delineates the procedural framework in pursuing administrative complaints against
erring members of the police organization. Section 41 of the law enumerates the authorities to which a complaint against
an erring member of the PNP may be filed. Evidently, the PNP Chief and regional directors are vested with the power to
summarily dismiss erring PNP members if any of the causes for summary dismissal enumerated in Section 42 is attendant.
Thus, the power to dismiss PNP members is not only the prerogative of PLEB but concurrently exercised by the PNP Chief
and regional directors.

WHEREFORE, the petition is GRANTED.

Garcia vs. Sandiganbayan, June 22, 2005

Facts: Petitioner Major General Carlos F. Garcia was the Deputy Chief of Staff for Comptrollership, J6, of the Armed Forces
of the Philippines. Petitioner filed this Petition for certiorari and prohibition under Rule 65 to annul and set aside public
respondent Sandiganbayans Resolution and Writ of Preliminary Attachment, and to enjoin public respondents
Sandiganbayan and Office of the Ombudsman from further proceeding with any action relating to the enforcement of the
assailed issuances. Atty. Maria Olivia Elena A. Roxas, Graft Investigation and Prosecution Officer II of the Field Investigation
Office of the Office of the Ombudsman, after due investigation, filed a complaint against petitioner with public respondent
Office of the Ombudsman, among others, for violation of Republic Act (R.A.) No. 6713. The Republic of the Philippines,
acting through public respondent Office of the Ombudsman, filed before the Sandiganbayan, a Petition with Verified Urgent
Ex Parte Application for the Issuance of a Writ of Preliminary Attachment against petitioner, his wife, and three sons,
seeking the forfeiture of unlawfully acquired properties. It was alleged that the Office of the Ombudsman, after conducting
an inquiry similar to a preliminary investigation in criminal cases, has determined that a prima facie case exists against Maj.
Gen. Garcia and the other respondents therein who hold such properties for, with, or on behalf of, Maj. Gen. Garcia, since
during his incumbency as a soldier and public officer he acquired huge amounts of money and properties manifestly out of
proportion to his salary as such public officer and his other lawful income, if any.

Sandiganbayan issued the questioned Resolution granting the relief prayed for by the RP. The corresponding writ of
preliminary attachment was subsequently issued upon the filing of a bond by the Republic. Petitioner (as respondent a quo)
filed a Motion to Dismiss on the ground of lack of jurisdiction of the Sandiganbayan over forfeiture proceedings under R.A.
No. 1379. On even date, petitioner filed the present Petition, raising the same issue of lack jurisdiction. Petitioner argues in
this Petition that the Sandiganbayan is without jurisdiction over the civil action for forfeiture of unlawfully acquired
properties under R.A. No. 1379, maintaining that such jurisdiction actually resides in the Regional Trial Courts as provided
under Sec. 2 of the law, and that the jurisdiction of the Sandiganbayan in civil actions pertains only to separate actions for
recovery of unlawfully acquired property against President Marcos, his family, and cronies.

Issue: Whether the Sandiganbayan has jurisdiction over petitions for forfeiture under R.A. No. 1379;

SC: The petition is patently without merit. It should be dismissed.

Originally, it was the Solicitor General who was authorized to initiate forfeiture proceedings before the then Court of First
Instance of the city or province where the public officer or employee resides or holds office, pursuant to Sec. 2 of R.A. No.
1379. Upon the creation of the Sandiganbayan pursuant to P.D. No. 1486, original and exclusive jurisdiction over such
violations was vested in the said court. P.D. No. 1606 was later issued expressly repealing P.D. No. 1486, as well as
modifying the jurisdiction of the Sandiganbayan by removing its jurisdiction over civil actions brought in connection with
crimes within the exclusive jurisdiction of said court. Subsequently, Batas Pambansa Blg. 129 abolished the concurrent
jurisdiction of the Sandiganbayan and the regular courts and expanded the exclusive original jurisdiction of the
Sandiganbayan over the offenses enumerated in Sec. 4 of P.D. No. 1606 to embrace all such offenses irrespective of the
imposable penalty. On the foregoing premises alone, the Court in Republic v. Sandiganbayan, deduced that jurisdiction
over violations of R.A. No. 3019 and 1379 is lodged with the Sandiganbayan. In the face of the prevailing jurisprudence and
the present state of statutory law on the jurisdiction of the Sandiganbayan, petitioners argument that the Sandiganbayan
has no jurisdiction over the petition for forfeiture it being civil in nature and the Sandiganbayan allegedly having no
jurisdiction over civil actions collapses completely. The civil nature of an action for forfeiture was first recognized
in Republic v. Sandiganbayan, thus: [T]he rule is settled that forfeiture proceedings are actions in rem and, therefore, civil in
nature. It is logically congruent, therefore, that violations of R.A. No. 1379 are placed under the jurisdiction of the
Sandiganbayan, even though the proceeding is civil in nature, since the forfeiture of the illegally acquired property amounts
to a penalty. WHEREFORE, in view of the foregoing, the Petition is DISMISSED.
Alejandro vs. Office of the Ombudsman Fact-Finding and Intelligence Bureau, April 3, 2013

Facts: On May 4, 2000, the Head of the Non-Revenue Water Reduction Department of the Manila Water Services, Inc.
(MWSI) received a report from an Inspectorate and Special Projects team that the Mico Car Wash (MICO), owned by
Alfredo Rap Alejandro, has been illegally opening an MWSI fire hydrant and using it to operate its car-wash business in
Binondo, Manila.5chanroblesvirtualawlibrary

On May 10, 2000, the MWSI, in coordination with the Philippine National Police Criminal Investigation and Detection Group
(PNP-CIDG), conducted an anti-water pilferage operation against MICO. 6chanroblesvirtualawlibrary

During the anti-water pilferage operation, the PNP-CIDG discovered that MICO's car-wash boys indeed had been illegally
getting water from an MWSI fire hydrant. The PNP-CIDG arrested the car-wash boys and confiscated the containers used in
getting water. At this point, the petitioner, Alfredo's father and the Barangay Chairman or punong barangay of Barangay
293, Zone 28, Binondo, Manila, interfered with the PNP-CIDG's operation by ordering several men to unload the confiscated
containers. This intervention caused further commotion and created an opportunity for the apprehended car-wash boys to
escape.7chanroblesvirtualawlibrary

On August 5, 2003, the respondent Office of the Ombudsman Fact-Finding and Intelligence Bureau, after conducting its
initial investigation, filed with the Office of the Overall Deputy Ombudsman an administrative complaint against the
petitioner for his blatant refusal to recognize a joint legitimate police activity, and for his unwarranted
intervention.8chanroblesvirtualawlibrary

In its decision9 dated August 20, 2004, the Office of the Deputy Ombudsman found the petitioner guilty of grave
misconduct and ordered his dismissal from the service. The Deputy Ombudsman ruled that the petitioner cannot
overextend his authority as Barangay Chairman and induce other people to disrespect proper authorities. The Deputy
Ombudsman also added that the petitioner had tolerated the illegal acts of MICO's car-wash
boys.10chanroblesvirtualawlibrary

The petitioner filed a motion for reconsideration which the Office of the Deputy Ombudsman denied in its order 11 of
November 2, 2004.

The petitioner appealed to the CA via a petition for review under Rule 43 of the Rules of Court. In its decision 12 dated
February 21, 2006, the CA dismissed the petition for premature filing. The CA ruled that the petitioner failed to exhaust
proper administrative remedies because he did not appeal the Deputy Ombudsman's decision to the Ombudsman.

The petitioner moved for the reconsideration of the CA ruling. On June 15, 2006, the CA denied the
motion.13chanroblesvirtualawlibrary

The Petition

The petitioner posits that the CA erred in dismissing his petition outright without considering Rule 43 of the Rules of Court
and Administrative Order No. 07 (otherwise known as the Rules of Procedure of the Office of the Ombudsman), 14 on the
belief that the filing of a motion for reconsideration of the decision of the Office of the Overall Deputy Ombudsman can
already be considered as an exhaustion of administrative remedies. The petitioner further argues that the Office of the
Ombudsman has no jurisdiction to order his dismissal from the service since under Republic Act No. (RA) 7160 (otherwise
known as the Local Government Code of 1991), an elective local official may be removed from office only by the order of a
proper court. Finally, he posits that the penalty of dismissal from the service is not warranted under the available facts.

The Office of the Deputy Ombudsman, through the Office of the Solicitor General, pointed out in its Comment 15 that the
petitioner failed to exhaust administrative remedies since he did not appeal the decision of the Deputy Ombudsman to the
Ombudsman. The Office of the Deputy Ombudsman maintained that under RA 6770 16 (The Ombudsman Act of 1989), the
Office of the Ombudsman has disciplinary authority over all elective and appointive officials. It also asserted that sufficient
evidence exists to justify the petitioner's dismissal from the service.

As framed by the parties, the case poses the following issues:chanroblesvirtualawlibrary

I.

WHETHER THE PRINCIPLE OF EXHAUSTION OF ADMINISTRATIVE REMEDIES REQUIRES A REQUEST FOR RECONSIDERATION
FROM THE OFFICE OF THE DEPUTY OMBUDSMAN TO THE OMBUDSMAN FOR THE PURPOSE OF A RULE 43 REVIEW.

II.

WHETHER THE OFFICE OF THE OMBUDSMAN HAS JURISDICTION OVER ELECTIVE OFFICIALS AND HAS THE POWER TO ORDER
THEIR DISMISSAL FROM THE SERVICE.

III.

WHETHER PETITIONER'S ACT CONSTITUTES GRAVE MISCONDUCT TO WARRANT HIS DISMISSAL.

The Court's Ruling

We deny the petition for lack of merit.

Preliminary Issues

The CA committed no reversible error in affirming the findings and conclusions of the Deputy Ombudsman.

No further need exists to exhaust administrative remedies from the decision of the Deputy Ombudsman because he was
acting in behalf of the Ombudsman

We disagree with the CA's application of the doctrine of exhaustion of administrative remedies which states that when
there is "a procedure for administrative review, x x x appeal, or reconsideration, the courts x x x will not entertain a case
unless the available administrative remedies have been resorted to and the appropriate authorities have been given an
opportunity to act and correct the errors committed in the administrative forum." 17chanroblesvirtualawlibrary

Section 7, Rule III of Administrative Order No. 07, dated April 10, 1990, provides that:chanroblesvirtualawlibrary

Section 7. FINALITY OF DECISION. Where the respondent is absolved of the charge and in case of conviction where the
penalty imposed is public censure or reprimand, suspension of not more than one (1) month, or a fine equivalent to one (1)
month salary, the decision shall be final and unappealable. In all other cases, the decision shall become final after the
expiration of ten (10) days from receipt thereof by the respondent, unless a motion for reconsideration or petition
for certiorari shall have been filed by him as prescribed in Section 27 of RA 6770. [italics supplied; emphasis and underscore
ours]

Administrative Order No. 07 did not provide for another appeal from the decision of the Deputy Ombudsman to the
Ombudsman. It simply requires that a motion for reconsideration or a petition for certiorari may be filed in all other cases
where the penalty imposed is not one involving public censure or reprimand, suspension of not more than one (1) month,
or a fine equivalent to one (1) month salary. This post-judgment remedy is merely an opportunity for the Office of the
Deputy Ombudsman, or the Office of the Ombudsman, to correct itself in certain cases. To our mind, the petitioner has fully
exhausted all administrative remedies when he filed his motion for reconsideration on the decision of the Deputy
Ombudsman. There is no further need to review the case at the administrative level since the Deputy Ombudsman has
already acted on the case and he was acting for and in behalf of the Office of the Ombudsman.

The Ombudsman has concurrent jurisdiction over administrative cases which are within the jurisdiction of the regular
courts or administrative agencies

The Office of the Ombudsman was created by no less than the Constitution. 18 It is tasked to exercise disciplinary authority
over all elective and appointive officials, save only for impeachable officers. While Section 21 of The Ombudsman Act 19 and
the Local Government Code both provide for the procedure to discipline elective officials, the seeming conflicts between
the two laws have been resolved in cases decided by this Court. 20chanroblesvirtualawlibrary

In Hagad v. Gozo-Dadole,21 we pointed out that "there is nothing in the Local Government Code to indicate that it has
repealed, whether expressly or impliedly, the pertinent provisions of the Ombudsman Act. The two statutes on the specific
matter in question are not so inconsistent x x x as to compel us to only uphold one and strike down the other." The two
laws may be reconciled by understanding the primary jurisdiction and concurrent jurisdiction of the Office of the
Ombudsman.

The Ombudsman has primary jurisdiction to investigate any act or omission of a public officer or employee who is under the
jurisdiction of the Sandiganbayan. RA 6770 provides:chanroblesvirtualawlibrary

Section 15. Powers, Functions and Duties. The Office of the Ombudsman shall have the following powers, functions and
duties:chanroblesvirtualawlibrary

(1) Investigate and prosecute on its own or on complaint by any person, any act or omission of any public officer or
employee, office or agency, when such act or omission appears to be illegal, unjust, improper or inefficient. It has primary
jurisdiction over cases cognizable by the Sandiganbayan and, in the exercise of this primary jurisdiction, it may take over, at
any stage, from any investigatory agency of Government, the investigation of such cases. [italics supplied; emphasis and
underscore ours]

The Sandiganbayan's jurisdiction extends only to public officials occupying positions corresponding to salary grade 27 and
higher.22chanroblesvirtualawlibrary

Consequently, as we held in Office of the Ombudsman v. Rodriguez, 23 any act or omission of a public officer or employee
occupying a salary grade lower than 27 is within the concurrent jurisdiction of the Ombudsman and of the regular courts or
other investigative agencies.24chanroblesvirtualawlibrary

In administrative cases involving the concurrent jurisdiction of two or more disciplining authorities, the body where the
complaint is filed first, and which opts to take cognizance of the case, acquires jurisdiction to the exclusion of other
tribunals exercising concurrent jurisdiction.25 In this case, the petitioner is a Barangay Chairman, occupying a position
corresponding to salary grade 14.26 Under RA 7160, the sangguniang panlungsod or sangguniang bayan has disciplinary
authority over any elective barangay official, as follows:chanroblesvirtualawlibrary

Section 61. Form and Filing of Administrative Complaints. A verified complaint against any erring local elective official shall
be prepared as follows:chanroblesvirtualawlibrary

xxx

(c) A complaint against any elective barangay official shall be filed before the sangguniang panlungsod or sangguniang
bayan concerned whose decision shall be final and executory. [italics supplied]
Since the complaint against the petitioner was initially filed with the Office of the Ombudsman, the Ombudsman's exercise
of jurisdiction is to the exclusion of the sangguniang bayan whose exercise of jurisdiction is concurrent.

The Ombudsman has the power to impose administrative sanctions

Section 15 of RA 677027 reveals the manifest intent of the lawmakers to give the Office of the Ombudsman
full administrative disciplinary authority. This provision covers the entire range of administrative activities attendant to
administrative adjudication, including, among others, the authority to receive complaints, conduct investigations, hold
hearings in accordance with its rules of procedure, summon witnesses and require the production of documents, place
under preventive suspension public officers and employees pending an investigation, determine the appropriate penalty
imposable on erring public officers or employees as warranted by the evidence, and, necessarily, impose the corresponding
penalty.28chanroblesvirtualawlibrary

These powers unmistakably grant the Office of the Ombudsman the power to directly impose administrative sanctions; its
power is not merely recommendatory. We held in Office of the Ombudsman v. Apolonio29 that:chanroblesvirtualawlibrary

It is likewise apparent that under RA 6770, the lawmakers intended to provide the Office of the Ombudsman with sufficient
muscle to ensure that it can effectively carry out its mandate as protector of the people against inept and corrupt
government officers and employees. The Office was granted the power to punish for contempt in accordance with the
Rules of Court. It was given disciplinary authority over all elective and appointive officials of the government and its
subdivisions, instrumentalities and agencies (with the exception only of impeachable officers, members of Congress and
the Judiciary). Also, it can preventively suspend any officer under its authority pending an investigation when the case so
warrants.30 (italics supplied; emphasis and underscore ours)

Substantive Issue

The petitioner is liable for grave misconduct

At the outset, we point out that the maintenance of peace and order is a function of both the police and the Barangay
Chairman, but crime prevention is largely a police matter. At the time when the police officers were hauling the confiscated
equipment, they were creating a commotion. As Barangay Chairman, the petitioner was clearly in the performance of his
official duty when he interfered. Under Section 389(b)(3) of RA 7160, the law provides that a punong barangay must
"maintain public order in the barangay and, in pursuance thereof, assist the city or municipal mayor and the sanggunian
members in the performance of their duties and functions." The PNP-CIDG's anti-water pilferage operation against the car-
wash boys was affecting the peace and order of the community and he was duty-bound to investigate and try to maintain
public order.31chanroblesvirtualawlibrary

After the petitioner introduced himself and inquired about the operation, the police officers immediately showed their
identifications and explained to him that they were conducting an anti-water pilferage operation. However, instead of
assisting the PNP-CIDG, he actually ordered several bystanders to defy the PNP-CIDG's whole operation. The petitioner's act
stirred further commotion that unfortunately led to the escape of the apprehended car-wash
boys.32chanroblesvirtualawlibrary

The petitioner, as Barangay Chairman, is tasked to enforce all laws and ordinances which are applicable within the
barangay, in the same manner that the police is bound to maintain peace and order within the community. While the
petitioner has general charge of the affairs in the barangay, the maintenance of peace and order is largely a police matter,
with police authority being predominant33 especially when the police has began to act on an enforcement matter.34 The
maintenance of peace and order in the community is a general function undertaken by the punong barangay. It is a task
expressly conferred to the punong barangay under Section 389(b)(3) of RA 7160. 35 On the other hand, the maintenance of
peace and order carries both general and specific functions on the part of the police. Section 24 of RA 6975 (otherwise
known as "the Department of the Interior and Local Government Act of 1990"), 36as amended,37 enumerates the powers
and functions of the police. In addition to the maintenance of peace and order, the police has the authority to "investigate
and prevent crimes, effect the arrest of criminal offenders, bring offenders to justice and assist in their prosecution," and
are charged with the enforcement of "laws and ordinances relative to the protection of lives and properties." 38 Examined
side by side, police authority is superior to the punong barangay's authority in a situation where the maintenance of peace
and order has metamorphosed into crime prevention and the arrest of criminal offenders.

In this case, a criminal act was actually taking place and the situation was already beyond the general maintenance of peace
and order. The police was, at that point, under the obligation to prevent the commission of a crime and to effect the arrest,
as it actually did, of criminal offenders.

From another perspective, the peace and order function of the punong barangay must also be related to his function of
assisting local executive officials (i.e., the city mayor), under Section 389(b), Chapter III of the Local Government
Code.39 Local executive officials have the power to employ and deploy police for the maintenance of peace and order, the
prevention of crimes and the arrest of criminal offenders.40 Accordingly, in the maintenance of peace and order, the
petitioner is bound, at the very least, to respect the PNP-CIDG's authority even if he is not in the direct position to give aid.
By interfering with a legitimate police operation, he effectively interfered with this hierarchy of authority. Thus, we are left
with no other conclusion other than to rule that Alejandro is liable for misconduct in the performance of his duties.

Misconduct is considered grave if accompanied by corruption, a clear intent to violate the law, or a flagrant disregard of
established rules, which must all be supported by substantial evidence. 41 If the misconduct does not involve any of the
additional elements to qualify the misconduct as grave, the person charged may only be held liable for simple misconduct.
"Grave misconduct necessarily includes the lesser offense of simple misconduct.'' 42chanroblesvirtualawlibrary

Sufficient records exist to justify the imposition of a higher penalty against the petitioner. His open interference in a
legitimate police activity. and defiance of the police's authority only show his clear i1itent to violate the law; in fact, he
reneged on his first obligation as the grassroot official tasked at the first level with the enforcement of the law. The
photographs, taken together with the investigation report of the Police Superintendent and the testimonies of the
witnesses, even lead to conclusions beyond interference and defiance; the petitioner himself could have been involved in
corrupt activities, although we cannot make this conclusive finding at this point. 43 We make this observation though as his
son owns MICO whose car-wash boys were engaged in water pilferage. What we can conclusively confirm is that the
petitioner violated the law by directly interfering with a legitimate police activity where his own son appeared to be
involved. This act qualifies the misconduct as grave. Section 52(A)(3), Rule IV of the Revised Uniform Rules on
Administrative Cases in the Civil Service provides that the penalty for grave misconduct is dismissal from the service.

WHEREFORE, in view of the foregoing, we hereby DENY the petition for lack of merit, and AFFIRM the decision of the Court
of Appeals in CA-G.R. SP No. 88544.

SO ORDERED.

APPELLATE JURISDICTION VS. ORIGINAL JURISDICTION

Maslag vs. Monzon, 2013

"It is incumbent upon x x x appellants to utilize the correct mode of appeal of the decisions of trial courts to the appellate
courts. In the mistaken choice of their remedy, they can blame no one but themselves." 1

This is a Petition for Review on Certiorari2 of the May 31, 2006 Resolution3 of the Court of Appeals (CA) in CA-G.R. CV No.
83365, which dismissed petitioner Darma Maslag’s (petitioner) ordinary appeal to it for being an improper remedy. The
Resolution disposed of the case as follows:cralavvonlinelawlibrary
WHEREFORE, the Motion to Dismiss is GRANTED, and the Appeal is hereby DISMISSED.

SO ORDERED.4nadcralavvonlinelawlibrary

The Petition also assails the CA’s September 22, 2006 Resolution 5 denying petitioner’s Motion for Reconsideration.6

Factual Antecedents

In 1998, petitioner filed a Complaint7 for reconveyance of real property with declaration of nullity of original certificate of
title (OCT) against respondents Elizabeth Monzon (Monzon), William Geston and the Registry of Deeds of La Trinidad,
Benguet. The Complaint was filed before the Municipal Trial Court (MTC) of La Trinidad, Benguet.

After trial, the MTC found respondent Monzon guilty of fraud in obtaining an OCT over petitioner’s property. 8 It ordered
her to reconvey the said property to petitioner, and to pay damages and costs of suit. 9

Respondents appealed to the Regional Trial Court (RTC) of La Trinidad, Benguet.

After going over the MTC records and the parties’ respective memoranda, the RTC of La Trinidad, Benguet, Branch 10,
through Acting Presiding Judge Fernando P. Cabato (Judge Cabato), issued its October 22, 2003 Order,10 declaring the MTC
without jurisdiction over petitioner’s cause of action. It further held that it will take cognizance of the case pursuant to
Section 8, Rule 40 of the Rules of Court, which reads:cralavvonlinelawlibrary

SECTION 8. Appeal from orders dismissing case without trial; lack of jurisdiction. – x x x

If the case was tried on the merits by the lower court without jurisdiction over the subject matter, the Regional Trial Court
on appeal shall not dismiss the case if it has original jurisdiction thereof, but shall decide the case in accordance with the
preceding section, without prejudice to the admission of amended pleadings and additional evidence in the interest of
justice.

Both parties acknowledged receipt of the October 22, 2003 Order,11 but neither presented additional evidence before the
new judge, Edgardo B. Diaz De Rivera, Jr. (Judge Diaz De Rivera). 12

On May 4, 2004, Judge Diaz De Rivera issued a Resolution 13 reversing the MTC Decision. The fallo reads as
follows:cralavvonlinelawlibrary

WHEREFORE, the Judgment appealed from the Municipal Trial Court of La Trinidad, Benguet is set aside. [Petitioner] is
ordered to turn over the possession of the 4,415 square meter land she presently occupies to [Monzon]. This case
is remanded to the court a quo for further proceedings to determine whether [Maslag] is entitled to the remedies afforded
by law to a builder in good faith for the improvements she constructed thereon.

No pronouncement as to damages and costs.

SO ORDERED.14

Petitioner filed a Notice of Appeal15 from the RTC’s May 4, 2004 Resolution.

Petitioner assailed the RTC’s May 4, 2004 Resolution for reversing the MTC’s factual findings16 and prayed that the MTC
Decision be adopted. Her prayer before the CA reads:cralavvonlinelawlibrary
WHEREFORE, premises considered, it is most respectfully prayed that the decision of the Regional Trial Court, Branch 10 of
La Trinidad, Benguet, appealed from be reversed in toto and that the Honorable Court adopt the decision of the Municipal
Trial Court. Further reliefs just and equitable under the premises are prayed for. 17

Respondents moved to dismiss petitioner’s ordinary appeal for being the improper remedy. They asserted that the proper
mode of appeal is a Petition for Review under Rule 42 because the RTC rendered its May 4, 2004 Resolution in its appellate
jurisdiction.18

Ruling of the Court of Appeals

The CA dismissed petitioner’s appeal. It observed that the RTC’s May 4, 2004 Resolution (the subject matter of the appeal
before the CA) set aside an MTC Judgment; hence, the proper remedy is a Petition for Review under Rule 42, and not an
ordinary appeal.19

Petitioner sought reconsideration.20 She argued, for the first time, that the RTC rendered its May 4, 2004 Resolution in its
original jurisdiction. She cited the earlier October 22, 2003 Order of the RTC declaring the MTC without jurisdiction over
the case.

The CA denied petitioner’s Motion for Reconsideration in its September 22, 2006 Resolution:21

A perusal of the May 4, 2004 Resolution of the RTC, which is the subject matter of the appeal, clearly reveals that it took
cognizance of the MTC case in the exercise of its appellate jurisdiction. Consequently, as We have previously enunciated,
the proper remedy, is a petition for review under Rule 42 and not an ordinary appeal under Rule 41.

WHEREFORE, premises considered, the instant Motion for Reconsideration is DENIED. The May 31, 2006 Resolution of this
Court is hereby AFFIRMED in toto.

SO ORDERED.22

Hence this Petition wherein petitioner prays that the CA be ordered to take cognizance of her appeal. 23

Issues

Petitioner set forth the following issues in her Petition:cralavvonlinelawlibrary

WHETHER X X X THE COURT OF APPEALS WAS CORRECT IN DISMISSING THE APPEAL FILED BY THE PETITIONER,
CONSIDERING THAT THE REGIONAL TRIAL COURT, BRANCH 10 OF LA TRINIDAD, BENGUET HELD THAT THE ORIGINAL
COMPLAINT AS FILED BEFORE THE MUNICIPAL TRIAL COURT OF LA TRINIDAD, BENGUET WAS DECIDED BY THE LATTER
WITHOUT ANY JURISDICTION AND, IN ORDERING THAT THE CASE SHALL BE DECIDED PURSUANT TO THE PROVISION OF
SECTION 8 OF RULE 40 OF THE RULES OF COURT, IT DECIDED THE CASE NOT ON ITS APPELLATE JURISDICTION BUT ON ITS
ORIGINAL JURISDICTION

WHAT WILL BE THE EFFECT OF THE DECISION OF THE REGIONAL TRIAL COURT, BRANCH 10 OF LA TRINIDAD, BENGUET,
WHEN IT DECIDED A CASE APPEALED BEFORE IT UNDER THE PROVISION OF SECTION 8, RULE 40 OF THE RULES OF COURT
OF THE PHILIPPINES, AS TO THE COURSE OF REMEDY THAT MAY BE AVAILED OF BY THE PETITIONER – A PETITION FOR
REVIEW UNDER RULE 42 OR AN ORDINARY APPEAL UNDER RULE 41.24nadcralavvonlinelawlibrary

Our Ruling

In its October 22, 2003 Order, the RTC declared that the MTC has no jurisdiction over the subject matter of the case based
on the supposition that the same is incapable of pecuniary estimation. Thus, following Section 8, Rule 40 of the Rules of
Court, it took cognizance of the case and directed the parties to adduce further evidence if they so desire. The parties
bowed to this ruling of the RTC and, eventually, submitted the case for its decision after they had submitted their respective
memoranda.

We cannot, however, gloss over this jurisdictional faux pas of the RTC. Since it involves a question of jurisdiction, we
may motu proprio review and pass upon the same even at this late stage of the proceedings. 25

In her Complaint26 for reconveyance of real property with declaration of nullity of OCT, petitioner claimed that she and her
father had been in open, continuous, notorious and exclusive possession of the disputed property since the 1940’s. She
averred:cralavvonlinelawlibrary

7. Sometime in the year 1987, Elizabeth Monzon, the owner of the adjacent parcel of land being occupied by plaintiff
[Maslag], informed the plaintiff that the respective parcels of land being claimed by them can now be titled. A suggestion
was, thereafter made, that those who were interested to have their lands titled, will contribute to a common fund for the
surveying and subsequent titling of the land;chanroblesvirtualawlibrary

8. Since plaintiff had, for so long, yearned for a title to the land she occupies, she contributed to the amount being
requested by Elizabeth Monzon;chanroblesvirtualawlibrary

9. A subdivision survey was made and in the survey, the respective areas of the plaintiff and the defendants were defined
and delimited – all for purposes of titling. x x x

10. But alas, despite the assurance of subdivided titles, when the title was finally issued by the Registry of Deeds, the same
was only in the name of Elizabeth Monzon and WILLIAM GESTON. The name of Darma Maslag was fraudulently,
deliberately and in bad faith omitted. Thus, the title to the property, to the extent of 18,295 square meters, was titled
solely in the name of ELIZABETH MONZON.

As a relief, petitioner prayed that Monzon be ordered to reconvey the portion of the property which she claimed was
fraudulently included in Monzon’s title. Her primary relief was to recover ownership of real property. Indubitably,
petitioner’s complaint involves title to real property. An action "involving title to real property," on the other hand, was
defined as an action where "the plaintiff’s cause of action is based on a claim that [she] owns such property or that [she]
has the legal rights to have exclusive control, possession, enjoyment, or disposition of the same." 27 Under the present state
of the law, in cases involving title to real property, original and exclusive jurisdiction belongs to either the RTC or the MTC,
depending on the assessed value of the subject property. 28 Pertinent provisions of Batas Pambansa Blg. (BP) 129,29 as
amended by Republic Act (RA) No. 7691,30provides:cralavvonlinelawlibrary

Sec. 19. Jurisdiction in civil cases. – Regional Trial Courts shall exercise exclusive original jurisdiction:cralavvonlinelawlibrary

(1) In all civil actions in which the subject of the litigation is incapable of pecuniary estimation;chanroblesvirtualawlibrary

(2) In all civil actions which involve the title to, or possession of, real property, or any interest therein, where the assessed
value of the property involved exceeds Twenty thousand pesos (P20,000.00) or for civil actions in Metro Manila, where x x x
the [assessed] value [of the property] exceeds Fifty thousand pesos ([P]50,000.00) except actions for forcible entry into and
unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon Metropolitan Trial Courts,
Municipal Trial Courts, and Municipal Circuit Trial Courts;chanroblesvirtualawlibrary

x x x x

SEC. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in Civil Cases. —
Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts shall exercise: x x x x
(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real property, or any interest
therein where the assessed value of the property or interest therein does not exceed Twenty thousand pesos (P20,000.00)
or, in civil actions in Metro Manila, where such assessed value does not exceed Fifty thousand pesos (P50,000.00) x x x.

In the case at bench, annexed to the Complaint is a Declaration of Real Property 31 dated November 12, 1991, which was
later marked as petitioner’s Exhibit "A",32 showing that the disputed property has an assessed value of P12,400 33 only. Such
assessed value of the property is well within the jurisdiction of the MTC. In fine, the RTC, thru Judge Cabato, erred in
applying Section 19(1) of BP 129 in determining which court has jurisdiction over the case and in pronouncing that the MTC
is divested of original and exclusive jurisdiction.

This brings to fore the next issue of whether the CA was correct in dismissing petitioner’s appeal.

Section 2, Rule 50 of the Rules of Court provides for the dismissal of an improper appeal:cralavvonlinelawlibrary

SECTION 2. Dismissal of improper appeal to the Court of Appeals. – An appeal under Rule 41 taken from the Regional Trial
Court to the Court of Appeals raising only questions of law shall be dismissed, issues purely of law not being reviewable by
said court. Similarly, an appeal by notice of appeal instead of by petition for review from the appellate judgment of a
Regional Trial Court shall be dismissed.

An appeal erroneously taken to the Court of Appeals shall not be transferred to the appropriate court but shall be dismissed
outright. (Emphasis supplied)

There are two modes of appealing an RTC decision or resolution on issues of fact and law. 34 The first mode is an ordinary
appeal under Rule 41 in cases where the RTC exercised its original jurisdiction. It is done by filing a Notice of Appeal with
the RTC. The second mode is a petition for review under Rule 42 in cases where the RTC exercised its appellate
jurisdiction over MTC decisions. It is done by filing a Petition for Review with the CA. Simply put, the distinction between
these two modes of appeal lies in the type of jurisdiction exercised by the RTC in the Order or Decision being appealed.

As discussed above, the MTC has original and exclusive jurisdiction over the subject matter of the case; hence, there is no
other way the RTC could have taken cognizance of the case and review the court a quo’s Judgment except in the exercise of
its appellate jurisdiction. Besides, the new RTC Judge who penned the May 4, 2004 Resolution, Judge Diaz de Rivera,
actually treated the case as an appeal despite the October 22, 2003 Order. He started his Resolution by stating, "This is an
appeal from the Judgment rendered by the Municipal Trial Court (MTC) of La Trinidad Benguet" 35 and then proceeded to
discuss the merits of the "appeal." In the dispositive portion of said Resolution, he reversed the MTC’s findings and
conclusions and remanded residual issues for trial with the MTC. 36 Thus, in fact and in law, the RTC Resolution was a
continuation of the proceedings that originated from the MTC. It was a judgment issued by the RTC in the exercise of its
appellate jurisdiction. With regard to the RTC’s earlier October 22, 2003 Order, the same should be disregarded for it
produces no effect (other than to confuse the parties whether the RTC was invested with original or appellate jurisdiction).
It cannot be overemphasized that jurisdiction over the subject matter is conferred only by law and it is "not within the
courts, let alone the parties, to themselves determine or coveniently set aside."37 Neither would the active participation of
the parties nor estoppel operate to confer original and exclusive jurisdiction where the court or tribunal only wields
appellate jurisdiction over the case.38 Thus, the CA is correct in holding that the proper mode of appeal should have been
a Petition for Review under Rule 42 of the Rules of Court, and not an ordinary appeal under Rule 41.

Seeing the futility of arguing against what the RTC actually did, petitioner resorts to arguing for what the RTC should have
done. She maintains that the RTC should have issued its May 4, 2004 Resolution in its original jurisdiction because it had
earlier ruled that the MTC had no jurisdiction over the cause of action.

Petitioner’s argument lacks merit. To reiterate, only statutes can confer jurisdiction. Court issuances cannot seize or
appropriate jurisdiction. It has been repeatedly held that "any judgment, order or resolution issued without [jurisdiction] is
void and cannot be given any effect."39 By parity of reasoning, an order issued by a court declaring that it has original and
exclusive jurisdiction over the subject matter of the case when under the law it has none cannot likewise be given effect. It
amounts to usurpation of jurisdiction which cannot be countenanced. Since BP 129 already apportioned the jurisdiction of
the MTC and the RTC in cases involving title to property, neither the courts nor the petitioner could alter or disregard the
same. Besides, in determining the proper mode of appeal from an RTC Decision or Resolution, the determinative factor is
the type of jurisdiction actually exercised by the RTC in rendering its Decision or Resolution. Was it rendered by the RTC in
the exercise of its original jurisdiction, or in the exercise of its appellate jurisdiction? In short, we look at what type of
jurisdiction was actually exercised by the RTC. We do not look into what type of jurisdiction the RTC should have exercised.
This is but logical. Inquiring into what the RTC should have done in disposing of the case is a question which already
involves the merits of the appeal, but we obviously cannot go into that where the mode of appeal was improper to begin
with.

WHEREFORE, premises considered, the Petition for Review is DENIED for lack of merit. The assailed May 31, 2006 and
September 22, 2006 Resolutions of the Court of Appeals in CA-G.R. CV No. 83365 are AFFIRMED.

SO ORDERED.

Maglalang vs. PAGCOR, December 11, 2013

Before this Court is a petition1 for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended,
seeking the reversal of the Resolution2 dated September 30, 2009 issued by the Court of Appeals (CA) in CA"".G.R. SP No.
110048, which outrightly dismissed the petition for certiorari filed by herein petitioner Mark Jerome S. Maglalang
(petitioner). Also assailed is the appellate court's Resolution3 dated November 26, 2009 which denied petitioner's motion
for reconsideration.

The facts follow.

Petitioner was a teller at the Casino Filipino, Angeles City Branch, Angeles City, which was operated by respondent
Philippine Amusement and Gaming Corporation (PAGCOR), a government-owned or controlled corporation existing by
virtue of Presidential Decree (P.D.) No. 1869. 4

Petitioner alleged that in the afternoon of December 13, 2008, while he was performing his functions as teller, a lady
customer identified later as one Cecilia Nakasato 5 (Cecilia) approached him in his booth and handed to him an
undetermined amount of cash consisting of mixed P1,000.00 and P500.00 bills. There were 45 P1,000.00 and ten P500.00
bills for the total amount of P50,000.00. Following casino procedure, petitioner laid the bills on the spreading board.
However, he erroneously spread the bills into only four clusters instead of five clusters worth P10,000.00 per cluster. He
then placed markers for P10,000.00 each cluster of cash and declared the total amount of P40,000.00 to Cecilia. Perplexed,
Cecilia asked petitioner why the latter only dished out P40,000.00. She then pointed to the first cluster of bills and
requested petitioner to check the first cluster which she observed to be thicker than the others. Petitioner performed a
recount and found that the said cluster contained 20 pieces of P1,000.00 bills. Petitioner apologized to Cecilia and rectified
the error by declaring the full and correct amount handed to him by the latter. Petitioner, however, averred that Cecilia
accused him of trying to shortchange her and that petitioner tried to deliberately fool her of her money. Petitioner tried to
explain, but Cecilia allegedly continued to berate and curse him. To ease the tension, petitioner was asked to take a break.
After ten minutes, petitioner returned to his booth. However, Cecilia allegedly showed up and continued to berate
petitioner. As a result, the two of them were invited to the casino’s Internal Security Office in order to air their respective
sides. Thereafter, petitioner was required to file an Incident Report which he submitted on the same day of the incident. 6

On January 8, 2009, petitioner received a Memorandum7 issued by the casino’s Branch Manager, Alexander Ozaeta,
informing him that he was being charged with Discourtesy towards a casino customer and directing him to explain within 72
hours upon receipt of the memorandum why he should not be sanctioned or dismissed. In compliance therewith, petitioner
submitted a letter-explanation8 dated January 10, 2009.
On March 31, 2009, petitioner received another Memorandum9 dated March 19, 2009, stating that the Board of Directors
of PAGCOR found him guilty of Discourtesy towards a casino customer and imposed on him a 30-day suspension for this
first offense. Aggrieved, on April 2, 2009, petitioner filed a Motion for Reconsideration10seeking a reversal of the board’s
decision and further prayed in the alternative that if he is indeed found guilty as charged, the penalty be only a reprimand
as it is the appropriate penalty. During the pendency of said motion, petitioner also filed a Motion for Production 11 dated
April 20, 2009, praying that he be furnished with copies of documents relative to the case including the recommendation of
the investigating committee and the Decision/Resolution of the Board supposedly containing the latter’s factual findings. In
a letter-reply12 dated June 2, 2009, one Atty. Carlos R. Bautista, Jr. who did not indicate his authority therein to represent
PAGCOR, denied the said motion. Petitioner received said letter-reply on June 17, 2009.

Subsequently, on June 18, 2009, PAGCOR issued a Memorandum 13 dated June 18, 2009 practically reiterating the contents
of its March 19, 2009 Memorandum. Attached therewith is another Memorandum 14 dated June 8, 2009 issued by
PAGCOR’s Assistant Vice President for Human Resource and Development, Atty. Lizette F. Mortel, informing petitioner that
the Board of Directors in its meeting on May 13, 2009 resolved to deny his appeal for reconsideration for lack of merit.
Petitioner received said memoranda on the same date of June 18, 2009.

On August 17, 2009, petitioner filed a petition15 for certiorari under Rule 65 of the 1997 Rules of Civil Procedure, as
amended, before the CA, averring that there is no evidence, much less factual and legal basis to support the finding of guilt
against him. Moreover, petitioner ascribed grave abuse of discretion amounting to lack or excess of jurisdiction to the acts
of PAGCOR in adjudging him guilty of the charge, in failing to observe the proper procedure in the rendition of its decision
and in imposing the harsh penalty of a 30-day suspension. Justifying his recourse to the CA, petitioner explained that he did
not appeal to the Civil Service Commission (CSC) because the penalty imposed on him was only a 30-day suspension which
is not within the CSC’s appellate jurisdiction. He also claimed that discourtesy in the performance of official duties is
classified as a light offense which is punishable only by reprimand.

In its assailed Resolution16 dated September 30, 2009, the CA outrightly dismissed the petition for certiorari for being
premature as petitioner failed to exhaust administrative remedies before seeking recourse from the CA. Invoking Section
2(1), Article IX-B of the 1987 Constitution,17 the CA held that the CSC has jurisdiction over issues involving the employer-
employee relationship in all branches, subdivisions, instrumentalities and agencies of the Government, including
government-owned or controlled corporations with original charters such as PAGCOR. Petitioner filed his Motion for
Reconsideration18 which the CA denied in the assailed Resolution 19 dated November 26, 2009. In denying the said motion,
the CA relied on this Court’s ruling in Duty Free Philippines v. Mojica 20 citing Philippine Amusement and Gaming Corp. v.
CA,21 where this Court held as follows:

It is now settled that, conformably to Article IX-B, Section 2(1), [of the 1987 Constitution] government-owned or controlled
corporations shall be considered part of the Civil Service only if they have original charters, as distinguished from those
created under general law.

PAGCOR belongs to the Civil Service because it was created directly by PD 1869 on July 11, 1983. Consequently,
controversies concerning the relations of the employee with the management of PAGCOR should come under the
jurisdiction of the Merit System Protection Board and the Civil Service Commission, conformably to the Administrative Code
of 1987.

Section 16(2) of the said Code vest[s] in the Merit System Protection Board the power inter alia to:

a) Hear and decide on appeal administrative cases involving officials and employees of the Civil Service. Its decision shall be
final except those involving dismissal or separation from the service which may be appealed to the Commission.

Hence, this petition where petitioner argues that the CA committed grave and substantial error of judgment
1. IN OUTRIGHTLY DISMISSING THE PETITION FOR CERTIORARI FILED BY PETITIONER AND IN DENYING THE LATTER’S
MOTION FOR RECONSIDERATION[;]

2. IN RULING THAT THE CIVIL SERVICE COMMISSION HAS APPELLATE JURISDICTION OVER THE SUSPENSION OF THE
PETITIONER DESPITE THE FACT THAT THE PENALTY INVOLVED IS NOT MORE THAN THIRTY (30) DAYS[;]

3. IN RESOLVING THE PETITION FOR CERTIORARI FILED BY PETITIONER IN A MANNER WHICH IS UTTERLY CONTRARY TO LAW
AND JURISPRUDENCE[;]

4. IN UNJUSTIFIABLY REFUSING TO RENDER A DECISION AS TO THE PROPRIETY OR VALIDITY OF THE SUSPENSION OF THE
PETITIONER BY THE RESPONDENT[;]

5. IN UNDULY REFUSING TO RENDER A DECISION DECLARING THAT THE ASSAILED DECISIONS/RESOLUTIONS OF THE
RESPONDENT ARE NOT SUPPORTED BY THE EVIDENCE ON RECORD[; AND]

6. IN UNJUSTIFIABLY REFUSING TO RENDER A DECISION DECLARING THAT THE ASSAILED DECISIONS/RESOLUTIONS OF

RESPONDENT WERE ISSUED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION. 22

Petitioner claims that the CA clearly overlooked the applicable laws and jurisprudence that provide that when the penalty
involved in an administrative case is suspension for not more than 30 days, the CSC has no appellate jurisdiction over the
said administrative case. As authority, petitioner invokes our ruling in Geronga v. Hon. Varela 23 which cited Section
47,24 Chapter 1, Subtitle A, Title I, Book V of Executive Order (E.O.) No. 292 otherwise known as The Administrative Code of
1987. Said Section 47 provides that the CSC may entertain appeals only, among others, from a penalty of suspension of
more than 30 days. Petitioner asserts that his case, involving a 30-day suspension penalty, is not appealable to the CSC.
Thus, he submits that his case was properly brought before the CA via a petition for certiorari.25

On the other hand, PAGCOR alleges that petitioner intentionally omitted relevant matters in his statement of facts.
PAGCOR essentially claims that petitioner refused to apologize to Cecilia; that he treated Cecilia’s complaint with
arrogance; and that before taking the aforementioned 10-minute break, petitioner slammed the cash to the counter
window in giving it back to the customer. PAGCOR argues that the instant petition raises questions of fact which are not
reviewable in a petition for review on certiorari. PAGCOR maintains that the CA’s ruling was in accordance with law and
jurisprudence. Moreover, PAGCOR counters that petitioner’s remedy of appeal is limited as Section 37 of the Revised
Uniform Rules on Administrative Cases in the Civil Service provides that a decision rendered by heads of agencies whereby a
penalty of suspension for not more than 30 days is imposed shall be final and executory. PAGCOR opines that such intent of
limiting appeals over such minor offenses is elucidated in the Concurring Opinion of former Chief Justice Reynato S. Puno in
CSC v. Dacoycoy26 and based on the basic premise that appeal is merely a statutory privilege. Lastly, PAGCOR submits that
the 30-day suspension meted on petitioner is justified under its own Code of Discipline. 27 Prescinding from the foregoing,
the sole question for resolution is: Was the CA correct in outrightly dismissing the petition for certiorari filed before it on
the ground of non-exhaustion of administrative remedies?

We resolve the question in the negative.

Our ruling in Public Hearing Committee of the Laguna Lake Development Authority v. SM Prime Holdings, Inc. 28on the
doctrine of exhaustion of administrative remedies is instructive, to wit:

Under the doctrine of exhaustion of administrative remedies, before a party is allowed to seek the intervention of the
court, he or she should have availed himself or herself of all the means of administrative processes afforded him or her.
Hence, if resort to a remedy within the administrative machinery can still be made by giving the administrative officer
concerned every opportunity to decide on a matter that comes within his or her jurisdiction, then such remedy should be
exhausted first before the court's judicial power can be sought. The premature invocation of the intervention of the court is
fatal to one’s cause of action. The doctrine of exhaustion of administrative remedies is based on practical and legal reasons.
The availment of administrative remedy entails lesser expenses and provides for a speedier disposition of controversies.
Furthermore, the courts of justice, for reasons of comity and convenience, will shy away from a dispute until the system of
administrative redress has been completed and complied with, so as to give the administrative agency concerned every
opportunity to correct its error and dispose of the case.

However, the doctrine of exhaustion of administrative remedies is not absolute as it admits of the following exceptions:

(1) when there is a violation of due process; (2) when the issue involved is purely a legal question; (3) when the
administrative action is patently illegal amounting to lack or excess of jurisdiction; (4) when there is estoppel on the part of
the administrative agency concerned; (5) when there is irreparable injury; (6) when the respondent is a department
secretary whose acts as an alter ego of the President bears the implied and assumed approval of the latter; (7) when to
require exhaustion of administrative remedies would be unreasonable; (8) when it would amount to a nullification of a
claim; (9) when the subject matter is a private land in land case proceedings; (10) when the rule does not provide a plain,
speedy and adequate remedy, and (11) when there are circumstances indicating the urgency of judicial intervention, and
unreasonable delay would greatly prejudice the complainant; (12) where no administrative review is provided by law; (13)
where the rule of qualified political agency applies and (14) where the issue of non-exhaustion of administrative remedies
has been rendered moot.29

The case before us falls squarely under exception number 12 since the law per se provides no administrative review for
administrative cases whereby an employee like petitioner is covered by Civil Service law, rules and regulations and
penalized with a suspension for not more than 30 days.

Section 37 (a) and (b) of P.D. No. 807, otherwise known as the Civil Service Decree of the Philippines, provides for the
unavailability of any appeal:

Section 37. Disciplinary Jurisdiction.

(a) The Commission shall decide upon appeal all administrative disciplinary cases involving the imposition of a penalty of
suspension for more than thirty days, or fine in an amount exceeding thirty days’ salary, demotion in rank or salary or
transfer, removal or dismissal from Office. A complaint may be filed directly with the Commission by a private citizen
against a government official or employee in which case it may hear and decide the case or it may deputize any department
or agency or official or group of officials to conduct the investigation. The results of the investigation shall be submitted to
the Commission with recommendation as to the penalty to be imposed or other action to be taken.

(b) The heads of departments, agencies and instrumentalities, provinces, cities and municipalities shall have jurisdiction to
investigate and decide matters involving disciplinary action against officers and employees under their jurisdiction. Their
decisions shall be final in case the penalty imposed is suspension for not more than thirty days or fine in an amount not
exceeding thirty days’ salary. In case the decision rendered by a bureau or office head is appealable to the Commission, the
same may be initially appealed to the department and finally to the Commission and pending appeal, the same shall be
executory except when the penalty is removal, in which case the same shall be executory only after confirmation by the
department head. (Emphasis supplied.)

Similar provisions are reiterated in the aforequoted Section 4730 of E.O. No. 292 essentially providing that cases of this sort
are not appealable to the CSC. Correlatively, we are not unaware of the Concurring Opinion of then Chief Justice Puno
in CSC v. Dacoycoy,31 where he opined, to wit:

In truth, the doctrine barring appeal is not categorically sanctioned by the Civil Service Law. For what the law declares as
"final" are decisions of heads of agencies involving suspension for not more than thirty (30) days or fine in an amount not
exceeding thirty (30) days salary. But there is a clear policy reason for declaring these decisions final. These decisions
involve minor offenses. They are numerous for they are the usual offenses committed by government officials and
employees. To allow their multiple level appeal will doubtless overburden the quasijudicial machinery of our administrative
system and defeat the expectation of fast and efficient action from these administrative agencies. Nepotism, however, is
not a petty offense. Its deleterious effect on government cannot be over-emphasized. And it is a stubborn evil. The objective
should be to eliminate nepotic acts, hence, erroneous decisions allowing nepotism cannot be given immunity from review,
especially judicial review. It is thus non sequitur to contend that since some decisions exonerating public officials
from minor offenses can not be appealed, ergo, even a decision acquitting a government official from a major offense like
nepotism cannot also be appealed.

Nevertheless, decisions of administrative agencies which are declared final and unappealable by law are still subject to
judicial review. In Republic of the Phils. v. Francisco,32 we held:

Since the decision of the Ombudsman suspending respondents for one (1) month is final and unappealable, it follows that
the CA had no appellate jurisdiction to review, rectify or reverse the same. The Ombudsman was not estopped from
asserting in this Court that the CA had no appellate jurisdiction to review and reverse the decision of the Ombudsman via
petition for review under Rule 43 of the Rules of Court. This is not to say that decisions of the Ombudsman cannot be
questioned. Decisions of administrative or quasi-administrative agencies which are declared by law final and
unappealable are subject to judicial review if they fail the test of arbitrariness, or upon proof of gross abuse of discretion,
fraud or error of law. When such administrative or quasi-judicial bodies grossly misappreciate evidence of such nature as to
compel a contrary conclusion, the Court will not hesitate to reverse the factual findings. Thus, the decision of the
Ombudsman may be reviewed, modified or reversed via petition for certiorari under Rule 65 of the Rules of Court, on a
finding that it had no jurisdiction over the complaint, or of grave abuse of discretion amounting to excess or lack of
jurisdiction.It bears stressing that the judicial recourse petitioner availed of in this case before the CA is a special civil action
for certiorari ascribing grave abuse of discretion, amounting to lack or excess of jurisdiction on the part of PAGCOR, not an
appeal. Suffice it to state that an appeal and a special civil action such as certiorari under Rule 65 are entirely distinct and
separate from each other. One cannot file petition for certiorari under Rule 65 of the Rules where appeal is available, even
if the ground availed of is grave abuse of discretion. A special civil action for certiorari under Rule 65 lies only when there is
no appeal, or plain, speedy and adequate remedy in the ordinary course of law. Certiorari cannot be allowed when a party
to a case fails to appeal a judgment despite the availability of that remedy, as the same should not be a substitute for the
lost remedy of appeal. The remedies of appeal and certiorari are mutually exclusive and not alternative or successive. 33

In sum, there being no appeal or any plain, speedy, and adequate remedy in the ordinary course of law in view of
petitioner's allegation that P AGCOR has acted without or in excess of jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction, the CA's outright dismissal of the petition for certiorari on the basis of non-
exhaustion of administrative remedies is bereft of any legal standing and should therefore be set aside.

Finally, as a rule, a petition for certiorari under Rule 65 is valid only when the question involved is an error of jurisdiction, or
when there is grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the court or tribunals
exercising quasi-judicial functions. Hence, courts exercising certiorari jurisdiction should refrain from reviewing factual
assessments of the respondent court or agency. Occasionally, however, they are constrained to wade into factual matters
when the evidence on record does not support those factual findings; or when too much is concluded, inferred or deduced
from the bare or incomplete facts appearing on record. 34Considering the circumstances and since this Court is not a trier of
facts, 35 remand of this case to the CA for its judicious resolution is in order.

WHEREFORE, the petition is PARTLY GRANTED. The Resolutions dated September 30, 2009 and November 26, 2009 of the
Court of Appeals in CA-G.R. SP No. 110048 are hereby REVERSED and SET ASIDE. The instant case is REMANDED to the
Court of Appeals for further proceedings.

No pronouncement as to costs.

SO ORDERED.

GENERAL JURISDICTION vis-à-vis SPECIAL OR LIMITED JURISDICTION

Yoshizaki vs. Joy Training Center of Aurora Inc., July 31, 2013

We resolve the petition for review on certiorari1 filed by petitioner Sally Yoshizaki to challenge the February 14, 2006
Decision2 and the October 3, 2006 Resolution3 of the Court of Appeals (CA) in CA-G.R. CV No. 83773.

The Factual Antecedents

Respondent Joy Training Center of Aurora, Inc. (Joy Training) is a non-stock, non-profit religious educational institution. It
was the registered owner of a parcel of land and the building thereon (real properties) located in San Luis Extension, Purok
No. 1, Barangay Buhangin, Baler, Aurora. The parcel of land was designated as Lot No. 125-L and was covered by Transfer
Certificate of Title (TCT) No. T-25334.4cralaw virtualaw library

On November 10, 1998, the spouses Richard and Linda Johnson sold the real properties, a Wrangler jeep, and other
personal properties in favor of the spouses Sally and Yoshio Yoshizaki. On the same date, a Deed of Absolute Sale 5 and a
Deed of Sale of Motor Vehicle6 were executed in favor of the spouses Yoshizaki. The spouses Johnson were members of Joy
Training’s board of trustees at the time of sale. On December 7, 1998, TCT No. T-25334 was cancelled and TCT No. T-
260527 was issued in the name of the spouses Yoshizaki.

On December 8, 1998, Joy Training, represented by its Acting Chairperson Reuben V. Rubio, filed an action for the
Cancellation of Sales and Damages with prayer for the issuance of a Temporary Restraining Order and/or Writ of
Preliminary Injunction against the spouses Yoshizaki and the spouses Johnson before the Regional Trial Court of Baler,
Aurora (RTC).8 On January 4, 1999, Joy Training filed a Motion to Amend Complaint with the attached Amended Complaint.
The amended complaint impleaded Cecilia A. Abordo, officer-in-charge of the Register of Deeds of Baler, Aurora, as
additional defendant. The RTC granted the motion on the same date. 9cralaw virtualaw library

In the complaint, Joy Training alleged that the spouses Johnson sold its properties without the requisite authority from the
board of directors.10 It assailed the validity of a board resolution dated September 1, 199811 which purportedly granted the
spouses Johnson the authority to sell its real properties. It averred that only a minority of the board, composed of the
spouses Johnson and Alexander Abadayan, authorized the sale through the resolution. It highlighted that the Articles of
Incorporation provides that the board of trustees consists of seven members, namely: the spouses Johnson, Reuben,
Carmencita Isip, Dominador Isip, Miraflor Bolante, and Abelardo Aquino.12cralaw virtualaw library

Cecilia and the spouses Johnson were declared in default for their failure to file an Answer within the reglementary
period.13 On the other hand, the spouses Yoshizaki filed their Answer with Compulsory Counterclaims on June 23, 1999.
They claimed that Joy Training authorized the spouses Johnson to sell the parcel of land. They asserted that a majority of
the board of trustees approved the resolution. They maintained that the actual members of the board of trustees consist of
five members, namely: the spouses Johnson, Reuben, Alexander, and Abelardo. Moreover, Connie Dayot, the corporate
secretary, issued a certification dated February 20, 199814 authorizing the spouses Johnson to act on Joy Training’s behalf.
Furthermore, they highlighted that the Wrangler jeep and other personal properties were registered in the name of the
spouses Johnson.15 Lastly, they assailed the RTC’s jurisdiction over the case. They posited that the case is an intra-corporate
dispute cognizable by the Securities and Exchange Commission (SEC).16cralaw virtualaw library

After the presentation of their testimonial evidence, the spouses Yoshizaki formally offered in evidence photocopies of the
resolution and certification, among others.17 Joy Training objected to the formal offer of the photocopied resolution and
certification on the ground that they were not the best evidence of their contents. 18 In an Order19 dated May 18, 2004, the
RTC denied the admission of the offered copies.

The RTC Ruling

The RTC ruled in favor of the spouses Yoshizaki. It found that Joy Training owned the real properties. However, it held that
the sale was valid because Joy Training authorized the spouses Johnson to sell the real properties. It recognized that there
were only five actual members of the board of trustees; consequently, a majority of the board of trustees validly authorized
the sale. It also ruled that the sale of personal properties was valid because they were registered in the spouses Johnson’s
name.20cralaw virtualaw library

Joy Training appealed the RTC decision to the CA.

The CA Ruling

The CA upheld the RTC’s jurisdiction over the case but reversed its ruling with respect to the sale of real properties. It
maintained that the present action is cognizable by the RTC because it involves recovery of ownership from third parties.

It also ruled that the resolution is void because it was not approved by a majority of the board of trustees. It stated that
under Section 25 of the Corporation Code, the basis for determining the composition of the board of trustees is the list
fixed in the articles of incorporation. Furthermore, Section 23 of the Corporation Code provides that the board of trustees
shall hold office for one year and until their successors are elected and qualified. Seven trustees constitute the board since
Joy Training did not hold an election after its incorporation.

The CA did not also give any probative value to the certification. It stated that the certification failed to indicate the date
and the names of the trustees present in the meeting. Moreover, the spouses Yoshizaki did not present the minutes that
would prove that the certification had been issued pursuant to a board resolution. 21 The CA also denied22 the spouses
Yoshizaki’s motion for reconsideration, prompting Sally 23 to file the present petition.

The Petition

Sally avers that the RTC has no jurisdiction over the case. She points out that the complaint was principally for the
nullification of a corporate act. The transfer of the SEC’s original and exclusive jurisdiction to the RTC24 does not have any
retroactive application because jurisdiction is a substantive matter.

She argues that the spouses Johnson were authorized to sell the parcel of land and that she was a buyer in good faith
because she merely relied on TCT No. T-25334. The title states that the spouses Johnson are Joy Training’s representatives.

She also argues that it is a basic principle that a party dealing with a registered land need not go beyond the certificate of
title to determine the condition of the property. In fact, the resolution and the certification are mere reiterations of the
spouses Johnson’s authority in the title to sell the real properties. She further claims that the resolution and the
certification are not even necessary to clothe the spouses Johnson with the authority to sell the disputed properties.
Furthermore, the contract of agency was subsisting at the time of sale because Section 108 of Presidential Decree No. (PD)
1529 requires that the revocation of authority must be approved by a court of competent jurisdiction and no revocation
was reflected in the certificate of title. 25cralaw virtualaw library

The Case for the Respondent

In its Comment26 and Memorandum,27 Joy Training takes the opposite view that the RTC has jurisdiction over the case. It
posits that the action is essentially for recovery of property and is therefore a case cognizable by the RTC. Furthermore,
Sally is estopped from questioning the RTC’s jurisdiction because she seeks to reinstate the RTC ruling in the present case.

Joy Training maintains that it did not authorize the spouses Johnson to sell its real properties. TCT No. T-25334 does not
specifically grant the authority to sell the parcel of land to the spouses Johnson. It further asserts that the resolution and
the certification should not be given any probative value because they were not admitted in evidence by the RTC. It argues
that the resolution is void for failure to comply with the voting requirements under Section 40 of the Corporation Code. It
also posits that the certification is void because it lacks material particulars.

The Issues

The case comes to us with the following issues:cralawlibrary

1) Whether or not the RTC has jurisdiction over the present case; and
Whether or not there was a contract of agency to sell the real properties
2)
between Joy Training and the spouses Johnson.
As a consequence of the second issue, whether or not there was a valid
3) contract of sale of the real properties between Joy Training and the spouses
Yoshizaki.

Our Ruling

We find the petition unmeritorious.

The RTC has jurisdiction over disputes

concerning the application of the
Civil Code

Jurisdiction over the subject matter is the power to hear and determine cases of the general class to which the proceedings
before a court belong.28 It is conferred by law. The allegations in the complaint and the status or relationship of the parties
determine which court has jurisdiction over the nature of an action.29 The same test applies in ascertaining whether a case
involves an intra-corporate controversy.30cralaw virtualaw library

The CA correctly ruled that the RTC has jurisdiction over the present case. Joy Training seeks to nullify the sale of the real
properties on the ground that there was no contract of agency between Joy Training and the spouses Johnson. This was
beyond the ambit of the SEC’s original and exclusive jurisdiction prior to the enactment of Republic Act No. 8799 which only
took effect on August 3, 2000. The determination of the existence of a contract of agency and the validity of a contract of
sale requires the application of the relevant provisions of the Civil Code. It is a well-settled rule that “[d]isputes concerning
the application of the Civil Code are properly cognizable by courts of general jurisdiction.” 31 Indeed, no special skill requiring
the SEC’s technical expertise is necessary for the disposition of this issue and of this case.

The Supreme Court may review questions of

fact in a petition for review on certiorari
when the findings of fact by the lower courts
are conflicting

We are aware that the issues at hand require us to review the pieces of evidence presented by the parties before the lower
courts. As a general rule, a petition for review on certiorari precludes this Court from entertaining factual issues; we are not
duty-bound to analyze again and weigh the evidence introduced in and considered by the lower courts. However, the
present case falls under the recognized exception that a review of the facts is warranted when the findings of the lower
courts are conflicting.32 Accordingly, we will examine the relevant pieces of evidence presented to the lower court.

There is no contract of agency between Joy

Training and the spouses Johnson to sell the
parcel of land with its improvements
Article 1868 of the Civil Code defines a contract of agency as a contract whereby a person “binds himself to render some
service or to do something in representation or on behalf of another, with the consent or authority of the latter.” It may be
express, or implied from the acts of the principal, from his silence or lack of action, or his failure to repudiate the agency,
knowing that another person is acting on his behalf without authority.

As a general rule, a contract of agency may be oral. However, it must be written when the law requires a specific
form.33 Specifically, Article 1874 of the Civil Code provides that the contract of agency must be written for the validity of the
sale of a piece of land or any interest therein. Otherwise, the sale shall be void. A related provision, Article 1878 of the Civil
Code, states that special powers of attorney are necessary to convey real rights over immovable properties.

The special power of attorney mandated by law must be one that expressly mentions a sale or that includes a sale as a
necessary ingredient of the authorized act. We unequivocably declared in Cosmic Lumber Corporation v. Court of
Appeals34 that a special power of attorney must express the powers of the agent in clear and unmistakable language for
the principal to confer the right upon an agent to sell real estate. When there is any reasonable doubt that the language so
used conveys such power, no such construction shall be given the document. The purpose of the law in requiring a special
power of attorney in the disposition of immovable property is to protect the interest of an unsuspecting owner from being
prejudiced by the unwarranted act of another and to caution the buyer to assure himself of the specific authorization of the
putative agent.35cralaw virtualaw library

In the present case, Sally presents three pieces of evidence which allegedly prove that Joy Training specially authorized the
spouses Johnson to sell the real properties: (1) TCT No. T-25334, (2) the resolution, (3) and the certification. We quote the
pertinent portions of these documents for a thorough examination of Sally’s claimuote the pertinent portions of the said
documents.. this Court becuse es. es Training did not e. TCT No. T-25334, entered in the Registry of Deeds on March 5,
1998, states:cralawlibrary

A parcel of land x x x is registered in accordance with the provisions of the Property Registration Decree in the name of JOY
TRAINING CENTER OF AURORA, INC., Rep. by Sps. RICHARD A. JOHNSON and LINDA S. JOHNSON, both of legal age, U.S.
Citizen, and residents of P.O. Box 3246, Shawnee, Ks 66203, U.S.A.36 (emphasis ours)

On the other hand, the fifth paragraph of the certification provides:cralawlibrary

Further, Richard A. and Linda J[.] Johnson were given FULL AUTHORITY for ALL SIGNATORY purposes for the corporation
on ANY and all matters and decisions regarding the property and ministry here. They will follow guidelines set forth
according to their appointment and ministerial and missionary training and in that, they will formulate and come up with
by-laws which will address and serve as governing papers over the center and corporation. They are to issue monthly and
quarterly statements to all members of the corporation.37 (emphasis ours)

The resolution states:cralawlibrary

We, the undersigned Board of Trustees (in majority) have authorized the sale of land and building owned by spouses
Richard A. and Linda J[.] Johnson (as described in the title SN No. 5102156 filed with the Province of Aurora last 5th day of
March, 1998. These proceeds are going to pay outstanding loans against the project and the dissolution of the corporation
shall follow the sale. This is a religious, non-profit corporation and no profits or stocks are issued.38 (emphasis ours)

The above documents do not convince us of the existence of the contract of agency to sell the real properties. TCT No. T-
25334 merely states that Joy Training is represented by the spouses Johnson. The title does not explicitly confer to the
spouses Johnson the authority to sell the parcel of land and the building thereon. Moreover, the phrase “Rep. by Sps.
Richard A. Johnson and LINDA S. JOHNSON”39 only means that the spouses Johnson represented Joy Training in land
registration.
The lower courts should not have relied on the resolution and the certification in resolving the case. The spouses Yoshizaki
did not produce the original documents during trial. They also failed to show that the production of pieces of secondary
evidence falls under the exceptions enumerated in Section 3, Rule 130 of the Rules of Court. 40 Thus, the general rule – that
no evidence shall be admissible other than the original document itself when the subject of inquiry is the contents of a
document – applies.41cralaw virtualaw library

Nonetheless, if only to erase doubts on the issues surrounding this case, we declare that even if we consider the
photocopied resolution and certification, this Court will still arrive at the same conclusion.

The resolution which purportedly grants the spouses Johnson a special power of attorney is negated by the phrase “land
and building owned by spouses Richard A. and Linda J[.] Johnson.”42 Even if we disregard such phrase, the resolution must
be given scant consideration. We adhere to the CA’s position that the basis for determining the board of trustees’
composition is the trustees as fixed in the articles of incorporation and not the actual members of the board. The second
paragraph of Section 2543 of the Corporation Code expressly provides that a majority of the number of trustees as fixed in
the articles of incorporation shall constitute a quorum for the transaction of corporate business.

Moreover, the certification is a mere general power of attorney which comprises all of Joy Training’s business. 44 Article
1877 of the Civil Code clearly states that “[a]n agency couched in general terms comprises only acts of administration, even
if the principal should state that he withholds no power or that the agent may execute such acts as he may consider
appropriate, or even though the agency should authorize a general and unlimited management.”45cralaw virtualaw library

The contract of sale is unenforceable

Necessarily, the absence of a contract of agency renders the contract of sale unenforceable;46 Joy Training effectively did
not enter into a valid contract of sale with the spouses Yoshizaki. Sally cannot also claim that she was a buyer in good faith.
She misapprehended the rule that persons dealing with a registered land have the legal right to rely on the face of the title
and to dispense with the need to inquire further, except when the party concerned has actual knowledge of facts and
circumstances that would impel a reasonably cautious man to make such inquiry.47 This rule applies when the ownership of
a parcel of land is disputed and not when the fact of agency is contested.

At this point, we reiterate the established principle that persons dealing with an agent must ascertain not only the fact of
agency, but also the nature and extent of the agent’s authority. 48 A third person with whom the agent wishes to contract
on behalf of the principal may require the presentation of the power of attorney, or the instructions as regards the
agency.49 The basis for agency is representation and a person dealing with an agent is put upon inquiry and must discover
on his own peril the authority of the agent. 50 Thus, Sally bought the real properties at her own risk; she bears the risk of
injury occasioned by her transaction with the spouses Johnson.

WHEREFORE, premises considered, the assailed Decision dated February 14, 2006 and Resolution dated October 3, 2006 of
the Court of Appeals are hereby AFFIRMED and the petition is hereby DENIED for lack of merit.

SO ORDERED.

Philippine Overseas Telecommunication Corp. vs. Africa, July 3, 2013

An intra-corporate dispute involving a corporation under sequestration of the Presidential Commission on Good
Government (PCGG) falls under the jurisdiction of the Regional Trial Court (RTC), not the Sandiganbayan.

The Cases

These consolidated appeals via petitions for review on certiorari include the following:

(a) G.R. No.184622 - the appeal from the dismissal by the

 Sandiganbayan of the petitioners’ complaint for injunction
docketed as Civil Case No. 0198 on the ground that the
Sandiganbayan had no jurisdiction over the issue due to its being
an intra-corporate dispute;

(b) G.R. No.184712-14 and G.R. No. 186066 - the appeals of the
Locsin Group (in representation of Philippine Overseas
Telecommunications Corporation (POTC), Philippine
Communications Satellite Corporation (PHILCOMSAT), and
Philcomsat Holdings Corporation (PHC) from the consolidated
decision the Court of Appeals (CA) promulgated on September 30,
2008 in C.A.-G.R. SP No. 101225, C.A.-G.R. SP No. 98097 and C.A.-
G.R. SP No. 98399; and

G.R. No. 186590 - the appeal of the Ilusorio Group seeking the
(c) reversal of the decision promulgated by the CA on July 16, 2008 in
C.A.-G.R. SP No. 102437.
Common Antecedents

POTC is a domestic corporation organized for the purpose of, among others, constructing, installing, maintaining, and
operating communications satellite systems, satellite terminal stations and associated equipments and facilities in the
Philippines.1cralaw virtualaw library

PHILCOMSAT is also a domestic corporation. Its purposes include providing telecommunications services through space
relay and repeater stations throughout the Philippines.

PHC is likewise a domestic corporation, previously known as Liberty Mines, Inc., and is engaged in the discovery,
exploitation, development and exploration of oil. In 1997, Liberty Mines, Inc. changed its name to PHC, declassified its
shares, and amended its primary purpose to become a holding company. 2cralaw virtualaw library

The ownership structure of these corporations implies that whoever had control of POTC necessarily held 100% control of
PHILCOMSAT, and in turn whoever controlled PHILCOMSAT wielded 81% majority control of PHC. Records reveal that POTC
has been owned by seven families through

their individual members or their corporations, namely: (a) the Ilusorio Family; (b) the Nieto Family; (c) the Poblador Family;
(d) the Africa Family; (e) the Benedicto Family; (f) the Ponce Enrile Family; and (g) the Elizalde Family.3cralaw virtualaw
library

Atty. Potenciano Ilusorio, the patriarch of the Ilusorio Family, owned shares of stock in POTC. A block consisting of 5,400
POTC shares of stock has become the bone of contention in a prolonged controversy among the parties. Atty. Ilusorio
claimed that he had incurred the ire of Imelda Marcos during the regime of President Marcos, leading to the Marcos
spouses’ grabbing from him the POTC shares of stock through threats and intimidation and without any valuable
consideration, and placing such shares under the names of their alter egos, namely: 3,644 shares in the name of
Independent Realty Corporation (IRC); 1,755 shares in the name of Mid-Pasig Land Development (Mid-Pasig); and one share
in the name of Ferdinand Marcos, Jr.4cralaw virtualaw library

On February 25, 1986, the EDSA People Power Revolution deposed President Marcos from power and forced him and his
family to flee the country. On February 28, 1986, newly-installed President Corazon C. Aquino issued Executive Order No. 1
to create the PCGG whose task was to assist the President in the recovery of all ill-gotten wealth amassed by President
Marcos, his immediate family, relatives, subordinates and close associates, whether located in the Philippines or abroad,
through the takeover or sequestration of all business enterprises and entities owned or controlled by them during
President Marcos’ administration, directly or through nominees, by taking undue advantage of their public office and/or
using their powers, authority, influence, connections or relationships. 5cralaw virtualaw library
Subsequently, Jose Y. Campos, a self-confessed crony of President Marcos, voluntarily surrendered to the PCGG the
properties, assets, and corporations he had held in trust for the deposed President. Among the corporations surrendered
were IRC (which, in the books of POTC, held 3,644 POTC shares) and Mid-Pasig (which, in the books of POTC, owned 1,755
POTC shares). Also turned over was one POTC share in the name of Ferdinand Marcos, Jr.6cralaw virtualaw library

With Campos’ surrender of IRC and Mid-Pasig to the PCGG, the ownership structure of POTC became as follows:

% of
Owner
Shareholdings
Ilusorio, Africa, Poblador,
Benedicto and Ponce Enrile46.39%
Families
PCGG (IRC and Mid-Pasig) 39.92%
Nieto Family 13.12%
Elizalde Family 0.57%
Total 100.00%
With 39.92% of the POTC shareholdings under its control, the PCGG obtained three out of the seven seats in the POTC
Board of Directors. At the time, Manuel Nieto, Jr. was the President of both POTC and PHILCOMSAT. However, Nieto, Jr.
had a falling out with other stockholders. To keep control of the POTC and PHILCOMSAT, Nieto, Jr. aligned with the PCGG
nominees to enable him to wrest four out of seven seats in the POTC Board of Directors and five out of the nine seats in the
PHILCOMSAT Board of Directors. Thus, Nieto, Jr. remained as the President of POTC and PHILCOMSAT. 7cralaw virtualaw
library

On July 22, 1987, the Government, represented by the PCGG, filed in the Sandiganbayan a Complaint for reconveyance,
reversion, accounting, restitution and damages against Jose L. Africa, Manuel H. Nieto, Jr., President Marcos, Imelda R.
Marcos, Ferdinand R. Marcos, Jr., Roberto S. Benedicto, Juan Ponce Enrile and Atty. Potenciano Ilusorio.8The Complaint,
docketed as SB Civil Case No. 009, alleged that the defendants “acted in collaboration with each other as dummies,
nominees and/or agents of defendants Ferdinand E. Marcos, Imelda R. Marcos and Ferdinand R. Marcos, Jr. in several
corporations, such as the Mid-Pasig Land Development Corporation and the Independent Realty Corporation which,
through manipulations by said defendants, appropriated a substantial portion of the shareholdings in Philippine Overseas
Telecommunications Corporation and Philippine Communications Satellite Corporation held by the late Honorio Poblador,
Jr., Jose Valdez and Francisco Reyes, thereby further advancing defendants’ scheme to monopolize the telecommunications
industry;” that through their illegal acts, they acquired ill-gotten wealth; that their acts constituted “breach of public trust
and the law, abuse of rights and power, and unjust enrichment;” and that their ill-gotten wealth, real and personal, “are
deemed to have been acquired (by them) for the benefit of the plaintiff (Republic) and are, therefore, impressed with
constructive trust in favor of (the latter) and the Filipino people.” 9cralaw virtualaw library

The Complaint prayed that all the funds, properties and assets illegally acquired by the defendants, or their equivalent
value, be reconveyed or reverted to the Government; and that the defendants be ordered to render an accounting and to
pay damages.10cralaw virtualaw library

In his Amended Answer with Cross-Claim (against the Marcoses) and Third-Party Complaint against Mid-Pasig and IRC, Atty.
Ilusorio denied having acquired ill-gotten wealth and having unjustly enriched himself by conspiring with any of the
defendants in committing a breach of public trust or abuse of right or of power, stating that “he has never held any public
office nor has he been a government employee;” and that he was never a dummy or agent of the Marcoses. He interposed
the affirmative defense that he owned 5,400 POTC shares of stock, having acquired them through his honest toil, but the
Marcoses had taken the shares from him through threats and intimidation and without valuable consideration and then
placed the shares in the names of their alter egos; and that he thus became “the hapless victim of injustice,” with the right
to recover the shares and their corresponding dividends. 11cralaw virtualaw library

On June 28, 1996, after a decade of litigation, the Republic, IRC and Mid-Pasig, and the PCGG (acting through PCGG
Commissioner Hermilo Rosal) entered into a compromise agreement with Atty. Ilusorio, whereby Atty. Ilusorio recognized
the ownership of the Republic over 4,727 of the POTC shares of stock in the names of IRC and Mid-Pasig, and, in turn, the
Republic acknowledged his ownership of 673 of the POTC shares of stock and undertook to dismiss Civil Case No. 009 as
against him.

The compromise agreement relevantly stated:

WHEREAS, this Compromise Agreement covers the full, comprehensive and final settlement of the claims of the
GOVERNMENT against ILUSORIO in Civil Case No. SB-009, pending before the Third Division of the Sandiganbayan; the
Cross-Claim involving several properties located in Parañaque, Metro Manila; and the Third-Party Complaint filed by
ILUSORIO, in the same case, involving the Five Thousand Four Hundred (5,400) shares of stocks registered in the names of
Mid-Pasig Land Development Corporation (MLDC) and Independent Realty Corporation (IRC), respectively, in the Philippine
Overseas Telecommunications Corporation (POTC);chanr0blesvirtualawlibrary

xxxx
President Ramos approved the compromise agreement, and directed its submission to the Sandiganbayan for approval
through his marginal note dated October 5, 1996.12cralaw virtualaw library

It was not until June 8, 1998, or nearly two years from its execution, however, that the Sandiganbayan approved the
compromise agreement, the resolution for which reads:

WHEREFORE, and as prayed for in the Motion dated June 3, 1998, which is hereby granted.

1. The foregoing Compromise Agreement dated June 28, 1996 executed by and between the plaintiff and defendant
Potenciano T. Ilusorio is hereby approved, the same not being contrary to law, good morals and public policy. The parties
thereto are hereby enjoined to strictly abide by and comply with the terms and conditions of the said Compromise
Agreement.

2. The complaint as against defendant Potenciano T. Ilusorio only in the above-entitled case No. 0009 is hereby dismissed.

3. The Motions for Injunction and Contempt, respectively, filed by defendant Potenciano T. Ilusorio against the
Government/PCGG, its officers and agents, in Civil Case No. 0009 are hereby withdrawn;chanr0blesvirtualawlibrary

4. The Third-Party Complaint and the Cross-Claim of defendant Potenciano T. Ilusorio are hereby dismissed; and

5. The Board of Directors, President and Corporate Secretary of the Philippine Overseas Telecommunications Corporation
are hereby ordered to issue the corresponding stock certificates to, and in the names of Potenciano T. Ilusorio, Mid-Pasig
Land Development Corporation, and Independent Realty Corporation, respectively. 13cralaw virtualaw library
The result was the redistribution of the POTC shareholdings as follows:

% of
Owner
Shareholdings
Ilusorio, Africa, Poblador,
Benedicto and Ponce Enrile51.37%
Families
PCGG (IRC and Mid-Pasig) 34.94%
Nieto Family 13.12%
Elizalde Family 0.57%
Total 100.00%
The Ilusorio Family’s shareholding became 18.12%, while that of the PCGG (through IRC and Mid-Pasig) was reduced to
34.94%. With its reduced shareholdings, the PCGG’s number of seats in the POTC Board settled at only two. The Ilusorio
Family continued its alliance with the Africa, Poblador, Benedicto and Ponce Enrile Families. In effect, the compromise
agreement tilted the control in POTC, PHILCOMSAT and PHC, such that the alliance between the Nieto Family and the
PCGG, theretofore dominant, became the minority.14cralaw virtualaw library
After assuming the Presidency in mid-1998, President Estrada nominated through the PCGG Ronaldo Salonga and Benito
Araneta, the latter a nephew of Nieto, Jr., to the POTC Board of Directors to represent the IRC and Mid-Pasig
shareholdings.15cralaw virtualaw library

As to the PHILCOMSAT Board of Directors, however, President Estrada through the PCGG nominated four nominees,
namely: Salonga, Araneta, Carmelo Africa and Edgardo Villanueva. The nomination of the four ignored the reduction of the
IRC and Mid-Pasig shareholdings in POTC that should have correspondingly reduced the board seats in PHILCOMSAT that
the PCGG was entitled to from four to only three. 16cralaw virtualaw library

On August 16, 1998, Mid-Pasig, represented by Salonga, filed in the Sandiganbayan in Civil Case No. 009 a Motion to Vacate
the order dated June 8, 1998 approving the compromise agreement. On October 2, 1998, IRC, also represented by Salonga,
filed a similar motion. Both motions insisted that the compromise agreement did not bind Mid-Pasig and IRC for not being
parties thereto, although they held substantial interests in the POTC shareholdings subject of the compromise agreement;
and that the compromise agreement was void because its terms were contrary to law, good morals and public policy for
being grossly and manifestly disadvantageous to the Government. 17cralaw virtualaw library

Aside from supporting the position taken by Mid-Pasig and IRC, PCGG added that the compromise agreement was fatally
defective for lack of any PCGG resolution authorizing Commissioner Rosal to enter into the compromise agreement in
behalf of the Government.18cralaw virtualaw library

On his part, Atty. Ilusorio vigorously opposed the motions. 19cralaw virtualaw library

On August 28, 1998, PHILCOMSAT stockholders held an informal gathering at the Manila Golf Club for the apparent purpose
of introducing the new PCGG nominees to the stockholders. During the proceedings, however, Atty. Luis Lokin, Jr.
announced that the gathering was being considered as a Special PHILCOMSAT Stockholders’ Meeting. Those in attendance
then proceeded to elect as Directors and Officers of PHILCOMSAT Nieto, Jr., Lourdes Africa, Honorio Poblador III, Salvador
Hizon, Salonga, Araneta, Carmelo Africa, and Edgardo Villanueva (Nieto Group-PCGG).20cralaw virtualaw library

As a consequence, other PHILCOMSAT stockholders (namely, Ilusorio, Katrina Ponce Enrile, Fidelity Farms, Inc., Great Asia
Enterprises and JAKA Investments Corporation) instituted a Complaint with application for the issuance of temporary
restraining order (TRO) and writ of preliminary injunction (WPI) in the Securities and Exchange Commission (SEC) assailing
the election of the Directors and Officers on several grounds, such as the lack of sufficient notice of the meeting, the lack of
quorum, and the lack of qualifying shares of those who were elected. They maintained that by reason of POTC’s 100%
beneficial ownership of PHILCOMSAT, there should have been a notice to POTC, which, upon a proper board meeting,
should have appointed proxies to attend the PHILCOMSAT Stockholders’ Meeting. The case was docketed as SEC Case No.
09-98-6086.21cralaw virtualaw library

The SEC issued a TRO, and, later on, a WPI enjoining the Nieto Group-PCGG from acting as Directors and Officers of
PHILCOMSAT and from representing themselves as such. 22cralaw virtualaw library

Salonga, Araneta, Africa and Villanueva commenced in the CA a special civil action for certiorari to nullify the WPI issued by
the SEC (C.A.-G.R. SP NO. 49205). On October 15, 1998, however, the CA dismissed the petition for certiorari because of the
petitioners’ failure to furnish a copy of the petition to the SEC. The dismissal became final and executory. 23cralaw virtualaw
library

Still, Salonga, Araneta, Africa and Villanueva brought in the CA another petition assailing the WPI issued by the SEC (C.A.-
G.R. SP No. 49328). The CA also dismissed their petition on October 26, 1999. 24cralaw virtualaw library

For their part, Nieto, Jr. and Lourdes Africa likewise went to the CA to assail the WPI issued by the SEC (C.A.-G.R. SP No.
49770), but on April 19, 2001, the CA dismissed the petition. Nieto, Jr. initially intended to appeal the dismissal, but the
Court denied his motion for extension of time to file petition for review on certiorari.25cralaw virtualaw library
Following the enactment of Republic Act No. 8799 (Securities Regulation Code),26 SEC Case No. 09-98-6086 was transferred
to the RTC in Makati City, which re-docketed it as Civil Case No. 01-840 and raffled it to Branch 138.27cralaw virtualaw
library

Meanwhile, on January 18, 1999, POTC held a Special Stockholders’ Meeting, at which the following were elected as
Directors of POTC, namely: Roberto S. Benedicto, Atty. Victor Africa, Sylvia Ilusorio, Honorio Poblador III, Cristina Agcaoili,
Katrina Ponce Enrile, and Nieto, Jr. The elected Directors, except Nieto, Jr., eventually formed the Africa-Ilusorio Group.
Thereafter, the Board of Directors held an organizational meeting during which they elected the following as the Officers of
POTC, namely: Roberto S. Benedicto (Chairman); Atty. Victor Africa (Vice-Chairman); Sylvia Ilusorio (President); Katrina
Ponce Enrile (Vice President); Rafael Poblador (Treasurer); Kitchie Benedicto (Assistant Treasurer); and Atty. Victoria de los
Reyes (Corporate Secretary).28cralaw virtualaw library

On December 20, 1999, the Sandiganbayan promulgated a resolution in SB Civil Case No. 009 denying IRC and Mid-Pasig’s
motions to vacate the order approving the compromise agreement, viz:

WHEREFORE, premises considered, third-party defendant Mid-Pasig’s Motion to Vacate Resolution Approving Compromise
Agreement dated August 16, 1998 and third party defendant Independent Realty Corporation's Manifestation and Motion
dated October 2, 1998 and the redundant and inappropriate concurrence of the PCGG and the OSG are hereby denied for
lack of merit.

The Court also declares all POTC shares in the name of Mid-Pasig and IRC as null and void. Accordingly, out of the 5,400
POTC shares, six hundred seventy three (673) is hereby directed to be issued in the name of Potenciano Ilusorio and four
thousand seven hundred twenty seven (4,727) in the name of the Republic of the Philippines. The Board of Directors,
President and Corporate Secretary of the POTC are hereby ordered to comply with this requirement within ten (10) days
from receipt of this Resolution.29cralaw virtualaw library
In compliance with the resolution, POTC Corporate Secretary Victoria de los Reyes effected the cancellation of the shares
registered in the names of IRC and Mid-Pasig and issued Certificate of Stocks No. 131 covering the 4,727 POTC shares in the
name of the Republic. Thereafter, Certificate of Stocks No. 131 was transmitted to then Chief Presidential Legal Counsel and
PCGG Chairman Magdangal Elma, who acknowledged receipt. Through its resolution dated January 12, 2000, the
Sandiganbayan noted the POTC Corporate Secretary’s compliance. 30cralaw virtualaw library

As earlier mentioned, the implementation of the Sandiganbayan’s resolution dated December 20, 1999 resulted in the re-
distribution of the shareholdings in POTC in the manner earlier shown.

On March 16, 2000, the PCGG filed in this Court its petition assailing the resolution of the Sandiganbayan dated December
20, 1999 (G.R. No. 141796 entitled Republic of the Philippines, represented by the Presidential Commission on Good
Government v. Sandiganbayan and Potenciano T. Ilusorio, substituted by Ma. Erlinda Ilusorio Bildner).

IRC and Mid-Pasig also filed in this Court their own petition to assail the resolution dated December 20, 1999 (G.R. No.
141804 entitled Independent Realty Corporation and Mid-Pasig Land Development Corporation v. Sandiganbayan and
Potenciano T. Ilusorio, substituted by Ma. Erlinda Ilusorio Bildner).

On March 29, 2000, this Court issued a TRO to enjoin the Sandiganbayan from executing its assailed resolution. 31cralaw
virtualaw library

On September 6, 2000, President Estrada nominated another set to the PHILCOMSAT Board of Directors, namely: Carmelo
Africa, Federico Agcaoili, Pacifico Marcelo and Edgardo Villanueva. Thereby, Africa and Villanueva were retained as
PHILCOMSAT Directors, while Agcaoili and Marcelo replaced Araneta and Salonga. 32cralaw virtualaw library

Subsequently, POTC, through the Africa-Bildner Group, decided to hold a Special Stockholders’ Meeting on September 22,
2000. POTC Corporate Secretary de los Reyes issued a Notice of Meeting. Attempting to stop the Stockholders’ Meeting,
Nieto, Jr., Araneta and Salonga filed in this Court in G.R. No. 141796 and G.R. No.141804 a Motion for Leave to Intervene
with urgent manifestation for contempt of court, praying, among others, that POTC Corporate Secretary de los Reyes be
cited in contempt and/or disbarred for issuing the Notice of Meeting.33cralaw virtualaw library

The Special Stockholders’ Meeting on September 22, 2000 was attended by stockholders representing 81.32% of the
outstanding capital stock of POTC (including PCGG). During the meeting, a new set of POTC Board of Directors were elected,
namely: Nieto, Jr., Katrina Ponce Enrile, Victor V. Africa, Sylvia K. Ilusorio, Honorio A. Poblador III, Carmelo Africa and PCGG
Commissioner Jorge Sarmiento (the latter two being nominated by PCGG). 34cralaw virtualaw library

POTC then convened a Special Stockholders’ Meeting of PHILCOMSAT, at which the following were elected as Directors:
Nieto, Jr., Francisca Benedicto, Katrina Ponce Enrile, Sylvia Ilusorio, Honorio Poblador III, and government representatives
Africa, Marcelo, Villanueva and Agcaoili (the latter four being nominated by PCGG). 35cralaw virtualaw library

In line with existing corporate policy requiring the elected Directors to accept their election before assuming their positions,
all the elected Directors (including Nieto, Jr.) were requested to sign acceptance letters to be submitted to POTC Corporate
Secretary de los Reyes. A few days later, however, Nieto, Jr. refused to accept and instead opted to assail the validity of the
September 22, 2000 POTC Special Stockholders’ Meeting.36cralaw virtualaw library

By virtue of the September 22, 2000 elections, the Africa-Bildner Group, together with the PCGG nominees, took control of
the management and operations of POTC and PHILCOMSAT. 37cralaw virtualaw library

In March 2002, President Gloria Macapagal-Arroyo named Enrique L. Locsin and Manuel D. Andal as new PCGG nominees to
sit in the POTC and PHILCOMSAT Boards of Directors. Julio Jalandoni was named as the third new PCGG nominee to the
PHILCOMSAT Board of Directors.38cralaw virtualaw library

On April 29, 2002, POTC, through the Africa-Ilusorio Group, decided to hold a stockholders’ meeting. Notices for the
meeting were dispatched to all stockholders of record, including the Republic. However, the meeting was adjourned for
failure to obtain a quorum because of the absence of several stockholders, including the proxy for the Republic. 39cralaw
virtualaw library

On December 3, 2003, Atty. Jose Ma. Ozamiz, a stockholder of PHC, sent a letter-complaint informing the SEC that PHC had
not conducted its annual stockholders’ meetings since 2001. His letter-complaint was docketed as SEC Case No. 12-03-
03.40cralaw virtualaw library

On December 29, 2003, the SEC issued the following Order in SEC Case No. 12-03-03, to wit:

PREMISES CONSIDERED, the Commission in the exercise of its regulatory authority over corporations and associations
registered with it hereby issues the following directives:cralawlibrary

1. The board of directors, responsible officers of Philcomsat Holdings, Inc (PHI) (sic) shall organize a COMELEC composed of
three members within ten (10) days from date of actual receipt of this Order. One member to be nominated by the group of
Atty. Jose Ma. Ozamiz, the second member to be nominated by the group of either Mr. Manuel H. Nieto or Mr. Carmelo P.
Africa, Jr. and the third member a neutral party, to be jointly nominated by both groups. Failure on the part of the
contending parties to designate their common nominee, the SEC shall be constrained to designate the neutral party.

x x x x.41cralaw virtualaw library

By letter dated January 8, 2004, Philip Brodett and Locsin communicated to the SEC that:

1. PHC and its directors and officers are not averse to the holding of meetings of its stockholders annually. PHC's inability to
hold its annual stockholders’ meeting in the past years can be attributed to the following: previous attempts of the group of
Mesdames Cristina Ilusorio and Sylvia Ilusorio and Mr. Carmelo Africa (for brevity the “Ilusorio Group”) to control PHC
without legal basis; delay in the completion of PHC's audited financial statements for the years 2001, 2002 and 2003 was
caused by the Ilusorio Group and the pending dispute as to who between the Ilusorio Group, on one hand, and the group of
Ambassador Manuel Nieto, Jr. Philippine Government, on the other, properly constitutes the governing board of directors
and officers of the parent companies of PHC's, namely the Philcomsat and POTC;chanr0blesvirtualawlibrary
Considering the aforesaid pending dispute as to who really controls the mother companies of PHC, it would be advisable
and practicable that the annual meetings of the stockholders and the election of the directors and officers of Philcomsat
and POTC should precede those of PHC. In view thereof, and for practical reasons and good order's sake, it was suggested
that perhaps the Commission should direct the holding of the annual stockholders' meetings and election of directors and
officers of both Philcomsat and POTC at a date or dates prior to those of PHC.

x x x x

4. x x x. Considering the foregoing, it is believed and humbly submitted that the 'COMELEC' directed to be organized under
the Order is unnecessary considering that its would-be functions (we note that the Order did not state what are the
functions of said COMELEC) can and will be performed by the Nomination Committee and the special committee of
inspectors.

Considering the foregoing, it is respectfully requested and prayed that the said Order dated 5 January 2004 of the
Commission be reconsidered and set aside. To enable PHC to hold an orderly and controversy-free meeting of its
stockholders and election of directors this year, it is likewise requested that the Commission first direct and cause PHC's
parent companies, namely Philcomsat and POTC, to hold their respective stockholders' meeting and election and directors
and officers prior to those of PHC.42cralaw virtualaw library
On May 6, 2004, the SEC ruled as follows:cralawlibrary

Based on the foregoing premises, the Commission, in the exercise of its regulatory authority as well as supervision
corporations and pursuant to its power under Section 5 (k) of the Securities Regulation Code (SRC) which states: “Compel
the officers of any registered corporation or association to call meetings of stockholders or members thereof under its
supervision,” hereby orders the following:

1. The board of directors, responsible officers of Philcomsat Holdings, Corporation (“PHC”) shall immediately convene the
COMELEC to consider the proposed election and annual meeting of subject corporation.

2. The board of directors and other responsible PHC officers are also enjoined to prepare proper notices of the intended
annual meeting and all the necessary documents required by Section 20 of the SRC rules within the stated period provided
thereunder in time for the scheduled annual meeting set by the Commission.

3. For the purpose of the meeting, Attys. Myla Gloria C. Amboy and Nicanor Patricio are hereby designated as the SEC
representatives to observe the PHC meeting.

4. The PHC and all its responsible directors or officers are hereby directed to hold a meeting for the purpose of conducting
the election of the board of directors of the PHC on 28 May 2004 at 10:00 a.m. To be held at the principal office of the
corporation.

5. Failure on the part of the authorized person to set/call the meeting within five (5) days from date hereof, Atty. Ozamiz
shall be authorized to call the meeting and to provide other stockholders with notice required under the Corporation Code,
the Securities Regulation Code and By-laws of the corporation. In such event, Atty. Ozamiz shall preside in said meeting
until at least a majority of the PHC stockholders present shall have chosen one of their members as the presiding officer in
the meeting.

6. The board of directors and authorized officers of PHC are hereby directed for the last time to submit the calendar of
activities for the forthcoming meeting within five (5) days from date of this Order. The petitioning stockholder, Atty.
Ozamiz, is likewise directed to submit his proposed calendar of activities which shall be used in case of failure on the part of
PHC to submit the aforesaid calendar.43cralaw virtualaw library
On June 7, 2004, the SEC received PCGG’s comment through Commissioner Victoria A. Avena, to wit:
1. For the sake of accuracy, we respectfully draw attention to the fact that Messrs. Enrique L. Locsin and Manuel Andal are
nominee-directors representing the Republic of the Philippines, through the PCGG, in the board of directors of the
Philippine Overseas Telecommunications Corporation (“POTC”) and the board of directors of Philippine Communications
Satellite Corporation (“Philcomsat”), but not of Philcomsat Holdings Corporation (“PHC”). The third government nominee-
director in Philcomsat is Mr. Julio Jalandoni. In February of 2004, Mr. Guy de Leon was nominated by President Gloria
Macapagal-Arroyo as a third director for POTC in the event elections.

2. Based on the records of PCGG, it is true and correct that POTC has not held an uncontested annual meeting since its last
uncontested stockholders' meeting in the year 1999.

3. Based on records of PCGG, it is true and correct that Philcomsat has not had an uncontested annual meeting since its
special stockholders' meeting in the year 2000.

4. The Republic owns forty percent (40%) of the outstanding capital stock of POTC; Philcomsat is a wholly-owned subsidiary
of POTC; and Philcomsat owns approximately eighty-five percent (85%) of the outstanding capital stock of PHC.

5. Because of the non-holding of elections for the board of directors of POTC, Philcomsat and PHC, the incumbent
respective boards thereof have been holding office as “hold-over” directors, and opposing stockholders have contested
their legitimacy.

6. The incumbent board of directors having actual corporate control of POTC and Philcomsat have invited government
nominee-directors Messrs. Locsin and Andal, and Mr. Julio Jalandoni in respect of Philcomsat, to respectively occupy seats
in said boards rendered vacant by resignations.

7. However, Messrs. Locsin, Andal and Jalandoni have not physically and actually assumed said positions, because of their
request for assumption thereof on the basis of election for the board of directors through stockholders' meetings for the
purpose.

8. In view of the ownership structure of POTC, Philcomsat and PHC and the rump boards that have resulted over the years,
the more judicious mode towards a truly fair election of directors based on an accurate identification of stockholder
representation in PHC (including in respect of government shares) would be to determine issues of representation in
Philcomsat and POTC.

9. Accordingly, annual stockholders' meetings and election of directors of the board must first be held for POTC, and then
for Philcomsat, then for PHC.44cralaw virtualaw library
On July 8, 2004, the SEC directed thuswise:cralawlibrary

On the bases of the mandatory provision of Sec. 50 of the Corporation Code on calling of annual meeting and the PCGG's
comment/manifestation which should be given weight, the following are hereby directed to:

1. POTC and Philcomsat, their respective board of directors or their duly authorized representatives are hereby directed to
constitute, within ten (10) days from the date of actual receipt hereof, their COMELEC to be composed of the PCGG
nominee/director to act as the neutral party, a representative from the Africa Group and one representative from Nieto
Group to perform any and all acts necessary for the determination of the legitimate stockholders of the corporation
qualified to vote or be represented in the corporate meetings and ensure a clean, orderly, and credible election of POTC
and Philcomsat.

2. POTC is likewise directed to conduct its annual stockholders' meeting not later than 5 August 2004 while Philcomsat shall
hold its annual stockholders' meeting on or before 12 August 2004. Thereafter, PHC shall call its annual stockholders'
meeting not later than August 31, 2004.

3. PHC, on the other hand, its board of directors or duly authorized representative are ordered to submit a revised calendar
of activities for the forthcoming 31 August 2004 annual stockholders' meeting within five (5) days from actual receipt of this
Order. The said date for the Annual Stockholders' Meeting shall not be postponed unless with prior Order of the
Commission. A nomination's (sic) Committee (NOMELEC) shall be constituted pursuant to the corporation's Manual on
Corporate Governance submitted to this Commission. This Committee shall be composed of three (3) voting members and
one (1) non-voting member in the person of the HR Director/Manager pursuant to x x x section 2.2.2.1 of the said Manual.
One representative each from the Africa Group and the Nieto Group and a nominee/representative of the PCGG (to act as
an independent member) shall comprise three (3) voting members. The committee shall perform the functions outlined in
Sections 2.2.2.1.1, 2.2.2.1.2, 2.2.2.1.3 and 2.2.2.1.4 of the Manual in connection with the forthcoming election. Failure to
submit the names of the representative of each group within ten (10) days from receipt of this Order shall authorize the
Commission to appoint persons to represent each group. Failure or refusal on the part of the corporation to hold the
stockholders' meeting on the scheduled date shall authorize the petitioning shareholder to call and preside in the said
meeting pursuant to Section 50 of the Corporation Code. All previous orders inconsistent herewith are hereby revoked.

4. Let the Corporate Finance Department CFD ) of this Commission be furnished with a copy of this Order for its
appropriate action on the matter.

5. To ensure protection of the interest of all outstanding capital stocks, including minority shareholders, Attys. Nicanor P.
Patricio Jr. and Myla Gloria A. Amboy are hereby designated as SEC representatives to attend and supervise the said Annual
Stockholders' Meeting.45cralaw virtualaw library
On July 26, 2004, the SEC clarified its immediately preceding order, as follows:

Pending consideration by the Commission is the letter dated 22 July 2004 of Mr. Enrique Locsin, Nominees/Director of the
Presidential Commission on Good Government To POTC and Philcomsat, seeking to enjoin the holding of any and all
meetings of POTC, Philcomsat and/or PHC, contrary to the 8 July 2004 SEC Order and requesting the correction of the date
of the Order cited in the 22 July 2004 Stay Order.

In order to clarify the Order issued by the Commission on July 8, 2004 and 22 July 2004, the following explications are
hereby made:cralawlibrary

First. The SEC Order of 8 July 2004 which states in part:

POTC is likewise directed to conduct its annual stockholders' meeting not later than 5 August 2004 while Philcomsat shall
hold its annual stockholders' meeting on or before 12 August 2004. Thereafter, PHC shall call its annual stockholders'
meeting not later than August 31, 2004, should be interpreted to mean that the stockholders' meeting of POTC, Philcomsat
and PHC should be held successively, in the order mentioned, that is, POTC first, then Philcomsat, and lastly, PHC. This was
the intention of the Commission in issuing the said Order (July 8, 2004).
To further clarify and ensure that the meetings shall be conducted on specific dates, the Order of July 8, 2004 is hereby
modified and the dates of the meetings are hereby scheduled as follows:
1. For POTC - July 28, 2004

2. For Philcomsat - August 12, 2004

3. For PHC - August 31, 2004

Second. One of the relevant orders was inadvertently referred to in the Stay Order of 22 July 2004 as “June 8, 2004,” which
should have been actually written as “July 8, 2004.” Hence, the same should be properly corrected.

Accordingly, POTC, Philcomsat and Philcomsat Holdings Corporation (PHC) are hereby reminded to strictly adhere to the
schedule dates of meetings of the said corporations set forth in this Order. POTC, Philcomsat and PHC are further reminded
to also comply with the manner of the conduct of their respective meetings as provided in the Order of the Commission
dated July 8, 2004.

As requested, let the 22 July 2004 Stay Order, particularly paragraphs 1, 2, and 3 thereof, be corrected to reflect the correct
date of the Order cited therein as “July 8, 2004” not “June 8, 2004.”46cralaw virtualaw library
On July 28, 2004, the Africa-Bildner Group held successive stockholders’ meetings for POTC and PHILCOMSAT. Elected as
Directors during the POTC stockholders’ meeting were Katrina Ponce Enrile, Victor Africa, Erlinda Bildner and Honorio
Poblador III, all from the Africa-

Bilder Group. Although absent from the meeting, Nieto, Jr., Locsin and Andal of the Nieto–PCGG Group were also elected as
Directors. Resultantly, the groups were represented on a 4:3 ratio. Victor Africa was designated as the POTC proxy to the
PHILCOMSAT stockholders’ meeting. Locsin and Andal were also elected as PHILCOMSAT Directors. However, Nieto, Jr.,
Locsin and Andal did not accept their election as POTC and PHILCOMSAT Directors. 47cralaw virtualaw library

On August 5, 2004, the Nieto-PCGG Group conducted the annual stockholders’ meeting for POTC at the Manila Golf Club.
Elected were Nieto, Jr. as President and Guy de Leon, a government nominee to POTC, as Chairman. At the same meeting,
the Nieto-PCGG Group, through its elected Board of Directors, issued a proxy in favor of Nieto, Jr. and/or Locsin authorizing
them to represent POTC and vote the POTC shares in the PHILCOMSAT stockholders’ meeting scheduled on August 9,
2004.48cralaw virtualaw library

On August 9, 2004, the Nieto-PCGG Group held the stockholders’ meeting for PHILCOMSAT at the Manila Golf Club.
Immediately after the stockholders’ meeting, an organizational meeting was held, and Nieto, Jr. and Locsin were
respectively elected as Chairman and President of PHILCOMSAT. At the same meeting, PHILCOMSAT (Nieto-PCGG Group)
issued a proxy in favor of Nieto, Jr. and/or Locsin authorizing them to represent PHILCOMSAT and vote the PHILCOMSAT
shares in the stockholders’ meeting of PHC scheduled on August 31, 2004. 49cralaw virtualaw library

On August 11, 2004, POTC (Africa-Bildner Group), Victor Africa, Honorio Poblador III and Katrina Ponce Enrile filed a
Complaint for injunction with prayer for TRO and WPI in the RTC in Makati City (Branch 133) against Nieto, Jr., Luis Lokin,
Jr., and Alma Kristina O. Alobba seeking to enjoin the latter from acting as Directors and Officers of POTC (Civil Case No. 04-
935).

On August 27, 2004, the RTC (Branch 133) dismissed Civil Case No. 04-935 for lack of jurisdiction over the subject matter,
explaining its action thusly:

x x x x

After a perusal of the complaint and of the memoranda filed, with particular attention on the authorities cited, the Court is
of the opinion that it has no jurisdiction over the case but the Sandiganbayan. 50cralaw virtualaw library

xxxx
Thereafter, the Africa-Bildner Group filed a motion for reconsideration.

Earlier, on August 18, 2004, PHC (Nieto-PCGG Group) submitted to the SEC a final list of candidates for Independent
Directors of PHC for the 2004-2005 term, to wit:

Please be informed that in connection with the annual stockholders' meeting of PHILCOMSAT HOLDINGS CORPORATION
(PHC) to be held on August 31, 2004, and in compliance with the Order dated 8 July 2004 of the Securities and Exchange
Commission in SEC Case No. 12-03-03 entitled “In the matter of Philcomsat Holdings Corporation, For: Calling of Meeting,”
the Board of Directors of PHC, at its meeting today constituted the Nomination Committee with the following persons as its
members:cralawlibrary

Voting Members:cralawlibrary

1. Luis K. Lokin, Jr. (representative of the Nieto Group)

2. Enrique L. Locsin (representative of the PCGG)

3. Vacant (to be designated by the Securities and Exchange Commission in default of the designation of representative by
the Africa group)
Non-voting member:cralawlibrary

1. Philip G. Brodett

The said Nomination Committee which shall act upon the affirmative vote of at least two (2) of its voting members, shall
have the following powers, duties and functions:cralawlibrary

(1) To pre-screen and shortlist all candidates nominated to become members of the board of directors in accordance with
the qualifications and disqualifications and the procedures prescribed in the Corporation's Manual on Corporate
Governance and the Securities Regulation Code (SRC) and its Implementing Rules and Regulations (SRC
Rules);chanr0blesvirtualawlibrary

(2) To submit to the Securities and Exchange Commission and the Philippine Stock Exchange the Final List of candidates for
Independent Directors as required under the SEC Rules;chanr0blesvirtualawlibrary

(3) To act as the committee of inspectors with powers to pass upon the validity of proxies, to canvass and tally the votes for
the election of directors and to certify the winning directors based on the votes garnered;chanr0blesvirtualawlibrary

(4) To do such acts or things as may from time to time be directed or delegated by the Board. 51cralaw virtualaw library
On August 20, 2004, the SEC issued an order, pertinently stating:

On separate dates, the group of Atty. Victor Africa (“Africa Group’) and the group of Ambassador Nieto (“Nieto group”)
conducted their respective annual stockholders’ meetings. The Africa group held successive meetings for POTC and
Philcomsat on July 28, 2004, while the Nieto group held similar meetings for POTC and Philcomsat on August 5 and August
9, respectively. On all these meetings, where the SEC representative was present (except the Philcomsat meeting of the
Africa group), the Commission noted the following observations:cralawlibrary

x x x x

In light of the foregoing, the Commission hereby upholds the validity of the stockholders' meetings conducted by the Nieto
Group in view of the clear compliance by the said group with the condition set forth by the Commission in its Orders of July
8 and 26, 2004.

Meanwhile, the PHC meeting shall proceed as scheduled on August 31, 2004. The Officers and Directors of PHC are hereby
reminded to strictly conform to the conditions stated in the July 8 and 26 Orders.

The President and the Corporate Secretary of PHC and its Stock and Transfer Agent are hereby ordered to submit to the
Commission the certified list of stockholders and the stock and transfer book of PHC on or before August 25, 2004.

Due to the failure of the Africa group to nominate their representative to the PHC NOMELEC, Atty. Victoria De Los Reyes is
hereby designated as the representative of the Africa group in the forthcoming August 31, 2004 PHC meeting.

The Corporation Finance Department is hereby directed to monitor PHC's compliance with the laws, rules and regulations
relative to the calling of the stockholders' meeting and to make the necessary action to ensure such compliance.

The Orders of 8 July 2004 and 26 July 2004 insofar as not inconsistent with this Order shall remain in full force and
effect.52cralaw virtualaw library
On August 23, 2004, the Africa Group commenced Civil Case No. 01-555 in the RTC in Makati City (Branch 61), praying for
the issuance of a TRO or WPI to “enjoin Philcomsat Holdings Corporation from recognizing defendants Nieto[, Jr.] and Lokin
as the representatives of PHILCOMSAT,” and to prevent Nieto, Jr. and Lokin from acting as Directors and Officers for and on
behalf of POTC and PHILCOMSAT.

On August 30, 2004, the RTC denied the motion for the issuance of TRO and WPI. 53cralaw virtualaw library
On August 26, 2004, the Nomination Committee (NOMELEC) of PHC (Nieto Group) met to conduct the validation of the
proxies and the evaluation and prequalification of the nominees for election as Independent Directors. After a majority vote
of its voting members, the NOMELEC recognized and validated the proxy submitted by Locsin.

On August 27, 2004, the Nieto Group submitted to the SEC the final list of candidates for Independent Directors of PHC for
the term 2004-2005. The list contained the names of Benito Araneta and Roberto Abad, both nominated by Brodett. The list
was submitted by NOMELEC members Lokin, Jr., Locsin and Brodett.

On the same date, POTC and PHILCOMSAT (Africa Group), through Atty. Victor Africa, filed in the CA a petition
for certiorari and prohibition (with prayer for TRO and WPI) seeking to annul and set aside the orders issued on July 8, 2004,
July 26, 2004 and August 20, 2004 issued in SEC Case No. 12-03-03 (C.A.-G.R. SP No. 85959).54cralaw virtualaw library

On August 31, 2004, the CA promulgated in C.A.-G.R. SP No. 85959 a resolution granting a TRO, pertinently stating:

In the meantime, since the petition questions the jurisdiction of public respondents in issuing the assailed Orders dated July
8, 2004, July 26, 2004 and August 20, 2004, and the implementation of the same will render moot and academic any and all
orders, resolutions and decisions of this Court, this Court hereby TEMPORARILY RESTRAINS respondents, their officers,
agents and other persons acting for and in their behalf, from enforcing, implementing and executing the aforesaid assailed
Orders within a period of sixty (60) days or until sooner revoked.55cralaw virtualaw library
The CA later granted the application for WPI, and enjoined the respondents therein, their agents, officers, representatives
and other persons acting for and in their behalf from executing, enforcing and implementing the assailed SEC orders issued
on July 8, 2004, July 26, 2004 and August 20, 2004 pending final resolution of the petition, or unless the WPI was sooner
lifted.56cralaw virtualaw library

Also on August 31, 2004, the PHC (Nieto Group) conducted its annual stockholders’ meeting. The Officers elected were
Locsin as Director and Acting Chairman; Oliverio Laperal as Director and Vice Chairman; Nieto, Jr. as Director, President and
Chief Executive Officer; Brodett as Director and Vice President; Manuel D. Andal as Director, Treasurer and Chief Financial
Officer; Roberto San Jose as Director and Corporate Secretary; Julio Jalandoni, Lokin, Jr., Prudencio Somera, Roberto Abad,
and Benito Araneta as Directors.57cralaw virtualaw library

On September 10, 2004, PHILCOMSAT (Africa Group), represented by Victor Africa, filed in the RTC in Makati City (Branch
138) a complaint against PHC, Lokin, Jr., Locsin and Brodett (Civil Case No. 04-1049) seeking the following reliefs, to wit:

1. The proceedings of the Nomination Committee be invalidated for having been in violation of the Manual of Corporate
Governance of defendant PHC;chanr0blesvirtualawlibrary

2. The act of the Nomination Committee in validating the proxy issued in favor of Manuel Nieto and/or defendant Enrique
Locsin and in invalidating the proxy issued in favor of Victor Africa be annulled;chanr0blesvirtualawlibrary

3. The elections held and the proclamation of winners during the Annual Stockholders' Meeting of defendant PHC held on
31 August 2004 be annulled;chanr0blesvirtualawlibrary

4. Defendant PHC be directed to recognize Atty. Victor Africa as the proxy of plaintiff and that he be allowed to vote the
shares standing in the name of plaintiff at subsequent elections for the members of the board of directors of defendant
PHC.58cralaw virtualaw library
On October 21, 2004, PHILCOMSAT (Nieto Group) and Lokin, Jr. filed their Answer with Grounds for Dismissal and
Compulsory Counterclaims, averring therein, among others, as follows:

37. The instant complaint must be DISMISSED for lack of capacity and/or authority of the alleged representative, Victor V.
Africa, to file the same and sue the defendants on behalf of Philcomsat.

38. While the Complaint names Philcomsat as the plaintiff, allegedly represented by Victor Africa, at no time did
[P]hilcomsat, through its duly constituted Board of Directors, authorize him to file the same.

39. Victor Africa bases his authority upon the Secretary Certificate, alleging that the Philcomsat Board of Directors, during
its meeting held on 28 July 2004, authorized him to file legal actions on behalf of the corporation.

40. It is respectfully averred, however, that Philcomsat, through its duly constituted Board of Directors DID NOT HOLD any
meeting on 28 July 2004, and DID NOT AUTHORIZE Africa to file any action or to do any act or deed on its behalf. The
Secretary's Certificate he represented is not signed by Atty. Luis K. Lokin, Jr., the duly-elected Corporate Secretary of
Philcomsat.

x x x x

50. There was no Philcomsat Board meeting held or authorized to be held on 28 July 2004. Neither was there any authority
vested upon Victor Africa to file this nuisance suit, which is only aimed at needlessly harassing defendants and the other
lawful stockholders of Philcomsat and PHC and the public at large.

51. For lack of any factual and legal basis of the alleged authority of the person instituting and verifying the instant
complaint, it must be declared as a NUISANCE SUIT and immediately DISMISSED by the Honorable Court, pursuant to
Section 1 (b) of the Interim Rules.

52. Furthermore, not only does Africa lack any authority to file the instant action, the complaint itself is devoid of any
meritorious legal basis.

53. The relevant facts are as follows: In 2003, a stockholder of PHC filed a letter-complaint (later docketed as SEC Case No.
12-03-03) with the SEC, alleging the non-holding of the annual stockholders' meeting since 2002. Hearings were conducted
wherein the officers and directors of POTC and Philcomsat were required to be present and to file their comments. Victor
Africa actively participated in the proceedings before the SEC, in his alleged capacity as officer of POTC, Philcomsat and
PHC.

54. In view of the government interest in POTC which is the sole beneficial owner of Philcomsat, which in turn, is the 80%
stockholder of PHC, and the fact that POTC and Philcomsat are under sequestration, the PCGG was likewise directed to file
their comments on the matters raised by the parties. PCGG, through then Commissioner Victoria Avena, asserted that the
government holds 40% interest in POTC. x x x.

55. Thereafter, the SEC issued the aforestated Order on 08 July 2004, directing the officers of POTC and Philcomsat to
conduct their respective stockholders' meetings. Before the rendition of the 08 July 2004 Order, the Africa group did not
conduct any stockholders' meeting of POTC or Philcomsat, but they would later claim that they had agreed, as early as 02
July 2004, to hold the meetings on 08 July 2004. Given the timing of the meeting, however, which was held after the 08 July
2004 SEC Order, no credence could be given to such self-serving claim. The timing and dates are more than mere
convenient coincidences.

56. After POTC and Philcomsat duly held their respective stockholders' meetings on 05 August 2004 and 09 August 2004,
the SEC upheld the validity of their meetings in its Order dated 20 August 2004.

57. Thereafter, Africa initiated a series of actions in different tribunals in an attempt to basically prevent the POTC and
Philcomsat Directors and Officers from acting in their capacity as such. 59cralaw virtualaw library
On November 18, 2004, PCGG expressly adopted the Answer of PHILCOMSAT (Nieto Group) as its own Answer in Civil Case
No. 04-1049.60cralaw virtualaw library

On December 7, 2004, the RTC denied the Africa Group’s Motion for Reconsideration assailing the order issued on August
27, 2004 in Civil Case No. 04-935.

Whereupon, POTC (Africa Group) went to the CA on certiorari to annul and set aside the orders issued on August 27, 2004
and December 7, 2004 in Civil Case No. 04-935 by the RTC (Branch 133). The suit, docketed as C.A.-G.R. SP NO. 88664, was
dismissed by the CA on July 5, 2005, the decision pertinently stating:

x x x We thus have to address one crucial issue: Was the lower court correct in ruling that the Sandiganbayan had
jurisdiction over the instant case?

It was.

It must be stressed that the petitioners' complaint essentially questions the legality by which the private respondents are
exercising control over the assets and operations of a sequestered corporation. They posit that the private respondents are
usurpers and have no right to sit in the board of directors or act as corporate officers of the POTC. Evidently, these issues
are “arising from, incidental to, or related to” the sequestration case against POTC which, under the law, should be
addressed by the Sandiganbayan.

x x x x

All told, the lower court did not commit grave abuse of discretion amounting to lack of or in excess of jurisdiction in
dismissing the instant complaint for lack of jurisdiction, the same being vested in the Sandiganbayan. 61cralaw virtualaw
library
On June 15, 2005, this Court rendered its decision in G.R. No. 141796 and G.R. No. 141804 by affirming the validity of the
compromise agreement dated June 28, 1996 between the PCGG and Atty. Ilusorio, holding:

With the imprimatur of no less than the former President Fidel V. Ramos and the approval of the Sandiganbayan, the
Compromise Agreement must be accorded utmost respect. Such amicable settlement is not only allowed but even
encouraged. x x x.

Having been sealed with court approval, the Compromise Agreement has the force of res judicata between the parties and
should be complied with in accordance with its terms. Pursuant thereto, Victoria C. de los Reyes, Corporate Secretary of the
POTC, transmitted to Mr. Magdangal B. Elma, then Chief Presidential Legal Counsel and Chairman of PCGG, Stock Certificate
No. 131 dated January 10, 2000, issued in the name of the Republic of the Philippines, for 4,727 POTC shares. Thus, the
Compromise Agreement was partly implemented.62cralaw virtualaw library
On July 5, 2005, the Africa Group, citing the decision in G.R. No. 141796 and G.R. No. 141804, filed a Manifestation with Ex-
Parte Motion to Resolve in Civil Case No. 04-1049.63cralaw virtualaw library

Also on July 5, 2005, the CA promulgated its decision in C.A.-G.R. SP No. 88664, dismissing the petition
for certiorari (brought to assail the dismissal by the RTC (Branch 133) of the complaint in Civil Case No. 04-935).64cralaw
virtualaw library

On August 18, 2005, PHILCOMSAT (Nieto Group), through Locsin, submitted a Counter-Manifestation, contending that the
decision in G.R. No. 141796 and G.R. No. 141804 did not operate to automatically nullify the proceedings during the
stockholders’ meeting of PHC on August 31, 2004.65cralaw virtualaw library

On August 19, 2005, the RTC (Branch 138), apprised of the pendency of motions for reconsideration in G.R. No. 141796 and
G.R. No. 141804, held in abeyance its action upon the parties’ respective manifestations until after the resolution of the
pending motions for reconsideration. 66cralaw virtualaw library

On September 7, 2005, the Court denied the motions for reconsideration in G.R. No. 141796 and G.R. No. 141804, stating:

Obviously, petitioners’ motions for reconsideration are devoid of merit. The matters they raise are mere reiterations of the
previous arguments in their petitions already considered and exhaustively passed upon in our July 27, 2005 (sic) Decision.
Indeed, we find no cogent reason to deviate from our Decision.

As regards the second incident, respondent Bildner seeks a clarification on the effect of the TRO, issued by this Court on
March 29, 2000, restraining the implementation of the challenged Sandiganbayan Resolution dated December 20, 1999 in
Civil Case No. 0009.

It may be recalled that in our June 15, 2005 Decision, we dismissed these consolidated petitions assailing the
Sandiganbayan Resolution of December 20, 1999. This Resolution (1) denied petitioners' separate motions to vacate the
Sandiganbayan Order dated June 8, 1998 approving the Compromise Agreement; (2) declared the 5,400 POTC shares
registered in the names of petitioners IRC and MLDC null and void as they categorically admitted that such shares are ill-
gotten wealth of

deposed President Marcos and his Family, and that the same were surrendered to the Government which now owns the
same; and (3) ordered the Corporate Secretary of POTC, within 10 days from receipt of the Resolution, to issue 4,727 POTC
shares in the name of the Republic, and 673 POTC shares in the name of Potenciano Ilusorio, pursuant to the approved
Compromise Agreement. In compliance with the Sandiganbayan Resolution, Atty. Victoria C. de los Reyes, Corporate
Secretary of the POTC, on January 10, 2000, transmitted to Mr. Justice Magdangal B. Elma, then Chief Presidential Legal
Counsel and Chairman of Philippine Commission on Good Government (PCGG), Stock Certificate No. 131 (of even date)
issued in the name of the Republic of the Philippines, for 4,727 POTC shares. Thus, the Compromise Agreement was partly
implemented.

In her present motion for clarification, respondent Bildner alleges inter alia that, on March 29, 2000 or more than two (2)
months after the Compromise Agreement had been implemented on January 10, 2000, this Court issued a TRO restraining
its implementation.

There is no need for us to make a clarification being sought by respondent Bildner in her motion. Suffice it to say that when
the TRO was issued on March 29, 2000, the Sandiganbayan Resolution of December 20, 1999 directing the issuance of POTC
shares in the names of the Republic and Potenciano Ilusorio in accordance with the Compromise Agreement had been
partially implemented on January 10, 2000 or more than two (2) months earlier by POTC Corporate Secretary Victoria C. de
los Reyes. She already transmitted to then PCGG Chairman Magdangal B. Elma Stock Certificate No. 131 issued in the name
of the Republic of the Philippines, for 4,727 POTC shares. This was never mentioned by petitioners in their petitions. In fact,
even before the petitions in these cases were filed, the implementation of the Compromise Judgment had been partially
effected. We were thus misled in issuing the TRO. In any case, the TRO has become moot and academic, the same having no
more legal force as the act sought to be restrained had been partially implemented and considering our Decision in this
case.

WHEREFORE, petitioners’ instant motions for reconsideration are DENIED with FINALITY. On respondent Bildner's motion
for clarification, the same is considered moot and academic.67cralaw virtualaw library
In the meantime, the RTC (Branch 138) required the parties to submit their respective memoranda in Civil Case No. 04-
1049. Both parties complied.68cralaw virtualaw library

On September 14, 2005, the Africa Group brought a special civil action for certiorari and prohibition in this Court assailing
the decision promulgated on July 5, 2005 in C.A.-G.R. SP No. 88664 (G.R. No. 171799).69cralaw virtualaw library

On September 22, 2005, POTC and PHILCOMSAT (Africa-Ilusorio Group) elected a new set of Directors and Officers. Ma.
Erlinda I. Bildner was elected as the Chairman of the Boards of Directors of both POTC and PHILCOMSAT.70cralaw virtualaw
library

On September 26, 2005, POTC and PHILCOMSAT (Nieto Group) initiated a Complaint for injunction and damages with
prayer for TRO and WPI in the Sandiganbayan (SB Civil Case No. 0198). 71cralaw virtualaw library

The Sandiganbayan issued a TRO in SB Civil Case No. 0198, enjoining the Africa-Ilusorio Group from acting as Officers and
Directors of POTC and PHILCOMSAT. 72cralaw virtualaw library

On June 5, 2006, the Court dismissed G.R. No. 171799, viz:

Considering the allegations, issues and arguments adduced in the petition for certiorari and prohibition with prayer for writ
of preliminary injunction and/or temporary restraining order dated 14 September 2005, the Court Resolves to DISMISS the
petition for failure to sufficiently show that the questioned judgment of the Court of Appeals is tainted with grave abuse of
discretion.73cralaw virtualaw library
On October 14, 2006, the RTC (Branch 138) rendered its decision in Civil Case No. 04-1049, thus:

In the case at bar, the Nieto Group did not specifically deny plaintiff's allegation that their votes during the 2004 annual
stockholders' meeting for POTC and Philcomsat mainly relied on the IRC and Mid- Pasig shares. Upon the promulgation of
the above-cited Supreme Court Decision dated 15 June 2005, even as early as 1986, both IRC and Mid- Pasig corporations
have no more right or interest over the subject POTC shares which was already surrendered by Jose Y. Campos to the
Government. Mid-Pasig and IRC themselves were sequestered, and then voluntarily surrendered as part of the res covered
by the Campos Compromise Agreement. Insofar as Mid-Pasig and IRC are concerned, they have already relinquished all
rights or interest over all POTC shares registered in their names in favor of the Republic represented by PCGG, even as early
as 1986. Hence, the Supreme Court Decision, in effect, invalidates the elections held by the Nieto Group in the annual
stockholders' meeting of POTC and Philcomsat on 5 August 2004 and 9 August 2004, for not having the majority control of
the said corporation. In turn, the defendant Nieto Group could not have, therefore, issued a valid proxy nor could they have
appointed defendant Locsin as Philcomsat’s representative to the PHC annual stockholders’ meeting.

WHEREFORE, judgment is hereby rendered invalidating the proxy issued in favor Manuel Nieto and/or defendant Locsin for
purposes of the Annual Stockholders' Meeting for the year 2004 and declaring the proxy issued in favor of Victor V. Africa
for the said purpose, valid. Corollarily, the elections held and the proclamation of winners during the annual stockholders'
meeting of defendant PHC held on 31 August 2004 is hereby annulled. 74cralaw virtualaw library
On October 23, 2006, the RTC (Branch 138) dismissed Civil Case No. 01-840 for lack of jurisdiction. Subsequently, the RTC
(Branch 138) denied the petitioners’ Motion for Reconsideration, and treated it instead as a notice of appeal. 75cralaw
virtualaw library

On March 1, 2007, PHC (Nieto Group) and Brodett appealed the decision dated October 14, 2006 rendered in Civil Case No.
04-1049 to the CA via a petition for review (CA-G.R. SP NO. 98097). On March 27, 2007, the Africa-Ilusorio Groups
submitted their comment (with opposition to the application for TRO and WPI).76cralaw virtualaw library

On March 21, 2007, POTC and PHILCOMSAT (Nieto Group) brought to the CA a petition for certiorari (with prayer for TRO
and WPI), similarly assailing the decision rendered on October 14, 2006 in Civil Case No. 04-1049 (C.A.-G.R. SP No.
98399).77cralaw virtualaw library

On March 27, 2007, PHILCOMSAT (Africa Group) sought the execution of the decision rendered on October 14, 2006 in Civil
Case No. 04-1049 by the RTC (Branch 138). Although on April 4, 2007, PHC (Nieto Group), Locsin and Brodett opposed the
motion for execution, the RTC (Branch 138) granted the motion on April 12, 2007, to wit:

WHEREFORE, premises considered, the Court hereby grants the plaintiff's Motion. Let a writ of execution be issued
directing the implementation of the following orders:cralawlibrary

1) the individuals elected by defendant Locsin in the 2004 PHC ASM, and so proclaimed to be PHC’s board of directors,
namely: Enrique Locsin, Julio Jalandoni, Manuel Andal, Luis Lokin, Jr., Prudencio Somera, Jr., Manuel H. Nieto, Jr., Roberto
V. San Jose, Philip Brodett, Oliverio Laperal, Benito Araneta and Roberto Abad and all their representatives or agents are
enjoined from continuing to act as PHC board of directors;chanr0blesvirtualawlibrary

2) the proxy of plaintiff issued to Victor V. Africa is declared valid and thus, the individuals elected by plaintiff's proxy in the
2004 PHC ASM namely: Victor V. Africa, Erlinda I. Bildner, Katrina Ponce Enrile, Honorio Poblador III, Federico Agcaoili,
Sylvia K. Ilusorio and Jose Ma. Ozamiz are declared as the valid board of directors of PHC; and

3) the defendants are directed to render an accounting of funds of PHC since 2004 up to the present within 15 days from
the finality of this Order.78cralaw virtualaw library
On April 18, 2007, PHC (Nieto Group) and Brodett filed their Reply with Reiteration of the Urgent Application for Temporary
Restraining Order and Preliminary Injunction in C.A.-G.R. SP NO. 98097. On April 20, 2007, they filed a Supplemental
Petition with Urgent Application for Temporary Restraining Order and Preliminary Injunction, alleging that, upon motion of
respondent (Africa Group), the RTC had issued an order dated April 12, 2007 directing the issuance of a writ of execution to
implement the decision dated October 14, 2006.79cralaw virtualaw library

On April 18, 2007, the RTC (Branch 138) issued a writ of execution of the decision dated October 14, 2006. 80cralaw
virtualaw library

On April 24, 2007, the PHC (Africa Group) held an organizational meeting of its Board of Directors pursuant to the decision
dated October 14, 2006 as well as the order dated April 12, 2007 and the writ of execution dated April 20, 2007, all issued in
Civil Case No. 04-1049. At that organizational meeting, Victor V. Africa, Federico R. Agcaoili, Erlinda I. Bildner, Katrina C.
Ponce Enrile, Sylvia K. Ilusorio, Honorio Poblador III, Jose Ozamiz, Prudencio Somera, Pablo Lobregat and Oliverio Laperal
were elected as Directors. On the same occasion, the following were elected as Officers of PHC, namely: Honorio Poblador
III as Chairman; Oliverio Laperal as Vice-Chairman; Erlinda I. Bildner as President; Lorna P. Kapunan as Vice President; Pablo
Lobregat as Vice-President; Katrina Ponce Enrile as Treasurer; Rafael Poblador as Assistant Treasurer; John Benedict Sioson
as Corporate Secretary; and Dennis R. Manzanal as Assistant Corporate Secretary. 81cralaw virtualaw library

On April 30, 2007, PHILCOMSAT (Africa Group) filed an Urgent Motion to Lift the TRO in C.A.-G.R. SP No. 98399.82cralaw
virtualaw library

On May 2, 2007, PHC (Nieto Group) presented a Manifestation in C.A.-G.R. SP NO. 98097, alleging that they were informed
that POTC and PHILCOMSAT had filed a petition dated March 14, 2007 in this Court which involved substantially the same
issues raised in C.A.-G.R. SP No. 98097.83cralaw virtualaw library

On May 10, 2007, the CA directed POTC and PHILCOMSAT (Nieto Group) to comment on the Urgent Motion to Lift the TRO
filed in C.A.-G.R. SP NO. 98399.84cralaw virtualaw library

On May 17, 2007, the CA issued a resolution in C.A.-G.R. SP No. 98097, to wit:

WHEREFORE, petitioners’ application for a temporary restraining order/writ of preliminary injunction to enjoin the
execution of the Decision dated October 14, 2006 of the court a quo in Civil Case No. 04-1049 is merely NOTED as the same
has been rendered moot and academic.

The issues having been joined with the filing of the comment and reply, the petition for review is considered submitted for
decision.85cralaw virtualaw library
On June 8, 2007, the CA dismissed the petition in C.A.-G.R. CV NO. 88360 for being an improper mode of appeal. 86cralaw
virtualaw library

On June 12, 2007, POTC and PHILCOMSAT (Nieto Group) filed their Reply with Urgent Motion to Resolve the Application for
Preliminary Injunction in CA-G.R. SP No. 98399. The CA granted the Urgent Motion to Resolve on June 25, 2007, and issued
the WPI on the same date.87cralaw virtualaw library

On August 17, 2007, POTC and PHILCOMSAT (Africa-Ilusorio Group) brought a petition for certiorari to annul and set aside
the CA’s resolution dated June 25, 2007 in C.A.-G.R. SP No. 98399.88cralaw virtualaw library

Earlier, on August 15, 2007, the Sandiganbayan issued its resolution dismissing the Complaint of POTC and PHILCOMSAT
(Nieto Group) in SB Civil Case No. 0198, to wit:

WHEREFORE, in view of the foregoing, the Court hereby resolves as follows:cralawlibrary

1) The Urgent Motion to Dismiss dated September 29, 2005 of the defendant is hereby GRANTED. Accordingly, the
plaintiffs' Complaint dated September 20, 2005 is hereby ordered DISMISSED.
2) The following motions and pleadings are considered MOOT AND ACADEMIC in view of the dismissal of the case.

a. Motion to Consider and Declare Defendants in Default dated October 21, 2005 of the
plaintiffs;chanr0blesvirtualawlibrary

b. Motion for Consolidation with SB Civil Case No. 0009 dated September 24, 2006 of the
plaintiffs;chanr0blesvirtualawlibrary

c. Petition to Show Cause dated April 25, 2007 filed by the plaintiffs; and

d. Motion for Leave to Intervene and to Admit Complaint-In-Intervention dated May 16, 2007 filed by the PCGG.

3) The Court hereby REPRIMANDS Enrique L. Locsin and Atty. Sikini C. Labastilla for omitting material facts in their
Complaint and Urgent Motion for Special Raffle and WARNS that a repetition of the same or similar acts in the future shall
be dealt with more severely.89cralaw virtualaw library
POTC and PHILCOMSAT (Nieto Group) moved for reconsideration on September 5, 2007, and later supplemented the
motion.90cralaw virtualaw library

On November 5, 2007, Atty. Sikini C. Labastilla filed in the CA a petition to cite Erlinda I. Bildner and her lawyer Atty. Dennis
R. Manzanal for indirect contempt of court (C.A.-G.R. SP No. 101225), and prayed that the petition be consolidated with
C.A.-G.R. SP No. 98399. The consolidation was allowed on December 12, 2007.91cralaw virtualaw library

On November 13, 2007, President Arroyo named new nominees to the POTC Board of Directors, namely: Daniel C.
Gutierrez, Allan S. Montaño, and Retired Justice Santiago J. Ranada; and to the PHILCOMSAT Board of Directors, namely:
Ramon P. Jacinto, Abraham R. Abesamis, and Rodolfo G. Serrano, Jr. 92cralaw virtualaw library

On November 19, 2007, POTC held its Annual Stockholders’ Meeting and Organizational Meeting of the Board of Directors.
Elected were Daniel C. Gutierrez as Director and Chairman; Erlinda I. Bildner as Director and Vice Chairman; Katrina Ponce
Enrile as Director and President/CEO; Marietta K. Ilusorio as Director and Treasurer; Francisca Benedicto Paulino, Pablo L.
Lobregat, Allan Montaño, Honario A. Poblador III and Justice Ranada as Directors; Rafael A. Poblador as Assistant Treasurer;
and Victoria C. de los Reyes as Corporate Secretary.93cralaw virtualaw library

On the same date, PHILCOMSAT held its Annual Stockholders’ Meeting and Organizational Meeting of the Board of
Directors. Elected were: Abraham R. Abesamis as Director and Chairman; Pablo L. Lobregat as Director and Vice-Chairman;
Ramon Jacinto as Director and Chairman of the Executive Committee; Erlinda I. Bildner as Director and President/CEO;
Marietta K. Ilusorio as Director and Vice President; Katrina Ponce Enrile as Director and Treasurer; Lorna P. Kapunan,
Honorio A. Poblador III and Rodolfo G. Serrano, Jr. as Directors; Rafael A. Poblador as Assistant Treasurer; and John
Benedict L. Sioson as Corporate Secretary. 94cralaw virtualaw library

Thereafter, Concepcion A. Poblador of the Nieto Group filed a Complaint for injunction and declaration of nullity (with
prayer for TRO and WPI) with the Sandiganbayan, seeking to enjoin the PCGG from recognizing the stockholders’ meeting
held on November 19, 2007 (Civil Case No. 07-0001).

Meanwhile, PHC (Africa Group), through Erlinda I. Bildner, filed a Complaint for injunction against the Bank of the Philippine
Islands (BPI) with the RTC (Branch 62) in Makati City, seeking to enjoin BPI from allowing further disbursements of PHC
funds to unauthorized persons comprising those who were no longer members of the PHC Board of Directors due to the
nullification of their election.

On the basis of the Complaint, the RTC (Branch 62) issued an order on December 13, 2007, as follows:

FOREGOING CONSIDERED, pending final adjudication on the principal action raised herein and subject to the posting of the
indemnity bond in the sum of Three Million Pesos (Php 3,000,000.00) issued in favor of the defendant Bank of the
Philippine Islands and defendant intervener PHC represented by Enrique M. Locsin, let a writ of preliminary injunction issue,
enjoining the said defendant bank, its employees, officers, and representatives from allowing the defendant intervener,
Locsin Group, their officers, employees, agents, and/or representatives to inquire, withdraw, and/or in any manner transact
relative to any and all Philcomsat Holdings Corporation accounts maintained with Bank of the Philippine Islands until further
orders from this Court.

Finally, the defendant bank is hereby ordered to submit to this Court the latest (as of receipt of this Order) bank statements
and/or certificates of all PHC accounts deposited with its bank within ten (10) days from notice thereof. 95cralaw virtualaw
library
On December 14, 2007, POTC and PHILCOMSAT (Africa Group) filed in C.A.-G.R. SP NO. 98399 a Manifestation and Urgent
Motion to Withdraw Petition, praying that the petition be considered withdrawn, and that the WPI issued on June 25, 2007
be immediately lifted. In support of the motion, POTC and PHILCOMSAT (Africa Group) averred:

(1) On 21 March 2007, Mr. Enrique Locsin (Locsin) purportedly representing POTC and PHILCOMSAT filed the instant
petition, assailing the decision issued by the Regional Trial Court (RTC) of Makati Branch 138 in Civil Case No. 04-1049 x x x.

x x x x

(3) What Mr. Locsin has deliberately failed and/or refused to divulge to this Honorable Court upon filing the instant petition
are the following facts: (1) Mr. Locsin and his group are exactly the same set of individuals who comprise the respondents in
Civil Case No. 04-1049, the decision which is now herein assailed; and that (2) Mr. Locsin and his group, purportedly,
representing earlier or two weeks prior to the filing of the instant petition, already filed an appeal also with this Honorable
Court, albeit pending in a different division, docketed as CA-G.R. SP No. 98097, raising exactly the same issues and seeking
identical reliefs as they are now pending in the case at bar.

x x x x

(5) The difficulty in resolving the present controversy lodged before this Honorable Court stems from the fact that even the
legitimate POTC and PHILCOMSAT representatives become apparently undeterminable.

x x x x

(9) Nonetheless, the conflicting claims over POTC and PHILCOMSAT have finally come to resolution with the recent
developments.

(10) On 13 November 2007, the government appointed its new nominees to POTC and PHILCOMSAT. For POTC, the
government, through Undersecretary Enrique D. Perez with the directive of President Gloria Macapagal Arroyo, appointed
Atty. Daniel C. Gutierrez, Atty. Allan S. Montaño and Justice Santiago J. Ranada (Ret.) to the POTC board and represent the
government's 34.9% shareholdings in the board of directors of POTC. In the same manner and for an akin purpose, the
government appointed Mr. Ramon P. Jacinto, Mr. Rodolfo G. Serrano, Jr. and Radm. Abraham R. Abesamis (Ret.) to
represent the government's 34.9% shareholdings on the board of directors of PHILCOMSAT. Although this Honorable Court
may take judicial notice of these appointments, to evidence such new appointments, copies of the proxy issued by the
Republic of the Philippines to Undersecretary Perez and the “I desire” letter of the Office of the President for the
government's nominees to PHILCOMSAT, both dated 13 November 2007, and the list of nominees of Undersecretary Perez
for POTC and his letter to PCGG Chairman Camilo Sabio, both dated 19 November 2007, are attached and made integral
parts hereof as Annexes “B”, “B”, “C” and “D”, respectively.

(11) Needless to state, with the designation and their selection of the new government nominees to POTC and
PHILCOMSAT, the old nominees, namely: Mr. Locsin, Mr. Manuel Andal, Mr. Julio Jalandoni and Mr. Guy de Leon are
automatically replaced. This is an undeniable fact and had always been the procedure in the appointment and replacement
of government nominees to the board of companies where the government has a substantial interest.

(12) Following the said appointment of new nominees, necessarily, annual stockholders meetings of both POTC and
PHILCOMSAT were conducted and held on 19 November 2007 in order to elect the new directors of the respective boards
of the two companies. During the said meetings, where over 90% of the shareholders were present and/or duly
represented, the stockholders elected the new board of directors of POTC and PHILCOMSAT. These elections are evidenced
by the Secretary's Certificates duly executed by the Corporate Secretaries of POTC and PHILCOMSAT, copies of which are
attached and made integral parts hereof as Annexes “E” and “F”, respectively.

(13) Thus, the new government nominees, together with the private shareholders of POTC and Philcomsat are joined
together in a unified board of directors for the two companies. In fact, after the new sets of directors had been elected,
both companies conducted their respective organizational and board meetings.

(14) At the board meetings of POTC and Philcomsat held on 4 December 2007, POTC and PHILCOMSAT have decided, as the
new, unassailably legitimate and only board of directors of POTC and PHILCOMSAT, to authorize the withdrawal of the
instant petition filed in the name of POTC and PHILCOMSAT. The boards likewise in their resolutions, disallowed other
persons to represent their companies. Copies of these resolutions issued by POTC and PHILCOMSAT are attached and made
integral parts hereof as Annexes “G” and “H”, respectively.

(15) Thus, based on the foregoing, POTC and PHILCOMSAT, who are supposedly the petitioners in this case, move for the
immediate withdrawal of the petition dated 14 March 2007 and the immediate lifting of the Writ of Preliminary Injunction
dated 25 June 2007.96cralaw virtualaw library
The Urgent Motion to Withdraw Petition was opposed in a Comment and Opposition filed on February 13, 2008 that
averred as follows:

x x x x

4. Through the malicious motion to withdraw, there is a veiled attempt, to have this Honorable Court uphold and recognize
the validity of the supposed meetings held by rump boards on November 19, 2007.This is a matter that is properly
cognizable only by the Sandiganbayan.

5. In fact, there is already a pending complaint before the Sandiganbayan that assails the supposed November 19, 2007
meetings stated in the motion to withdraw.

6. The Sandiganbayan, acting through the Fifth Division, granted the issuance of a Temporary Restraining Order on
December 21, 2007, to prevent and prohibit any recognition of these November 19, 2007 meetings. x x x.

12. Petitioners, however, are compelled to address the misleading allegations and conclusions in the motion to withdraw. It
is respectfully manifested that these alleged November 19, 2007 meetings were not called by the legitimate boards of
petitioners POTC and Philcomsat. Only the legitimate boards, here represented by Mr. Locsin, can properly act upon any
change in the government nominees, and it is only the legitimate boards that can install them. As manifested by petitioners
to this Honorable Court, since there are no more legal challenges to the respective Boards of Directors of petitioners
originally led by Ronaldo Salonga and Manuel Nieto, Jr., since 1998, only the successors of these boards, here represented
by Mr. Locsin, can properly represent petitioners POTC and PHILCOMSAT.
12.1. The issue was settled with the dismissal of the appeal in CA G.R. CV No. 88360, which stemmed from the original
petition filed in 1998 by Potenciano Ilusorio, Katrina Ponce-Enrile, and their family owned corporations, to question the
election of the Nieto-Salonga board. The appeal was dismissed by the Honorable Court of Appeals in its Resolution dated
June 8, 2007, a copy of which is hereto attached as Annex B.
13. It is significant that the manifestation and motion to withdraw made admissions that recognize the validity of the
boards represented by Mr. Locsin. While petitioners do not admit to the genuineness or due execution of the Secretary's
Certificates which were not signed by the duly-elected Corporate Secretary x x x, it must be noted that the authority of Mr.
Locsin to file the instant petition was recognized and admitted therein. It was only claimed that such authority “was lost”
when he was allegedly replaced, which replacement, as discussed above, is still disputed. Thus, even the rump boards admit
that the filing of this petition by Mr. Locsin was duly authorized by POTC and PHILCOMSAT. 97cralaw virtualaw library

xxxx
On December 21, 2007, the Sandiganbayan (Fifth Division) issued an order in Civil Case No. 07-0001, to wit:

x x x x

Wherefore, finding the complaint to be sufficient in form and substance and considering the necessity to maintain the
status quo lest grave and irreparable injury would result to plaintiff pending the hearing of the main incident (Injunction
and Declaration of Nullity), let a TEMPORARY RESTRAINING ORDER issue ordering the defendants, their agents, executives
and other persons acting upon their instructions, from recognizing or acting pursuant to the 19 November 2007
stockholders meetings of POTC and PHILCOMSAT. The restraining order is good for twenty (20) days from notice to
defendants or any of their representatives.98cralaw virtualaw library

xxxx
On May 7, 2008, the PCGG passed Resolution No. 2008-009, viz:

NOW, THEREFORE, be it RESOLVED, as it is hereby RESOLVED, that:cralawlibrary

1. The PCGG recognize the validity of the 19 November 2007 POTC/Philcomsat stockholders' meeting and confirm as valid
the election of the following government nominees: Atty. Daniel C. Gutierrez, Justice Santiago J. Ranada and Atty. Allan S.
Montano to the Board of Directors of POTC and Radm. Abraham R. Abesamis, Mr. Ramon P. Jacinto and Mr. Rodolfo G.
Serrano, Jr. to the Board of Directors of Philcomsat;chanr0blesvirtualawlibrary

2. The PCGG recognize the validity of the 11 December 2007 and 18 January 2008 special stockholders' meetings of
Philcomsat subsidiaries, PHC and TCI, at which the new government nominees were also elected as members of their
respective Board of Directors subject to the “I Desire” letter of the President requiring the nomination and installation of
Mr. Enrique Locsin in PHC vice Mr. Rodolfo Serrano;chanr0blesvirtualawlibrary

3. The PCGG direct the old government nominees and their appointed Corporate Secretaries under pain of contempt to
submit to the Commission within ten (10) days from their receipt of the Resolution:
a. A complete set of Minutes of the Meetings of the Boards of Directors, Executive Committee, Legal Committee, Audit
Committee and all other committees with a Certification under oath of the completeness thereof from 1998 up to the
present;chanr0blesvirtualawlibrary

b. A complete and updated list of stockholders of the corporations with their last known addresses and number of shares
duly certified by the Corporate Secretary and/or Stock Transfer Agent;chanr0blesvirtualawlibrary

c. Copies of all audited and interim financial statements of these corporations; and

d. The stock transfer book and stock certificate booklet of PHC and TCI.
4. The PCGG request the Securities and Exchange Commission (“SEC”) and the Philippine Stock Exchange (“PSE”) to regulate
and monitor POTC, Philcomsat, PHC and TCI, to cooperate with the new government nominees and assist them in
complying with the reportorial requirements of these corporations, including, but not limited to, compelling the old
government nominees and their appointed officers to submit copies of the documents referred to
above;chanr0blesvirtualawlibrary

RESOLVED, FURTHER, that the Commission Secretary be directed to furnish copies of this Resolution to the old government
nominees/directors of POTC, Philcomsat, PHC and TCI namely Enrique Locsin, Manuel Andal, Julio Jalandoni, Guy De Leon,
Benito Araneta and Ronaldo Salonga, to the new government nominees Daniel Gutierrez, Santiago Ranada, Allan Montano,
Abraham Abesamis, Ramon Jacinto, Rodolfo Serrano, Jr. Enrique Locsin and to the SEC, PSE and BSP for their guidance,
observation and compliance.99cralaw virtualaw library
On July 16, 2008, the CA rendered its assailed decision in C.A.-G.R. SP No. 102437, annulling and setting aside the order
dated December 13, 2007 and the WPI issued on December 17, 2007 by the RTC (Branch 62).100cralaw virtualaw library

On February 13, 2009, the CA denied the motion for reconsideration. 101cralaw virtualaw library
On September 30, 2008, the CA promulgated its assailed consolidated decision in C.A.-G.R. SP No. 98097, C.A.-G.R. SP No.
98399 and C.A.- G.R. SP No. 101225, dismissing the petitions.102 The CA held that the RTC acted within its jurisdiction in
resolving the intra-corporate dispute; that the conduct of pre-trial was not required in corporate election cases; that the
RTC had the authority to decide Civil Case No. 04-1049; that the decision of the RTC was valid and correct; and that the
petition for contempt filed against Atty. Sikini C. Labastilla was without basis. The CA lifted and dissolved the WPI issued on
June 25, 2007.103cralaw virtualaw library

On December 23, 2008, the CA denied the motion for reconsideration. 104cralaw virtualaw library

Issues

G.R. No. 184622

WHETHER THE SANDIGANBAYAN’S REFUSAL TO TAKE COGNIZANCE OF THE CONTROVERSY ON THE GROUND THAT THE
SAME IS AN INTRA-CORPORATE CONTROVERSY IS IMPROPER AND AGAINST JURISPRUDENCE.105cralaw virtualaw library

G.R. No. 184712-14

WHETHER THE SANDIGANBAYAN HAS ORIGINAL AND EXCLUSIVE JURISDICTION OVER SEQUESTERED CORPORATIONS,
SEQUESTRATION-RELATED CASES, AND ANY AND OVER ALL INCIDENTS ARISING FROM, INCIDENTAL TO, OR RELATED TO
SUCH CASES.106cralaw virtualaw library

WHETHER THE SEQUESTRATION OVER POTC AND PHILCOMSAT REMAINS DESPITE THE APPROVAL OF THE PCGG-ILUSORIO
COMPROMISE AGREEMENT IN G.R. NOS. 141796 AND 141804.107cralaw virtualaw library

WHETHER THE MAKATI RTC MAY RENDER JUDGMENT ON THE COMPLAINT PURSUANT TO THE INTERIM RULES WHEN THE
SAID COURT HAS NOT BEEN DESIGNATED AS A SPECIAL COMMERCIAL COURT BY THE SUPREME COURT. 108cralaw virtualaw
library

WHETHER THE ORDER TO CONDUCT PRE-TRIAL AND THE SUBMISSION OF THE PRE-TRIAL BRIEFS IS MANDATORY UNDER ALL
CASES FILED UNDER THE INTERIM RULES.109cralaw virtualaw library

G.R. No. 186590

WHETHER THE COURT OF APPEALS ERRED WHEN IT NULLIFIED THE WRIT OF PRELIMINARY INJUNCTION ISSUED BY THE
TRIAL COURT.110cralaw virtualaw library

G.R. No. 186066

WHETHER OR NOT THE CA ERRED IN RULING THAT THE REGIONAL TRIAL COURT OF MAKATI HAD JURISDICTION OVER CIVIL
CASE NO. 04-1049;chanr0blesvirtualawlibrary

WHETHER OR NOT THE CA ERRED IN RULING THAT THE DECISION IN G.R. NOS. 141796 AND 141804 FINALLY SETTLED THE
ISSUES IN CIVIL CASE NO. 04-1049 AND CONSEQUENTLY ANNULLED THE POTC PROXY IN FAVOR OF MESSRS. NIETO AND
LOCSIN;chanr0blesvirtualawlibrary

WHETHER OR NOT THE CA ERRED IN RULING THAT BRANCH 138 COULD STILL ACT ON AND DECIDE CIVIL CASE NO. 04-1049
DESPITE THIS HONORABLE COURT’S REVOCATION OF ITS DESIGNATION AS SPECIAL COMMERCIAL COURT OF RTC MAKATI
CITY;chanr0blesvirtualawlibrary

WHETHER OR NOT THE CA ERRED IN RULING THAT PRE-TRIAL AND TRIAL CAN BE DISPENSED WITH IN CIVIL CASE NO. 01-
1049;chanr0blesvirtualawlibrary
WHETHER OR NOT THE CA ERRED IN AFFIRMING THE DECISION OF THE TRIAL COURT WHICH WAS CONTRARY TO THE FACTS
AND EXISTING JURISPRUDENCE.111cralaw virtualaw library
The Court reduces the issues for resolution to two main ones, namely:

(a) Did RTC (Branch 138) have jurisdiction over the intra-corporate
controversy (election contest)?
(b) Who among the contending parties or groups held the controlling
interest in POTC and, consequently, in PHILCOMSAT and PHC?
In G.R. No. 184712-14, the petitioners postulate that the Sandiganbayan had original and exclusive jurisdiction over
sequestered corporations, sequestration-related cases, and any and over all incidents arising from, or incidental or related
to such cases;112 that it was error on the part of the CA to conclude that the Sandiganbayan was automatically ousted of
jurisdiction over the sequestered assets once the complaint alleged an intra-corporate dispute due to the sequestered
assets being in custodia legis of the Sandiganbayan;113 that the sequestration of POTC and PHILCOMSAT remained despite
the approval of the compromise agreement in G.R. No. 141796 and G.R. No. 141804; that because the proceedings
involving the shares of the Nieto, Africa and Ponce Enrile Families were still pending and had not yet been finally
resolved,114 the RTC could not render a valid judgment on the dispute because it had not been designated as a Commercial
Court;115 and that the conduct of a pre-trial and the submission of a pre-trial brief were mandatory under all cases filed
under the Interim Rules.116cralaw virtualaw library

In its Comment, PHILCOMSAT counters that the rulings in Olaguer and Del Moral were not applicable because such cases
arose from different factual settings; 117 that the RTC had ample authority to rule upon the intra-corporate dispute;118and
that the conduct of pre-trial was not mandatory in corporate election cases.119cralaw virtualaw library

In G.R. No. 184622, the petitioners claim that the Sandiganbayan committed an error in refusing to take cognizance of the
injunction suit they had filed on the ground that it was an intra-corporate dispute; that the Sandiganbayan thereby went
against the spirit and intent of the Court’s rulings stressing the importance of protecting sequestered assets and recovering
ill-gotten wealth;120and that the Court’s pronouncement in G.R. No. 171799 affirming the status of POTC shares as
sequestered shares was more than enough reason for the Sandiganbayan to take cognizance of the injunction suit. 121cralaw
virtualaw library

In its Comment,122respondent Ilusorio-Africa Group counter that the injunction suit was not within the jurisdiction of the
Sandiganbayan; and that Locsin had no authority to institute the injunction suit due to his election being a patent nullity
considering that the proxies issued by IRC and Mid-Pasig could not be given effect after the Court had affirmed the ruling of
the Sandiganbayan on IRC and Mid-Pasig’s shareholdings in POTC.123cralaw virtualaw library

In G.R. No. 186590, PHILCOMSAT posits that the trial court properly issued the injunction against PHC after receiving
evidence of massive looting of corporate funds that led to PHC’s external auditor being suspended as found by Senate
Committees and the SEC.124cralaw virtualaw library

In its Comment, PHC states that PHILCOMSAT failed to establish its right in esse or the existence of a right to be protected
so as to warrant the issuance of the injunctive writ in its favor.125cralaw virtualaw library

In G.R. No. 186066, PHC argues that the CA erred in ruling that the RTC (Branch 138) was clothed with authority to decide
Civil Case No. 04-1049 because POTC and PHILCOMSAT were under sequestration of the PCGG; that, accordingly, all issues
and controversies arising or related or incidental to the sequestration fell under the sole and exclusive original jurisdiction
of the Sandiganbayan;126 that the CA erred in appreciating the

nature of Civil Case No. 04-1049; that the controversy, albeit involving an intra-corporate dispute, was still cognizable by
the Sandiganbayan because POTC and PHILCOMSAT shares were under sequestration; 127 that the ruling in G.R. Nos. 141796
and 141804 does not constitute res judicata; that even assuming that the RTC (Branch 138) had jurisdiction, its authority
was revoked prior to the issuance of its assailed judgment; 128and that PHC was denied due process due to the RTC’s open
violation of the Interim Rules.129cralaw virtualaw library
In its Comment, PHILCOMSAT counters that the insistence of PHC that the sequestration of PHILCOMSAT automatically took
away the jurisdiction of the RTC and conferred it to the Sandiganbayan was misplaced; 130 that the rulings in Olaguer and Del
Moral are not on all fours with this case;131 that the issue of the shares being ill-gotten was already settled in G.R. Nos.
141796 and 141804;132 that the RTC (Branch 138) had ample authority to decide the intra-corporate controversy because
the case, being already submitted for decision, remained cognizable by the same branch; 133and that the conduct of the pre-
trial was not required in election cases. 134cralaw virtualaw library

RULING OF THE COURT

We DENY the petitions in G.R. No. 184622, G.R. Nos.184712-14, and G.R. No.186066; but GRANT the petition in G.R. No.
186590.

1.

RTC (Branch 138) had jurisdiction

over the election contest between the
Ilusorio-Africa Groups and Nieto-Locsin Groups

Both Civil Case No. 04-1049 of the RTC (Branch 138) in Makati City and SB Civil Case No. 0198 of the Sandiganbayan
involved intra-corporate controversies among the stockholders and officers of the corporations. It is settled that there is an
intra-corporate controversy when the dispute involves any of the following relationships, to wit: (a) between the
corporation, partnership or association and the public; (b) between the corporation, partnership or association and the
State in so far as its franchise, permit or license to operate is concerned; (c) between the corporation, partnership or
association and its stockholders, partners, members or officers; and (d) among the stockholders, partners or associates
themselves.135cralaw virtualaw library

Consequently, we agree with the CA’s consolidated decision promulgated on September 30, 2008 that the RTC (Branch
138), not the Sandiganbayan, had jurisdiction because Civil Case No. 04-1049 did not involve a sequestration-related
incident but an intra-corporate controversy.

Originally, Section 5 of Presidential Decree (P.D.) No. 902-A vested the original and exclusive jurisdiction over cases
involving the following in the SEC, to wit:

x x x x

(a) Devices or schemes employed by, or any acts of the board of directors, business associates, its officers or partners,
amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or of the
stockholder, partners, members of associations or organization registered with the Commission;chanr0blesvirtualawlibrary

(b) Controversies arising out of intra-corporate or partnership relations, between and among stockholders, members or
associates; between any or all of them and the corporation, partnership or association of which they are stockholders,
members or associates, respectively; and between such corporation, partnership or association and the State insofar as it
concerns their individual franchise or right as such entity;chanr0blesvirtualawlibrary

(c) Controversies in the election or appointment of directors, trustees, officers or managers of such corporations,
partnership or associations;chanr0blesvirtualawlibrary

(d) Petitions of corporations, partnerships or associations to be declared in the state of suspension of payment in cases
where the corporation, partnership or association possesses sufficient property to cover all its debts but foresees the
impossibility of meeting them when they respective fall due or in cases where the corporation, partnership or association
has no sufficient assets to cover its liabilities but is under the management of a Rehabilitation Receiver or Management
Committee created pursuant to this Decree.136cralaw virtualaw library
Upon the enactment of Republic Act No. 8799 (The Securities Regulation Code), effective on August 8, 2000, the jurisdiction
of the SEC over intra-corporate controversies and the other cases enumerated in Section 5 of P.D. No. 902-A was
transferred to the Regional Trial Court pursuant to Section 5.2 of the law, which provides:

5.2. The Commission’s jurisdiction over all cases enumerated in Section 5 of Presidential Decree No. 902-A is hereby
transferred to the Courts of general jurisdiction or the appropriate Regional Trial Court; Provided, That the Supreme Court
in the exercise of its authority may designate the Regional Trial Court branches that shall exercise jurisdiction over these
cases. The Commission shall retain jurisdiction over pending cases involving intra-corporate disputes submitted for final
resolution which should be resolved within one (1) year from the enactment of this Code. The Commission shall retain
jurisdiction over pending suspension of payments/rehabilitation cases filed as of 30 June 2000 until finally disposed.
To implement Republic Act No. 8799, the Court promulgated its resolution of November 21, 2000 in A.M. No. 00-11-03-SC
designating certain branches of the RTC to try and decide the cases enumerated in Section 5 of P.D. No. 902-A. Among the
RTCs designated as special commercial courts was the RTC (Branch 138) in Makati City, the trial court for Civil Case No. 04-
1049.

On March 13, 2001, the Court adopted and approved the Interim Rules of Procedure for Intra-Corporate Controversies under
Republic Act No. 8799 in A.M. No. 01-2-04-SC, effective on April 1, 2001, whose Section 1 and Section 2, Rule 6 state:

Section 1. Cases covered. – The provisions of this rule shall apply to election contests in stock and non-stock corporations.

Section 2. Definition. – An election contest refers to any controversy or dispute involving title or claim to any elective
office in a stock or non-stock corporation, the validation of proxies, the manner and validity of elections, and the
qualifications of candidates, including the proclamation of winners, to the office of director, trustee or other officer directly
elected by the stockholders in a close corporation or by members of a non-stock corporation where the articles of
incorporation or by-laws so provide. (bold underscoring supplied)
Conformably with Republic Act No. 8799, and with the ensuing resolutions of the Court on the implementation of the
transfer of jurisdiction to the Regional Trial Court, the RTC (Branch 138) in Makati had the authority to hear and decide the
election contest between the parties herein. There should be no disagreement that jurisdiction over the subject matter of
an action, being conferred by law, could neither be altered nor conveniently set aside by the courts and the
parties.137cralaw virtualaw library

To buttress its position, however, the Nieto-Locsin Group relied on Section 2 of Executive Order No. 14, 138 which expressly
mandated that the PCGG “shall file all such cases, whether civil or criminal, with the Sandiganbayan, which shall have
exclusive and original jurisdiction thereof.”

The reliance was unwarranted.

Section 2 of Executive Order No. 14 had no application herein simply because the subject matter involved was an intra-
corporate controversy, not any incidents arising from, incidental to, or related to any case involving assets whose nature as
ill-gotten wealth was yet to be determined. In San Miguel Corporation v. Kahn,139 the Court held that:

The subject matter of his complaint in the SEC does not therefore fall within the ambit of this Court’s Resolution of August
10, 1988 on the cases just mentioned, to the effect that, citing PCGG v. Pena, et al., all cases of the Commission regarding
‘the funds, moneys, assets, and properties illegally acquired or misappropriated by former President Ferdinand Marcos,
Mrs. Imelda Romualdez Marcos, their close relatives, Subordinates, Business Associates, Dummies, Agents, or Nominees,
whether civil or criminal, are lodged within the exclusive and original jurisdiction of the Sandiganbayan,’ and all incidents
arising from, incidental to, or related to, such cases necessarily fall likewise under the Sandiganbayan's exclusive and
original jurisdiction, subject to review on certiorari exclusively by the Supreme Court.” His complaint does not involve any
property illegally acquired or misappropriated by Marcos, et al., or "any incidents arising from, incidental to, or related
to" any case involving such property, but assets indisputably belonging to San Miguel Corporation which were, in his (de
los Angeles') view, being illicitly committed by a majority of its board of directors to answer for loans assumed by a sister
corporation, Neptunia Co., Ltd.

De los Angeles’ complaint, in fine, is confined to the issue of the validity of the assumption by the corporation of the
indebtedness of Neptunia Co., Ltd., allegedly for the benefit of certain of its officers and stockholders, an issue evidently
distinct from, and not even remotely requiring inquiry into the matter of whether or not the 33,133,266 SMC shares
sequestered by the PCGG belong to Marcos and his cronies or dummies (on which, issue, as already pointed out, de los
Angeles, in common with the PCGG, had in fact espoused the affirmative). De los Angeles’ dispute, as stockholder and
director of SMC, with other SMC directors, an intra-corporate one, to be sure, is of no concern to the Sandiganbayan,
having no relevance whatever to the ownership of the sequestered stock. The contention, therefore, that in view of this
Court's ruling as regards the sequestered SMC stock above adverted to, the SEC has no jurisdiction over the de los
Angeles complaint, cannot be sustained and must be rejected. The dispute concerns acts of the board of directors claimed
to amount to fraud and misrepresentation which may be detrimental to the interest of the stockholders, or is one arising
out of intra-corporate relations between and among stockholders, or between any or all of them and the corporation of
which they are stockholders.140cralaw virtualaw library
Moreover, the jurisdiction of the Sandiganbayan has been held not to extend even to a case involving a sequestered
company notwithstanding that the majority of the members of the board of directors were PCGG nominees. The Court
marked this distinction clearly in Holiday Inn (Phils.), Inc. v. Sandiganbayan,141 holding thusly:

The subject-matter of petitioner’s proposed complaint-in-intervention involves basically, an interpretation of contract, i.e.,
whether or not the right of first refusal could and/or should have been observed, based on the Addendum/Agreement of
July 14, 1988, which extended the terms and conditions of the original agreement of January 1, 1976. The question of
whether or not the sequestered property was lawfully acquired by Roberto S. Benedicto has no bearing on the legality of
the termination of the management contract by NRHDC’s Board of Directors. The two are independent and unrelated
issues and resolution of either may proceed independently of each other. Upholding the legality of Benedicto’s acquisition
of the sequestered property is not a guarantee that HIP's management contract would be upheld, for only the Board of
Directors of NRHDC is qualified to make such a determination.

Likewise, the Sandiganbayan correctly denied jurisdiction over the proposed complaint-in-intervention. The original and
exclusive jurisdiction given to the Sandiganbayan over PCGG cases pertains to (a) cases filed by the PCGG, pursuant to
the exercise of its powers under Executive Order Nos. 1, 2 and 14. as amended by the Office of the President, and Article
XVIII, Section 26 of the Constitution, i.e., where the principal cause of action is the recovery of ill-gotten wealth, as well
as all incidents arising from, incidental to, or related to such cases and (b) cases filed by those who wish to question or
challenge the commission’s acts or orders in such cases.

Evidently, petitioner’s proposed complaint-in-intervention is an ordinary civil case that does not pertain to the
Sandiganbayan. As the Solicitor General stated, the complaint is not directed against PCGG as an entity, but against a
private corporation, in which case it is not per se, a PCGG case.
In the cases now before the Court, what are sought to be determined are the propriety of the election of a party as a
Director, and his authority to act in that capacity. Such issues should be exclusively determined only by the RTC pursuant to
the pertinent law on jurisdiction because they did not concern the recovery of ill-gotten wealth.

2.
Lack of pre-trial was not fatal
in intra-corporate election contests

Under Section 4 of Rule 6 (Election Contests) of the Interim Rules of Procedure for Intra-Corporate Controversies, which took
effect on April 1, 2001 (A.M. No. 01-2-04-SC), issued pursuant to Republic Act No. 8799, the trial court, within two days
from the filing of the complaint, may outrightly dismiss the complaint upon a consideration of the allegations thereof if the
complaint is not sufficient in form and substance, or, if the complaint is sufficient, may order the issuance of summons
which shall be served, together with a copy of the complaint, on the defendant within two days from its issuance. Should it
find the need to hold a hearing to clarify specific factual matters, the trial court shall set the case for hearing, and the
hearing shall be completed not later than 15 days from the date of the first hearing. The trial court is mandated to render a
decision within 15 days from receipt of the last pleading, or from the date of the last hearing, as the case may be.

The CA correctly pointed out that Rule 6 nowhere required that the RTC acting as a special commercial court should first
conduct a pre-trial conference before it could render its judgment in a corporate election contest. Hence, the RTC (Branch
138) in Makati properly heard the case of annulment of the election with dispatch in accordance with the guidelines set in
the resolution in A.M. No. 01-2-04-SC. With the requirements of due process having been served, no defect infirmed the
RTC’s ruling to set aside the election, and to oust those illegally elected.

3.
RTC (Branch 138) retained its jurisdiction
over the case that was ripe for adjudication

While it is true that this Court meanwhile revoked on June 27, 2006 the designation of the RTC (Branch 138) to act as a
special commercial court, through the resolution in A.M. No. 03-3-03-SC, the RTC (Branch 138) did not thereafter become
bereft of the jurisdiction to decide the controversy because of the exception expressly stated in the resolution in A.M. No.
03-3-03-SC itself, to wit:

x x x x

Upon the effectivity of this designation, all commercial cases pending before Branches 138 and 61 shall be transferred to
RTC, Branch 149, Makati City, except those which are already submitted for decision, which cases shall be decided by the
acting presiding judges thereat. x x x.
Contrary to the assertion of the Nieto-PCGG group, the foregoing provision did not require the issuance of any special order
stating that the case was already submitted for decision. It was sufficient, given the summary nature of intra-corporate
controversies, especially election contests, that the trial court was done collating all the evidence from the pleadings (i.e.,
pleadings, affidavits, documentary and other evidence attached thereto, and the answers of the witnesses to the
clarificatory questions of the court given during the hearings), if deemed sufficient, or from the clarificatory hearings, if
conducted. The purpose of the exception is to obviate the repetition of the gathering of evidence. It is clear from Section 9
of Rule 6 that after the collation of evidence, the only thing that remains is for the RTC to render its decision without issuing
a special order declaring the case submitted for decision, viz:

Section 9. Decision. – The Court shall render a decision within fifteen (15) days from receipt of the last pleading, or from the
date of the last hearing, as the case may be. The decision shall be based on the pleadings, affidavits, documentary and
other evidence attached thereto and the answers of the witnesses to the clarificatory questions of the court given during
the hearings.
4.
Ruling in G.R. No. 141796 and
G.R. No. 141804 was properly applied
to Civil Case No. 04-1049

It was not the principle of res judicata, as claimed by the Nieto-PCGG Group, that justified the application to Civil Case No.
04-1049 of the Court’s ruling in G.R. No. 141796 and G.R. No. 141804 invalidating the PHC elections conducted by the
Nieto-PCGG Group, but rather the doctrine of stare decisis et non quieta movere, which means “to adhere to precedents,
and not to unsettle things which are established.” 142cralaw virtualaw library

Under the doctrine of stare decisis, when the Court has once laid down a principle of law as applicable to a certain state of
facts, the courts will adhere to that principle, and apply it to all future cases in which the facts are substantially similar,
regardless of whether the parties and property involved are the same. 143 The doctrine of stare decisis is based upon the
legal principle or rule involved, not upon the judgment that results therefrom. It is in this particular sense that stare
decisis differs from res judicata, because res judicata is based upon the judgment.144cralaw virtualaw library
The doctrine of stare decisis is grounded on the necessity for securing certainty and stability in judicial decisions, thus:

Time and again, the Court has held that it is a very desirable and necessary judicial practice that when a court has laid down
a principle of law as applicable to a certain state of facts, it will adhere to that principle and apply it to all future cases in
which the facts are substantially the same. Stare decisis et non quieta movere. Stand by the decisions and disturb not what
is settled. Stare decisis simply means that for the sake of certainty, a conclusion reached in one case should be applied to
those that follow if the facts are substantially the same, even though the parties may be different. It proceeds from the first
principle of justice that, absent any powerful countervailing considerations, like cases ought to be decided alike. Thus,
where the same questions relating to the same event have been put forward by the parties similarly situated as in a
previous case litigated and decided by a competent court, the rule of stare decisis is a bar to any attempt to relitigate the
same issue.145cralaw virtualaw library
The question of who held the majority shareholdings in POTC and PHILCOMSAT was definitively laid to rest in G.R. No.
141796 and G.R. No. 141804, whereby the Court upheld the validity of the compromise agreement the Government had
concluded with Atty. Ilusorio. Said the Court:–

With the imprimatur of no less than the former President Fidel V. Ramos and the approval of the Sandiganbayan, the
Compromise Agreement must be accorded utmost respect. Such amicable settlement is not only allowed but even
encouraged. Thus, in Republic vs. Sandiganbayan, we held:
‘It is advocated by the PCGG that respondent Benedicto retaining a portion of the assets is anathema to, and incongruous
with, the zero-retention policy of the government in the pursuit for the recovery of all ill-gotten wealth pursuant to Section
2(a) of Executive Order No. 1. While full recovery is ideal, the PCGG is not precluded from entering into a
Compromise Agreement which entails reciprocal concessions if only to expedite recovery so that the remaining ‘funds,
assets and other properties may be used to hasten national economic recovery’ (3rd WHEREAS clause, Executive Order
No. 14-A). To be sure, the so-called zero retention mentioned in Section 2(a) of Executive Order No. 1 had been modified
to read:
‘WHEREAS, the Presidential Commission on Good Government was created on February 28, 1986 by Executive Order No.
1 to assist the President in the recovery of ill-gotten wealth accumulated by former President Ferdinand E. Marcos, his
immediate family, relatives, subordinates and close associates’;
which undoubtedly suggests a departure from the former goal of total restitution.

x x x x

The authority of the PCGG to enter into Compromise Agreements in civil cases and to grant immunity, under certain
circumstances, in criminal cases is now settled and established. In Republic of the Philippines and Jose O. Campos, Jr. vs.
Sandiganbayan, et al. (173 SCRA 72 [1989]), this Court categorically stated that amicable settlements and compromises
are not only allowed but actually encouraged in civil cases. A specific grant of immunity from criminal prosecutions was
also sustained. In Benedicto vs. Board of Administrators of Television Stations RPN, BBC, and IBC (207 SCRA 659 [1992]), the
Court ruled that the authority of the PCGG to validly enter into Compromise Agreement for the purpose of avoiding
litigation or putting an end to one already commenced was indisputable. x x x (italics supplied)
Having been sealed with court approval, the Compromise Agreement has the force of res judicata between the parties and
should be complied with in accordance with its terms. Pursuant thereto, Victoria C. de los Reyes, Corporate Secretary of the
POTC, transmitted to Mr. Magdangal B. Elma, then Chief Presidential Legal Counsel and Chairman of PCGG, Stock Certificate
No. 131 dated January 10, 2000, issued in the name of the Republic of the Philippines, for 4,727 POTC shares. Thus, the
Compromise Agreement was partly implemented.146cralaw virtualaw library
As a result of the Government having expressly recognized that 673 POTC shares belonged to Atty. Ilusorio, Atty. Ilusorio
and his group gained the majority control of POTC.

Applying the ruling in G.R. No. 141796 and G.R. No. 141804 to Civil Case No. 04-1049, the RTC (Branch 138) correctly
concluded that the Nieto-PCGG Group, because it did not have the majority control of POTC, could not have validly
convened and held the stockholders’ meeting and election of POTC officers on August 5, 2004 during which Nieto, Jr. and
PCGG representative Guy De Leon were respectively elected as President and Chairman; and that there could not be a valid
authority for Nieto, Jr. and/or Locsin to vote the proxies of the group in the PHILCOMSAT meeting.
For the same reason, the POTC proxies used by Nieto, Jr. and Locsin to elect themselves respectively as Chairman and
President of PHILCOMSAT; and the PHILCOMSAT proxies used by Nieto, Jr. and Locsin in the August 31, 2004 PHC elections
to elect themselves respectively as President and Acting Chairman of PHC, were all invalid for not having the support of the
majority shareholders of said corporations.

While it is true that judicial decisions should be given a prospective effect, such prospectivity did not apply to the June 15,
2005 ruling in G.R. No. 141796 and G.R. No. 141804 because the ruling did not enunciate a new legal doctrine or change the
interpretation of the law as to prejudice the parties and undo their situations established under an old doctrine or prior
interpretation. Indeed, the ruling only affirmed the compromise agreement consummated on June 28, 1996 and approved
by the Sandiganbayan on June 8, 1998, and accordingly implemented through the cancellation of the shares in the names of
IRC and MLDC and their registration in the names of Atty. Ilusorio to the extent of 673 shares, and of the Republic to the
extent of 4,727 shares. In a manner of speaking, the decision of the Court in G.R. No. 141796 and G.R. No. 141804
promulgated on June 15, 2005 declared the compromise agreement valid, and such validation properly retroacted to the
date of the judicial approval of the compromise agreement on June 8, 1998.

Consequently, although the assailed elections were conducted by the Nieto-PCGG group on August 31, 2004 but the ruling
in G.R. No. 141796 and G.R. No. 141804 was promulgated only on June 15, 2005, the ruling was the legal standard by which
the issues raised in Civil Case No. 04-1049 should be resolved.

5.
Proper mode of appeal in intra-corporate cases
is by petition for review under Rule 43

In Dee Ping Wee v. Lee Hiong Wee,147 the Court has expounded that the appropriate mode of appeal for an aggrieved party
in an intra-corporate dispute is a petition for review under Rule 43 of the Rules of Court, to wit:

Verily, the first part of Section 4, Rule 1 of the Interim Rules is categorical. Save for the exceptions clearly stated therein, the
provision enunciates that a decision and order issued under the Interim Rules shall be enforceable immediately after the
rendition thereof. In order to assail the decision or order, however, the second part of the provision speaks of an appeal or
petition that needs to be filed by the party concerned. In this appeal or petition, a restraining order must be sought from
the appellate court to enjoin the enforcement or implementation of the decision or order. Unless a restraining order is so
issued, the decision or order rendered under the Interim Rules shall remain to be immediately executory.

On September 14, 2004, the Court issued a Resolution in A.M. No. 04-9-07-SC to rectify the situation wherein “lawyers and
litigants are in a quandary on how to prevent under appropriate circumstances the execution of decisions and orders in
cases involving corporate rehabilitation and intra-corporate controversies.” To address the “need to clarify the proper
mode of appeal in [cases involving corporate rehabilitation and intra-corporate controversies] in order to prevent cluttering
the dockets of the courts with appeals and/or petitions for certiorari,” the Court thereby resolved that:
1. All decisions and final orders in cases falling under the Interim Rules of Corporate Rehabilitation and the Interim Rules
of Procedure Governing Intra-Corporate Controversies under Republic Act No. 8799 shall be appealable to the Court of
Appeals through a petition for review under Rule 43 of the Rules of Court.

2. The petition for review shall be taken within fifteen (15) days from notice of the decision or final order of the Regional
Trial Court. Upon proper motion and the payment of the full amount of the legal fee prescribed in Rule 141 as amended
before the expiration of the reglementary period, the Court of Appeals may grant an additional period of fifteen (15) days
within which to file the petition for review. No further extension shall be granted except for the most compelling reasons
and in no case to exceed fifteen (15) days. (Emphases ours.)
x x x x

The issue that needs to be resolved at this point is whether or not petitioners pursued the correct remedy in questioning
the RTC Decisions in Civil Case Nos. Q-04-091, Q-04-092 and Q-04-093. Corollary to this is whether or not the petitions
for certiorari filed by petitioners could have been treated as petitions for review under Rule 43 of the Rules of Court, in
accordance with the provisions of the Resolution in A.M. No. 04-9-07-SC, such that petitioners can be considered to have
availed themselves of the proper remedy in assailing the rulings of the RTC.

We answer in the negative.

The term “petition” in the third and fourth paragraphs of A.M. No. 04-9-07-SC, cannot be construed as to include a petition
for certiorari under Rule 65 of the Rules of Court. The rationale for this lies in the essential difference between a petition for
review under Rule 43 and a petition for certiorari under Rule 65 of the Rules of Court.

x x x x

The RTC Decisions in Civil Case Nos. Q-04-091, Q-04-092 and Q-04-093 are final orders that disposed of the whole subject
matter or terminated the particular proceedings or action, leaving nothing to be done but to enforce by execution what has
been determined. As the RTC was unquestionably acting within its jurisdiction, all errors that it might have committed in
the exercise of such jurisdiction are errors of judgment, which are reviewable by a timely appeal.

x x x x

The Court of Appeals (12th Division) was, therefore, correct in dismissing the petition for certiorari in CA-G.R. SP No. 85878,
which assailed the RTC Decision in Civil Case No. Q-04-091. x x x148cralaw virtualaw library
The rule providing that a petition for review under Rule 43 of the Rules of Court is the proper mode of appeal in intra-
corporate controversies, as embodied in A. M. No. 04-9-07-SC, has been in effect since October 15, 2004. Hence, the filing
by POTC and PHC (Nieto Group) of the petition for certiorari on March 21, 2007 (C.A.-G.R. SP No. 98399) was inexcusably
improper and ineffectual. By virtue of its being an extraordinary remedy, certiorari could neither replace nor substitute an
adequate remedy in the ordinary course of law, like appeal in due course.149 Indeed, the appeal under Rule 43 of the Rules
of Court would have been adequate to review and correct even the grave abuse of discretion imputed to the RTC. 150cralaw
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As a consequence of the impropriety and ineffectuality of the remedy chosen by POTC and PHC (Nieto Group), the TRO and
the WPI initially issued by the CA in C.A.-G.R. SP No. 98399 did not prevent the immediately executory character of the
decision in Civil Case No. 04-1049.

6.
Petition for contempt against Bildner had no basis

The filing by Bildner and her counsel Atty. Manzanal of the complaint for perjury against Locsin and his counsel Atty.
Labastilla in the Office of the City Prosecutor of Manila did not amount to unlawful interference with the processes of the
CA. There is no denying that Bildner was within her right as a party in interest in the proceedings then pending in the CA to
bring the perjury charge against Locsin and his counsel for their failure to aver in the certification against forum shopping
attached to the petition for certiorari in C.A.-G.R. SP No. 98399 of the pendency of another petition in C.A.-G.R. SP No.
98087 despite their knowledge thereof. Her complaint for perjury could really be dealt with by the Office of the City
Prosecutor of Manila independently from any action the CA would take on the issue of forum shopping. As such, the filing
of the complaint did not interfere with the CA’s authority over the petition in C.A.-G.R. SP No. 98399.

In this regard, we deem to be appropriate to reiterate what the Court said on the nature of contempt of court in Lorenzo
Shipping Corporation v. Distribution Management Association of the Philippines,151viz:

Misbehavior means something more than adverse comment or disrespect. There is no question that in contempt the intent
goes to the gravamen of the offense. Thus, the good faith, or lack of it, of the alleged contemnor should be considered.
Where the act complained of is ambiguous or does not clearly show on its face that it is contempt, and is one which, if the
party is acting in good faith, is within his rights, the presence or absence of a contumacious intent is, in some instances,
held to be determinative of its character. A person should not be condemned for contempt where he contends for what he
believes to be right and in good faith institutes proceedings for the purpose, however erroneous may be his conclusion as
to his rights. To constitute contempt, the act must be done willfully and for an illegitimate or improper purpose.
Nonetheless, the Court states that the power to punish for contempt is inherent in all courts, and is essential to the
preservation of order in judicial proceedings and to the enforcement of judgments, orders, and mandates of the court, and
ultimately, to the due administration of justice. But such power should be exercised on the preservative, not on the
vindictive, principle. Only in cases of clear and contumacious refusal to obey should the power be exercised. Such power,
being drastic and extraordinary in its nature, should not be resorted to unless necessary in the interest of justice. 152cralaw
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7.
Bildner Group entitled to injunctive relief

Concerning the propriety of the issuance of the WPI to enjoin BPI from letting the Locsin Group withdraw funds or transact
with BPI on PHC’s deposits, the Court finds that the Bildner Group as the applicant had a right in esse to be protected by the
injunctive relief. A right that is in esse is a clear and unmistakable right to be protected, and is one founded on or granted by
law or is enforceable as a matter of law.153 The Bildner Group, because of the indubitability of its standing as a party in
interest, showed a clear and unmistakable right to be protected.

In granting the Bildner Group’s application for the WPI, the RTC (Branch 62) emphasized the peculiarities of the case.
Apparently, the Bildner Group relied on the fact that their election to the PHC Board of Directors was implemented and
executed even prior to the WPI issued by the CA to stop the RTC (Branch 138) from implementing its decision in Civil Case
No. 04-1049. The right that the Bildner Group relied on in seeking the execution of the decision was enforceable as a matter
of law, for it emanated from the validly issued decision that was immediately executory under the pertinent rule. On the
other hand, the TRO and WPI the CA issued in C.A.-G. R. SP No. 98399 could not and did not have any restraining effect on
the immediately executory nature of the decision rendered in Civil Case No. 04-1049, because the matter had been brought
to the CA through the wrong remedy.

Considering that the Bildner Group’s clear right to an injunctive relief was established, coupled with the affirmance of the
consolidated decision of the CA upholding the validity of the July 28, 2004 election of the Bildner Group as Directors and
Officers of PHC, the decision promulgated in C.A.-G.R. SP No. 102437 to the effect that Bildner’s standing as a party-in-
interest was unclear, and that she failed to show a clear and unmistakable right to be protected by the writ of injunction,
lost its ground.

Accordingly, the reversal of the decision promulgated in C.A.-G.R. SP No. 102437, and the reinstatement of the WPI issued
against BPI by the RTC (Branch 62) in Civil Case No. 07-840 are in order.

8.
Supreme Court, not being a trier of facts,
will not reexamine the evidence

The insistence by POTC and PHC (Nieto Group) that the RTC’s decision in Civil Case No. 04-1049 was contrary to the facts
and the evidence lacks merit.

The Court is not a trier of facts, and thus should not reexamine the evidence in order to determine whether the facts were
as POTC and PHC (Nieto Group) now insist they were. The Court must respect the findings of the CA sustaining the factual
findings of the RTC in Civil Case No. 04-1049. As a rule, the findings of fact by the CA are not reviewed on appeal, but are
binding and conclusive.154 The reason for this has been well stated in J.R. Blanco v. Quasha: 155cralaw virtualaw library

To begin with, this Court is not a trier of facts. It is not its function to examine and determine the weight of the evidence
supporting the assailed decision. In Philippine Airlines, Inc. vs. Court of Appeals (275 SCRA 621 [1997]), the Court held that
factual findings of the Court of Appeals which are supported by substantial evidence are binding, final and conclusive upon
the Supreme Court. So also, well-established is the rule that “factual findings of the Court of Appeals are conclusive on the
parties and carry even more weight when the said court affirms the factual findings of the trial court.” Moreover, well
entrenched is the prevailing jurisprudence that only errors of law and not of facts are reviewable by this Court in a petition
for review on certiorari under Rule 45 of the Revised Rules of Court, which applies with greater force to the Petition under
consideration because the factual findings by the Court of Appeals are in full agreement with what the trial court found.
We affirm, therefore, the appealed consolidated decision promulgated in C.A.-G.R. SP No. 101225, C.A.-G.R. SP No. 98097
and C.A.-G.R. SP No. 98399, and dismiss the petitions of the Locsin/Nieto-PCGG Group filed in G.R. No. 184712-14 and G.R.
No. 186066.

WHEREFORE, the Court DENIES the petitions for review on certiorari in G.R. No. 184622, G.R. No. 184712-14, and G.R. No.
186066; AFFIRMS the resolution promulgated on August 15, 2007 by the Sandiganbayan in Civil Case No. 0198 and the
consolidated decision promulgated on September 30, 2008 in C.A.-G.R. SP No. 101225, C.A.-G.R. SP No. 98097 and C.A.-G.R.
SP No. 98399; GRANTS the petition for review on certiorari in G.R. No. 186590, and, accordingly, ANNULS and SETS
ASIDE the decision promulgated on July 16, 2008 in C.A.-G.R. SP No. 102437; AFFIRMS the order issued on December 13,
2007 by the Regional Trial Court, Branch 62, in Makati City; and REINSTATES the writ of injunction issued on December 17,
2007 against Bank of Philippine Islands.

The Court DIRECTS the Locsin/Nieto-PCGG Group to render an accounting of all the funds and other assets received from
the PHILIPPINE OVERSEAS TELECOMMUNICATIONS CORPORATION, PHILIPPINE HOLDINGS CORPORATION and PHILIPPINE
COMMUNICATIONS SATELLITE CORPORATION since September 1, 2004, and to return such funds to the respective
corporations within thirty days from the finality of this decision.

Costs of suit to be paid by the Group of Enrique L. Locsin and Manuel H. Nieto, Jr.

SO ORDERED.

Aguirre II vs. FQB+7 Inc., January 9, 2013

Pursuant to Section 145 of the Corporation Code, an existing intra-corporate dispute, which does not constitute a
continuation of corporate business, is not affected by the subsequent dissolution of the corporation.cralawlibrary

Before the Court is a Petition for Review on Certiorari of the June 29, 2005 Decision1ςrνl1 of the Court of Appeals (CA) in
CA-G.R. SP No. 87293, which nullified the trial court's writ of preliminary injunction and dismissed petitioner Vitaliano N.
Aguirre's (Vitaliano) Complaint before the Regional Trial Court (RTC) for lack of jurisdiction. The dispositive portion of the
assailed Decision reads:chanroblesvirtualawlibrary

WHEREFORE, the assailed October 15, 2004 Order, as well as the October 27, 2004 Writ of Preliminary Injunction, are SET
ASIDE. With FQB+7, Inc.'s dissolution on September 29, 2003 and Case No. 04111077's ceasing to become an intra-
corporate dispute, said case is hereby ordered DISMISSED for want of jurisdiction.cralawlibrary

SO ORDERED.2ςrνl1

Likewise assailed in this Petition is the appellate court's December 16, 2005 Resolution,3ςrνl1 which denied a
reconsideration of the assailed Decision.cralawlibrary

Factual Antecedents

On October 5, 2004, Vitaliano filed, in his individual capacity and on behalf of FQB+7, Inc. (FQB+7), a Complaint 4ςrνl1 for
intra-corporate dispute, injunction, inspection of corporate books and records, and damages, against respondents
Nathaniel D. Bocobo (Nathaniel), Priscila D. Bocobo (Priscila), and Antonio De Villa (Antonio). The Complaint alleged that
FQB+7 was established in 1985 with the following directors and subscribers, as reflected in its Articles of
Incorporation:chanroblesvirtualawlibrary
Directors Subscribers
1. Francisco Q. Bocobo 1. Francisco Q. Bocobo
2. Fidel N. Aguirre 2. Fidel N. Aguirre
3. Alfredo Torres 3. Alfredo Torres
4. Victoriano Santos 4. Victoriano Santos
5. Victorino Santos5ςrνl1 5. Victorino Santos
6. Vitaliano N. Aguirre II
7. Alberto Galang
8. Rolando B. Bechayda6ςrνl1

To Vitaliano's knowledge, except for the death of Francisco Q. Bocobo and Alfredo Torres, there has been no other change
in the above listings.cralawlibrary

The Complaint further alleged that, sometime in April 2004, Vitaliano discovered a General Information Sheet (GIS) of
FQB+7, dated September 6, 2002, in the Securities and Exchange Commission (SEC) records. This GIS was filed by Francisco
Q. Bocobo's heirs, Nathaniel and Priscila, as FQB+7's president and secretary/treasurer, respectively. It also stated FQB+7's
directors and subscribers, as follows:chanroblesvirtualawlibrary

Directors Subscribers
1. Nathaniel D. Bocobo 1. Nathaniel D. Bocobo
2. Priscila D. Bocobo 2. Priscila D. Bocobo
3. Fidel N. Aguirre 3. Fidel N. Aguirre
4. Victoriano Santos 4. Victorino7ςrνl1 Santos
5. Victorino Santos 5. Victorino Santos
6. Consolacion Santos8ςrνl1 6. Consolacion Santos9ςrνl1

Further, the GIS reported that FQB+7's stockholders held their annual meeting on September 3, 2002. 10ςrνl1

The substantive changes found in the GIS, respecting the composition of directors and subscribers of FQB+7, prompted
Vitaliano to write to the "real" Board of Directors (the directors reflected in the Articles of Incorporation), represented by
Fidel N. Aguirre (Fidel). In this letter11ςrνl1 dated April 29, 2004, Vitaliano questioned the validity and truthfulness of the
alleged stockholders meeting held on September 3, 2002. He asked the "real" Board to rectify what he perceived as
erroneous entries in the GIS, and to allow him to inspect the corporate books and records. The "real" Board allegedly
ignored Vitaliano's request.cralawlibrary

On September 27, 2004, Nathaniel, in the exercise of his power as FQB+7's president, appointed Antonio as the
corporation's attorney-in-fact, with power of administration over the corporation's farm in Quezon
Province.12ςrνl1 Pursuant thereto, Antonio attempted to take over the farm, but was allegedly prevented by Fidel and his
men.13ςrνl1

Characterizing Nathaniel's, Priscila's, and Antonio's continuous representation of the corporation as a usurpation of the
management powers and prerogatives of the "real" Board of Directors, the Complaint asked for an injunction against them
and for the nullification of all their previous actions as purported directors, including the GIS they had filed with the SEC.
The Complaint also sought damages for the plaintiffs and a declaration of Vitaliano's right to inspect the corporate
records.cralawlibrary

The case, docketed as SEC Case No. 04-111077, was assigned to Branch 24 of the RTC of Manila (Manila RTC), which was a
designated special commercial court, pursuant to A.M. No. 03-03-03-SC.14ςrνl1

The respondents failed, despite notice, to attend the hearing on Vitaliano's application for preliminary
injunction.15ςrνl1 Thus, in an Order16ςrνl1 dated October 15, 2004, the trial court granted the application based only on
Vitaliano's testimonial and documentary evidence, consisting of the corporation's articles of incorporation, by-laws, the GIS,
demand letter on the "real" Board of Directors, and police blotter of the incident between Fidel's and Antonio's groups. On
October 27, 2004, the trial court issued the writ of preliminary injunction 17ςrνl1 after Vitaliano filed an injunction
bond.cralawlibrary

The respondents filed a motion for an extension of 10 days to file the "pleadings warranted in response to the complaint,"
which they received on October 6, 2004. 18ςrνl1 The trial court denied this motion for being a prohibited pleading under
Section 8, Rule 1 of the Interim Rules of Procedure Governing Intra-corporate Controversies under Republic Act (R.A.) No.
8799.19ςrνl1

The respondents filed a Petition for Certiorari and Prohibition,20ςrνl1 docketed as CA-G.R. SP No. 87293, before the CA.
They later amended their Petition by impleading Fidel, who allegedly shares Vitaliano's interest in keeping them out of the
corporation, as a private respondent therein. 21ςrνl1

The respondents sought, in their certiorari petition, the annulment of all the proceedings and issuances in SEC Case No. 04-
11107722ςrνl1 on the ground that Branch 24 of the Manila RTC has no jurisdiction over the subject matter, which they
defined as being an agrarian dispute.23ςrνl1 They theorized that Vitaliano's real goal in filing the Complaint was to
maintain custody of the corporate farm in Quezon Province. Since this land is agricultural in nature, they claimed that
jurisdiction belongs to the Department of Agrarian Reform (DAR), not to the Manila RTC. 24ςrνl1 They also raised the
grounds of improper venue (alleging that the real corporate address is different from that stated in the Articles of
Incorporation)25ςrνl1 and forum-shopping26ςrνl1 (there being a pending case between the parties before the DAR
regarding the inclusion of the corporate property in the agrarian reform program). 27ςrνl1Respondents also raised their
defenses to Vitaliano's suit, particularly the alleged disloyalty and fraud committed by the "real" Board of
Directors,28ςrνl1 and respondents' "preferential right to possess the corporate property" as the heirs of the majority
stockholder Francisco Q. Bocobo.29ςrνl1

The respondents further informed the CA that the SEC had already revoked FQB+7's Certificate of Registration on
September 29, 2003 for its failure to comply with the SEC reportorial requirements.30ςrνl1The CA determined that the
corporation's dissolution was a conclusive fact after petitioners Vitaliano and Fidel failed to dispute this factual
assertion.31ςrνl1

Ruling of the Court of Appeals

The CA determined that the issues of the case are the following: (1) whether the trial court's issuance of the writ of
preliminary injunction, in its October 15, 2004 Order, was attended by grave abuse of discretion amounting to lack of
jurisdiction; and (2) whether the corporation's dissolution affected the trial court's jurisdiction to hear the intracorporate
dispute in SEC Case No. 04-111077.32ςrνl1

On the first issue, the CA determined that the trial court committed a grave abuse of discretion when it issued the writ of
preliminary injunction to remove the respondents from their positions in the Board of Directors based only on Vitaliano's
self-serving and empty assertions. Such assertions cannot outweigh the entries in the GIS, which are documented facts on
record, which state that respondents are stockholders and were duly elected corporate directors and officers of FQB+7, Inc.
The CA held that Vitaliano only proved a future right in case he wins the suit. Since an injunction is not a remedy to protect
future, contingent or abstract rights, then Vitaliano is not entitled to a writ. 33ςrνl1

Further, the CA disapproved the discrepancy between the trial court's October 15, 2004 Order, which granted the
application for preliminary injunction, and its writ dated October 27, 2004. The Order enjoined all the respondents "from
entering, occupying, or taking over possession of the farm owned by Atty. Vitaliano Aguirre II," while the writ states that
the subject farm is "owned by plaintiff corporation located in Mulanay, Quezon Province." The CA held that this discrepancy
imbued the October 15, 2004 Order with jurisdictional infirmity. 34ςrνl1

On the second issue, the CA postulated that Section 122 of the Corporation Code allows a dissolved corporation to continue
as a body corporate for the limited purpose of liquidating the corporate assets and distributing them to its creditors,
stockholders, and others in interest. It does not allow the dissolved corporation to continue its business. That being the
state of the law, the CA determined that Vitaliano's Complaint, being geared towards the continuation of FQB+7, Inc.'s
business, should be dismissed because the corporation has lost its juridical personality. 35ςrνl1 Moreover, the CA held that
the trial court does not have jurisdiction to entertain an intra-corporate dispute when the corporation is already
dissolved.36ςrνl1

After dismissing the Complaint, the CA reminded the parties that they should proceed with the liquidation of the dissolved
corporation based on the existing GIS, thus:chanroblesvirtualawlibrary

With SEC's revocation of its certificate of registration on September 29, 2004 [sic], FQB+7, Inc. will be obligated to wind up
its affairs. The Corporation will have to be liquidated within the 3-year period mandated by Sec. 122 of the Corporation
Code.cralawlibrary

Regardless of the method it will opt to liquidate itself, the Corporation will have to reckon with the members of the board
as duly listed in the General Information Sheet last filed with SEC. Necessarily, and as admitted in the complaint below, the
following as listed in the Corporation's General Information Sheet dated September 6, 2002, will have to continue acting as
Members of the Board of FQB+7, Inc. viz:

x x x x37ςrνl1

Herein petitioners filed a Motion for Reconsideration.38ςrνl1 They argued that the CA erred in ruling that the October 15,
2004 Order was inconsistent with the writ. They explained that pages 2 and 3 of the said Order were interchanged in the
CA's records, which then misled the CA to its erroneous conclusion. They also posited that the original sentence in the
correct Order reads: "All defendants are further enjoined from entering, occupying or taking over possession of the farm
owned by plaintiff corporation located in Mulanay, Quezon." This sentence is in accord with what is ordered in the writ,
hence the CA erred in nullifying the Order.cralawlibrary

On the second issue, herein petitioners maintained that the CA erred in characterizing the reliefs they sought as a
continuance of the dissolved corporation's business, which is prohibited under Section 122 of the Corporation Code.
Instead, they argued, the relief they seek is only to determine the real Board of Directors that can represent the dissolved
corporation.cralawlibrary

The CA denied the Motion for Reconsideration in its December 16, 2005 Resolution. 39ςrνl1 It determined that the crucial
issue is the trial court's jurisdiction over an intra-corporate dispute involving a dissolved corporation. 40ςrνl1 Based on the
prayers in the Complaint, petitioners seek a determination of the real Board that can take over the management of the
corporation's farm, not to sit as a liquidation Board. Thus, contrary to petitioners' claims, their Complaint is not geared
towards liquidation but a continuance of the corporation's business.cralawlibrary

Issues

1. Whether the CA erred in annulling the October 15, 2004 Order based on interchanged pages.cralawlibrary

2. Whether the Complaint seeks to continue the dissolved corporation's business.cralawlibrary

3. Whether the RTC has jurisdiction over an intra-corporate dispute involving a dissolved corporation.cralawlibrary

Our Ruling

The Petition is partly meritorious.cralawlibrary

On the nullification of the Order of
preliminary injunction.

Petitioners reiterate their argument that the CA was misled by the interchanged pages in the October 15, 2004 Order. They
posit that had the CA read the Order in its correct sequence, it would not have nullified the Order on the ground that it was
issued with grave abuse of discretion amounting to lack of jurisdiction. 41ςrνl1

Petitioners' argument fails to impress. The CA did not nullify the October 15, 2004 Order merely because of the
interchanged pages. Instead, the CA determined that the applicant, Vitaliano, was not able to show that he had an actual
and existing right that had to be protected by a preliminary injunction. The most that Vitaliano was able to prove was a
future right based on his victory in the suit. Contrasting this future right of Vitaliano with respondents' existing right under
the GIS, the CA determined that the trial court should not have disturbed the status quo. The CA's discussion regarding the
interchanged pages was made only in addition to its above ratiocination. Thus, whether the pages were interchanged or not
will not affect the CA's main finding that the trial court issued the Order despite the absence of a clear and existing right in
favor of the applicant, which is tantamount to grave abuse of discretion. We cannot disturb the CA's finding on this score
without any showing by petitioners of strong basis to warrant the reversal.cralawlibrary

Is the Complaint a continuation of business?

Section 122 of the Corporation Code prohibits a dissolved corporation from continuing its business, but allows it to continue
with a limited personality in order to settle and close its affairs, including its complete liquidation,
thus:chanroblesvirtualawlibrary

Sec. 122. Corporate liquidation. - Every corporation whose charter expires by its own limitation or is annulled by forfeiture
or otherwise, or whose corporate existence for other purposes is terminated in any other manner, shall nevertheless be
continued as a body corporate for three (3) years after the time when it would have been so dissolved, for the purpose of
prosecuting and defending suits by or against it and enabling it to settle and close its affairs, to dispose of and convey its
property and to distribute its assets, but not for the purpose of continuing the business for which it was established.

xxxx

Upon learning of the corporation's dissolution by revocation of its corporate franchise, the CA held that the intra-corporate
Complaint, which aims to continue the corporation's business, must now be dismissed under Section 122.cralawlibrary

Petitioners concede that a dissolved corporation can no longer continue its business. They argue, however, that Section 122
allows a dissolved corporation to wind up its affairs within 3 years from its dissolution. Petitioners then maintain that the
Complaint, which seeks only a declaration that respondents are strangers to the corporation and have no right to sit in the
board or act as officers thereof, and a return of Vitaliano's stockholdings, intends only to resolve remaining corporate
issues. The resolution of these issues is allegedly part of corporate winding up.cralawlibrary

Does the Complaint seek a continuation of business or is it a settlement of corporate affairs? The answer lies in the prayers
of the Complaint, which state:chanroblesvirtualawlibrary

PRAYER

WHEREFORE, it is most respectfully prayed of this Honorable Court that judgment be rendered in favor of the plaintiffs and
against the defendants, in the following wise:

I. ON THE PRAYER OF TRO/STATUS QUO ORDER AND WRIT OF PRELIMINARY INJUNCTION:

 1. Forthwith and pending the resolution of plaintiffs' prayer for issuance of writ of preliminary injunction, in
order to maintain the status quo, a status quo order or temporary restraining order (TRO) be issued
enjoining the defendants, their officers, employees, and agents from exercising the powers and authority
as members of the Board of Directors of plaintiff FQB as well as officers thereof and from misrepresenting
and conducting themselves as such, and enjoining defendant Antonio de Villa from taking over the farm of
the plaintiff FQB and from exercising any power and authority by reason of his appointment emanating
from his co-defendant Bocobos.cralawlibrary

2. After due notice and hearing and during the pendency of this action, to issue writ of preliminary
injunction prohibiting the defendants from committing the acts complained of herein, more particularly
those enumerated in the immediately pr[e]ceeding paragraph, and making the injunction permanent
after trial on the merits.

II. ON THE MERITS

After trial, judgment be rendered in favor of the plaintiffs and against the defendants, as follows:

1. Declaring defendant Bocobos as without any power and authority to represent or conduct themselves as
members of the Board of Directors of plaintiff FQB, or as officers thereof.cralawlibrary

2. Declaring that Vitaliano N. Aguirre II is a stockholder of plaintiff FQB owning fifty (50) shares of stock
thereof.cralawlibrary

3. Allowing Vitaliano N. Aguirre II to inspect books and records of the company.cralawlibrary

4. Annulling the GIS, Annex "C" of the Complaint as fraudulent and illegally executed and filed.cralawlibrary

5. Ordering the defendants to pay jointly and solidarily the sum of at least P200,000.00 as moral damages; at
least P100,000.00 as exemplary damages; and at least P100,000.00 as and for attorney's fees and other
litigation expenses.

Plaintiffs further pray for costs and such other relief just and equitable under the premises. 42ςrνl1

The Court fails to find in the prayers above any intention to continue the corporate business of FQB+7. The Complaint does
not seek to enter into contracts, issue new stocks, acquire properties, execute business transactions, etc. Its aim is not to
continue the corporate business, but to determine and vindicate an alleged stockholder's right to the return of his
stockholdings and to participate in the election of directors, and a corporation's right to remove usurpers and strangers
from its affairs. The Court fails to see how the resolution of these issues can be said to continue the business of
FQB+7.cralawlibrary

Neither are these issues mooted by the dissolution of the corporation. A corporation's board of directors is not
rendered functus officio by its dissolution. Since Section 122 allows a corporation to continue its existence for a limited
purpose, necessarily there must be a board that will continue acting for and on behalf of the dissolved corporation for that
purpose. In fact, Section 122 authorizes the dissolved corporation's board of directors to conduct its liquidation within
three years from its dissolution. Jurisprudence has even recognized the board's authority to act as trustee for persons in
interest beyond the said three-year period.43ςrνl1 Thus, the determination of which group is the bona fide or rightful
board of the dissolved corporation will still provide practical relief to the parties involved.cralawlibrary

The same is true with regard to Vitaliano's shareholdings in the dissolved corporation. A party's stockholdings in a
corporation, whether existing or dissolved, is a property right 44ςrνl1 which he may vindicate against another party who has
deprived him thereof. The corporation's dissolution does not extinguish such property right. Section 145 of the Corporation
Code ensures the protection of this right, thus:chanroblesvirtualawlibrary

Sec. 145. Amendment or repeal. – No right or remedy in favor of or against any corporation, its stockholders, members,
directors, trustees, or officers, nor any liability incurred by any such corporation, stockholders, members, directors,
trustees, or officers, shall be removed or impaired either by the subsequent dissolution of said corporation or by any
subsequent amendment or repeal of this Code or of any part thereof. (Emphases supplied.)

On the dismissal of the Complaint for

lack of jurisdiction.

The CA held that the trial court does not have jurisdiction over an intra-corporate dispute involving a dissolved corporation.
It further held that due to the corporation's dissolution, the qualifications of the respondents can no longer be questioned
and that the dissolved corporation must now commence liquidation proceedings with the respondents as its directors and
officers.cralawlibrary

The CA's ruling is founded on the assumptions that intra-corporate controversies continue only in existing corporations;
that when the corporation is dissolved, these controversies cease to be intra-corporate and need no longer be resolved;
and that the status quo in the corporation at the time of its dissolution must be maintained. The Court finds no basis for the
said assumptions.cralawlibrary

Intra-corporate disputes remain even

when the corporation is dissolved.

Jurisdiction over the subject matter is conferred by law. R.A. No. 879945ςrνl1 conferred jurisdiction over intra-corporate
controversies on courts of general jurisdiction or RTCs, 46ςrνl1 to be designated by the Supreme Court. Thus, as long as the
nature of the controversy is intra-corporate, the designated RTCs have the authority to exercise jurisdiction over such
cases.cralawlibrary

So what are intra-corporate controversies? R.A. No. 8799 refers to Section 5 of Presidential Decree (P.D.) No. 902-A (or The
SEC Reorganization Act) for a description of such controversies:chanroblesvirtualawlibrary

a) Devices or schemes employed by or any acts, of the board of directors, business associates, its officers or partners,
amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or of the
stockholder, partners, members of associations or organizations registered with the Commission;

b) Controversies arising out of intra-corporate or partnership relations, between and among stockholders, members, or
associates; between any or all of them and the corporation, partnership or association of which they are stockholders,
members or associates, respectively; and between such corporation, partnership or association and the state insofar as it
concerns their individual franchise or right to exist as such entity;

c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations,
partnerships or associations.

The Court reproduced the above jurisdiction in Rule 1 of the Interim Rules of Procedure Governing Intra-corporate
Controversies under R.A. No. 8799:chanroblesvirtualawlibrary

SECTION 1. (a) Cases Covered – These Rules shall govern the procedure to be observed in civil cases involving the
following:
(1) Devices or schemes employed by, or any act of, the board of directors, business associates, officers or partners,
amounting to fraud or misrepresentation which may be detrimental to the interest of the public and/or of the stockholders,
partners, or members of any corporation, partnership, or association;

(2) Controversies arising out of intra-corporate, partnership, or association relations, between and among stockholders,
members, or associates; and between, any or all of them and the corporation, partnership, or association of which they are
stockholders, members, or associates, respectively;

(3) Controversies in the election or appointment of directors, trustees, officers, or managers of corporations, partnerships,
or associations;

(4) Derivative suits; and

(5) Inspection of corporate books.

Meanwhile, jurisprudence has elaborated on the above definitions by providing tests in determining whether a controversy
is intra-corporate. Reyes v. Regional Trial Court of Makati, Br. 14247ςrνl1 contains a comprehensive discussion of these two
tests, thus:chanroblesvirtualawlibrary

A review of relevant jurisprudence shows a development in the Court's approach in classifying what constitutes an intra-
corporate controversy. Initially, the main consideration in determining whether a dispute constitutes an intra-corporate
controversy was limited to a consideration of the intra-corporate relationship existing between or among the parties. The
types of relationships embraced under Section 5(b) x x x were as follows:

a) between the corporation, partnership, or association and the public;

b) between the corporation, partnership, or association and its stockholders, partners, members, or officers;

c) between the corporation, partnership, or association and the State as far as its franchise, permit or license to operate is
concerned; and

d) among the stockholders, partners or associates themselves. xxx

The existence of any of the above intra-corporate relations was sufficient to confer jurisdiction to the SEC [now the RTC],
regardless of the subject matter of the dispute. This came to be known as the relationship test.cralawlibrary

However, in the 1984 case of DMRC Enterprises v. Esta del Sol Mountain Reserve, Inc., the Court introduced the nature
of the controversy test. We declared in this case that it is not the mere existence of an intra-corporate relationship that
gives rise to an intra-corporate controversy; to rely on the relationship test alone will divest the regular courts of their
jurisdiction for the sole reason that the dispute involves a corporation, its directors, officers, or stockholders. We saw that
there is no legal sense in disregarding or minimizing the value of the nature of the transactions which gives rise to the
dispute.cralawlibrary

Under the nature of the controversy test, the incidents of that relationship must also be considered for the purpose of
ascertaining whether the controversy itself is intra-corporate. The controversy must not only be rooted in the existence of
an intra-corporate relationship, but must as well pertain to the enforcement of the parties' correlative rights and
obligations under the Corporation Code and the internal and intra-corporate regulatory rules of the corporation. If the
relationship and its incidents are merely incidental to the controversy or if there will still be conflict even if the relationship
does not exist, then no intra-corporate controversy exists.cralawlibrary

The Court then combined the two tests and declared that jurisdiction should be determined by considering not only the
status or relationship of the parties, but also the nature of the question under controversy. This two-tier test was adopted
in the recent case of Speed Distribution, Inc. v. Court of Appeals:chanroblesvirtualawlibrary

'To determine whether a case involves an intra-corporate controversy, and is to be heard and decided by the branches of
the RTC specifically designated by the Court to try and decide such cases, two elements must concur: (a) the status or
relationship of the parties, and [b] the nature of the question that is the subject of their controversy.cralawlibrary

The first element requires that the controversy must arise out of intra-corporate or partnership relations between any or
all of the parties and the corporation, partnership, or association of which they are stockholders, members or associates,
between any or all of them and the corporation, partnership or association of which they are stockholders, members or
associates, respectively; and between such corporation, partnership, or association and the State insofar as it concerns the
individual franchises. The second element requires that the dispute among the parties be intrinsically connected with the
regulation of the corporation. If the nature of the controversy involves matters that are purely civil in character,
necessarily, the case does not involve an intra-corporate controversy.' (Citations and some emphases omitted; emphases
supplied.)

Thus, to be considered as an intra-corporate dispute, the case: (a) must arise out of intra-corporate or partnership relations,
and (b) the nature of the question subject of the controversy must be such that it is intrinsically connected with the
regulation of the corporation or the enforcement of the parties' rights and obligations under the Corporation Code and the
internal regulatory rules of the corporation. So long as these two criteria are satisfied, the dispute is intra-corporate and the
RTC, acting as a special commercial court, has jurisdiction over it.cralawlibrary

Examining the case before us in relation to these two criteria, the Court finds and so holds that the case is essentially an
intra-corporate dispute. It obviously arose from the intra-corporate relations between the parties, and the questions
involved pertain to their rights and obligations under the Corporation Code and matters relating to the regulation of the
corporation. We further hold that the nature of the case as an intra-corporate dispute was not affected by the subsequent
dissolution of the corporation.cralawlibrary

It bears reiterating that Section 145 of the Corporation Code protects, among others, the rights and remedies of corporate
actors against other corporate actors. The statutory provision assures an aggrieved party that the corporation's dissolution
will not impair, much less remove, his/her rights or remedies against the corporation, its stockholders, directors or officers.
It also states that corporate dissolution will not extinguish any liability already incurred by the corporation, its stockholders,
directors, or officers. In short, Section 145 preserves a corporate actor's cause of action and remedy against another
corporate actor. In so doing, Section 145 also preserves the nature of the controversy between the parties as an intra-
corporate dispute.cralawlibrary

The dissolution of the corporation simply prohibits it from continuing its business. However, despite such dissolution, the
parties involved in the litigation are still corporate actors. The dissolution does not automatically convert the parties into
total strangers or change their intra-corporate relationships. Neither does it change or terminate existing causes of action,
which arose because of the corporate ties between the parties. Thus, a cause of action involving an intra-corporate
controversy remains and must be filed as an intra-corporate dispute despite the subsequent dissolution of the
corporation.cralawlibrary

WHEREFORE, premises considered, the Petition for Review on Certiorari is PARTIALLY GRANTED. The assailed June 29, 2005
Decision of the Court of Appeals in CA-G.R. SP No. 87293, as well as its December 16, 2005 Resolution, are ANNULLED with
respect to their dismissal of SEC Case No. 04-111077 on the ground of lack of jurisdiction. The said case is
ordered REINSTATED before Branch 24 of the Regional Trial Court of Manila. The rest of the assailed issuances
are AFFIRMED.

SO ORDERED.

Okol vs. Slimmers World International, December 11, 2009

The Case

Before the Court is a petition for review on certiorari[1] assailing the Decision[2] dated 18 October 2002 and Resolution dated
22 September 2003 of the Court of Appeals in CA-G.R. SP No. 69893, which set aside the Resolutions dated 29 May 2001
and 21 December 2001 of the National Labor Relations Commission (NLRC).

The Facts

Respondent Slimmers World International operating under the name Behavior Modifications, Inc. (Slimmers World)
employed petitioner Leslie Okol (Okol) as a management trainee on 15 June 1992. She rose up the ranks to become Head
Office Manager and then Director and Vice President from 1996 until her dismissal on 22 September 1999.

On 28 July 1999, prior to Okols dismissal, Slimmers World preventively suspended Okol. The suspension arose from the
seizure by the Bureau of Customs of seven Precor elliptical machines and seven Precor treadmills belonging to or consigned
to Slimmers World. The shipment of the equipment was placed under the names of Okol and two customs brokers for a
value less than US$500. For being undervalued, the equipment were seized.

On 2 September 1999, Okol received a memorandum that her suspension had been extended from 2 September until 1
October 1999 pending the outcome of the investigation on the Precor equipment importation.

On 17 September 1999, Okol received another memorandum from Slimmers World requiring her to explain why no
disciplinary action should be taken against her in connection with the equipment seized by the Bureau of Customs.

On 19 September 1999, Okol filed her written explanation. However, Slimmers World found Okols explanation to be
unsatisfactory. Through a letter dated 22 September 1999 signed by its president Ronald Joseph Moy (Moy), Slimmers
World terminated Okols employment.

Okol filed a complaint[3] with the Arbitration branch of the NLRC against Slimmers World, Behavior Modifications, Inc. and
Moy (collectively called respondents) for illegal suspension, illegal dismissal, unpaid commissions, damages and attorneys
fees, with prayer for reinstatement and payment of backwages.

On 22 February 2000, respondents filed a Motion to Dismiss [4] the case with a reservation of their right to file a Position
Paper at the proper time. Respondents asserted that the NLRC had no jurisdiction over the subject matter of the complaint.

In an Order,[5] dated 20 March 2000, the labor arbiter granted the motion to dismiss. The labor arbiter ruled that Okol was
the vice-president of Slimmers World at the time of her dismissal. Since it involved a corporate officer, the dispute was an
intra-corporate controversy falling outside the jurisdiction of the Arbitration branch.

Okol filed an appeal with the NLRC. In a Resolution[6] dated 29 May 2001, the NLRC reversed and set aside the labor arbiters
order. The dispositive portion of the resolution states:
WHEREFORE, the Order appealed from is SET ASIDE and REVERSED. A new one is hereby ENTERED
ordering respondent Behavior Modification, Inc./Slimmers World International to reinstate complainant
Leslie F. Okol to her former position with full back wages which to date stood in the amount
of P10,000,000.00 computed from July 28, 1999 to November 28, 2000 until fully reinstated; and the
further sum of P1,250,000.00 as indemnity pay plus attorneys fee equivalent to ten (10%) of the total
monetary award. However, should reinstatement be not feasible separation pay equivalent to one month
pay per year of service is awarded, a fraction of at least six months considered one whole year.
All other claims are dismissed for lack of factual or legal basis.

SO ORDERED.[7]

Respondents filed a Motion for Reconsideration with the NLRC. Respondents contended that the relief prayed for was
confined only to the question of jurisdiction. However, the NLRC not only decided the case on the merits but did so in the
absence of position papers from both parties. In a Resolution[8] dated 21 December 2001, the NLRC denied the motion for
lack of merit.

Respondents then filed an appeal with the Court of Appeals, docketed as CA-G.R. SP No. 69893.

The Ruling of the Court of Appeals

In a Decision[9] dated 18 October 2002, the appellate court set aside the NLRCs Resolution dated 29 May 2001 and affirmed
the labor arbiters Order dated 20 March 2000. The Court of Appeals ruled that the case, being an intra-corporate dispute,
falls within the jurisdiction of the regular courts pursuant to Republic Act No. 8799. [10] The appellate court added that the
NLRC had acted without jurisdiction in giving due course to the complaint and deprived respondents of their right to due
process in deciding the case on the merits.
Okol filed a Motion for Reconsideration which was denied in a Resolution[11] dated 22 September 2003.

Hence, the instant petition.

The Issue

The issue is whether or not the NLRC has jurisdiction over the illegal dismissal case filed by petitioner.
The Courts Ruling

The petition lacks merit.

Petitioner insists that the Court of Appeals erred in ruling that she was a corporate officer and that the case is an intra-
corporate dispute falling within the jurisdiction of the regular courts. Petitioner asserts that even as vice-president, the
work that she performed conforms to that of an employee rather than a corporate officer. Mere title or designation in a
corporation will not, by itself, determine the existence of an employer-employee relationship. It is the four-fold test,
namely (1) the power to hire, (2) the payment of wages, (3) the power to dismiss, and (4) the power to control, which must
be applied.

Petitioner enumerated the instances that she was under the power and control of Moy, Slimmers Worlds president: (1)
petitioner received salary evidenced by pay slips, (2) Moy deducted Medicare and SSS benefits from petitioners salary, and
(3) petitioner was dismissed from employment not through a board resolution but by virtue of a letter from Moy.Thus,
having shown that an employer-employee relationship exists, the jurisdiction to hear and decide the case is vested with the
labor arbiter and the NLRC.
Respondents, on the other hand, maintain that petitioner was a corporate officer at the time of her dismissal from
Slimmers World as supported by the General Information Sheet and Directors Affidavit attesting that petitioner was an
officer. Also, the factors cited by petitioner that she was a mere employee do not prove that she was not an officer of
Slimmers World. Even the alleged absence of any resolution of the Board of Directors approving petitioners termination
does not constitute proof that petitioner was not an officer. Respondents assert that petitioner was not only an officer but
also a stockholder and director; which facts provide further basis that petitioners separation from Slimmers World does not
come under the NLRCs jurisdiction.

The issue revolves mainly on whether petitioner was an employee or a corporate officer of Slimmers World. Section 25 of
the Corporation Code enumerates corporate officers as the president, secretary, treasurer and such other officers as may
be provided for in the by-laws. In Tabang v. NLRC,[12] we held that an office is created by the charter of the corporation and
the officer is elected by the directors or stockholders. On the other hand, an employee usually occupies no office and
generally is employed not by action of the directors or stockholders but by the managing officer of the corporation who also
determines the compensation to be paid to such employee.

In the present case, the respondents, in their motion to dismiss filed before the labor arbiter, questioned the jurisdiction of
the NLRC in taking cognizance of petitioners complaint. In the motion, respondents attached the General Information
Sheet[13] (GIS) dated 14 April 1998, Minutes[14] of the meeting of the Board of Directors dated 14 April 1997 and Secretarys
Certificate,[15] and the Amended By-Laws[16] dated 1 August 1994 of Slimmers World as submitted to the SEC to show that
petitioner was a corporate officer whose rights do not fall within the NLRCs jurisdiction. The GIS and minutes of the meeting
of the board of directors indicated that petitioner was a member of the board of directors, holding one subscribed share of
the capital stock, and an elected corporate officer.

The relevant portions of the Amended By-Laws of Slimmers World which enumerate the power of the board of directors as
well as the officers of the corporation state:

Article II
The Board of Directors

1. Qualifications and Election The general management of the corporation shall be vested in a board of
five directors who shall be stockholders and who shall be elected annually by the stockholders and who
shall serve until the election and qualification of their successors.

xxx

Article III
Officers
xxx

4. Vice-President Like the Chairman of the Board and the President, the Vice-President shall be elected by the Board of
Directors from [its] own members.

The Vice-President shall be vested with all the powers and authority and is required to perform all the duties of the
President during the absence of the latter for any cause.

The Vice-President will perform such duties as the Board of Directors may impose upon him from time to time.

xxx
Clearly, from the documents submitted by respondents, petitioner was a director and officer of Slimmers World. The
charges of illegal suspension, illegal dismissal, unpaid commissions, reinstatement and back wages imputed by petitioner
against respondents fall squarely within the ambit of intra-corporate disputes. In a number of cases,[17] we have held that a
corporate officers dismissal is always a corporate act, or an intra-corporate controversy which arises between a stockholder
and a corporation. The question of remuneration involving a stockholder and officer, not a mere employee, is not a simple
labor problem but a matter that comes within the area of corporate affairs and management and is a corporate controversy
in contemplation of the Corporation Code.[18]

Prior to its amendment, Section 5(c) of Presidential Decree No. 902-A[19] (PD 902-A) provided that intra-corporate disputes
fall within the jurisdiction of the Securities and Exchange Commission (SEC):

Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission
over corporations, partnerships and other forms of associations registered with it as expressly granted
under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases
involving:

xxx

c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations,
partnerships or associations.

Subsection 5.2, Section 5 of Republic Act No. 8799, which took effect on 8 August 2000, transferred to regional trial courts
the SECs jurisdiction over all cases listed in Section 5 of PD 902-A:

5.2. The Commissions jurisdiction over all cases enumerated under Section 5 of Presidential Decree No.
902-A is hereby transferred to the Courts of general jurisdiction or the appropriate Regional Trial Court.

xxx

It is a settled rule that jurisdiction over the subject matter is conferred by law.[20] The determination of the rights of a
director and corporate officer dismissed from his employment as well as the corresponding liability of a corporation, if any,
is an intra-corporate dispute subject to the jurisdiction of the regular courts. Thus, the appellate court correctly ruled that it
is not the NLRC but the regular courts which have jurisdiction over the present case.

WHEREFORE, we DENY the petition. We AFFIRM the 18 October 2002 Decision and 22 September 2003 Resolution of the
Court of Appeals in CA-G.R. SP No. 69893. This Decision is without prejudice to petitioner Leslie Okols taking recourse to and
seeking relief through the appropriate remedy in the proper forum.

SO ORDERED.

WT Construction, Inc., vs. Caete, February 12, 2008

This is a petition for review[1] of the Decision and Resolution of the Court of Appeals (CA), dated July 25, 2002 and February
12, 2003, respectively, in CA-G.R. SP No. 65592 entitled WT Construction, Inc. vs. Hon. Ulric R. Caete, in his capacity as
Presiding Judge of the Regional Trial Court of Mandaue City, Branch 55, et al.

The facts are as follows:[2]

Juliana vda. De Cabahug filed a case for the settlement of the estate of her deceased husband, Alberto Cabahug,[3] before
the Regional Trial Court (RTC) of Mandaue City, Branch 55, presided by public respondent, Judge Ulric R. Caete.
On January 10, 1992, Ciriaco Cabahug, the administrator of the estate and heir of Alberto, was granted the authority to sell
one of the properties of the estate to defray the expenses for the payment of taxes due from the estate. The property to be
sold was the parcel of land subject of the petition, Lot 1, FLS-322-D, situated in Looc, Mandaue City, covered by Tax
Declaration No. 00272 with an estimated area of 17,382 square meters.

Ciriaco entered into an Agreement for Sale of Land with Downpayment with petitioner for P8,691,000 on September 23,
1996. In accordance with the agreement, petitioner made a down payment of fifty percent (50%) of the purchase price
or P4,431,600 [should be P4,345,500]. The balance of the purchase price was to be paid immediately after the land is free
from all occupants/obstructions. The contract likewise stipulated the following:
5. That the seller shall undertake the clearing of the land herein sold of its present occupants
and/or eject the squatters therein within a period of one (1) year reckoned from the receipt of
the advance payment, provided however, that if the buyer will be the one to handle the clearing
or ejectment of occupants, all the expenses incurred thereto shall be charged to and be deducted
from the remaining balance payable.

6. Upon receipt of the 50% advance payment of the purchase price, the buyer shall be authorized
to enter the property, utilize the same and introduce improvements thereon.

Subsequently, petitioner took steps in clearing the property of its occupants by filing a complaint for ejectment in
1998 with the Municipal Trial Court in Cities, Branch 3, Mandaue City.

It was later discovered that Ciriaco did not inform his co-heirs of the sale. He appropriated the amount paid by petitioner,
so public respondent issued an Order on August 19, 1997, relieving Ciriaco of his functions as administrator and directing
him to render an accounting of all the properties and assets of the estate.

Consequently, Administrator Linda Cabahug-Antigue, along with her co-heirs, demanded from petitioner the
payment of the balance of the purchase price. Referring to the provision of the agreement relating to the payment of the
balance of the purchase price conditioned upon the removal of occupants and obstructions in the property, petitioner
refused to pay the remaining balance.

On July 6, 2000, public respondent issued an Order,[4] stating:

WHEREFORE, premises considered, WT Construction is ordered to manifest in court within five

(5) days from receipt of this order whether it wants the Contract of Sale rescinded.

If no manifestation is filed within said period, WT Construction is further ordered to pay the estate of
Alberto Cabahug the amount of P4,259,400.00 less expenses incurred in the ejectment case within a
period of fifteen (15) days, otherwise, failure to do so will prompt the court to issue a writ of execution as
prayed for by movant-administratrix.

Petitioner filed a Motion for Reconsideration and/or Extension of Time to Manifest Option to Rescind on July 31,
2000. An Opposition to the motion was filed by private respondent on August 2, 2000.[5]

The motion for reconsideration was denied, and a Writ of Execution [6] to implement the above Order[7] was issued
by public respondent on October 5, 2000. The writ issued to Sheriff IV of RTC, Branch 55, Mandaue City, Veronico C. Ouano,
stated the following:
 WHEREFORE, you are hereby commanded that of the goods and chattels of WT CONSTRUCTION,
not exempt from execution, you cause to be made the sum of P4,259,400.00, liable to pay the estate of
Alberto Cabahug minus the expenses incurred by WT Construction in ejecting the occupants of the land.

But if sufficient personal properties could be found to satisfy this writ, then of the land and
buildings of the defendants you cause to be made the said sums of money in the manner required of you
by law.[8]

On November 17, 2000, petitioner filed an Urgent Motion to Quash the Writ of Execution claiming that the
issuance of the writ is premature for the following reasons: (1) the expenses to be deducted from the purchase price could
not be ascertained as there are still squatters on the land who have yet to be evicted; (2) the existence of an action for
Quieting of Title, Injunction and Damages[9] for ownership and possession of a portion of the property in question or 4,690
square meters; and (3) the balance of the purchase price would be significantly reduced if the claim of the plaintiffs in the
aforesaid action will be granted.[10]

During the pendency of the motion, the plaintiffs in the action for quieting of title, namely, Antonia Flores, Andrea
Lumapas, Emilio Omobong and Constancia O. Tolo, filed a Motion for Leave to Intervene contending that they have a right
to a portion or to 4,690 square meters of the subject lot. The group also moved for the quashing of the writ of execution. [11]

On May 15, 2001, public respondent issued an Order denying petitioners motion:

There being no merits to the urgent Motion to Quash the Writ of Execution, the same is denied.

SO ORDERED.[12]

Petitioners motion for reconsideration was likewise denied in an Order dated June 28, 2001.

Petitioner went to the CA on a petition for certiorari under Rule 65 but the CA dismissed the petition on July 25,
2002. The pertinent portions of the Decision of the CA read:

The resolution of the ejectment case came in the wake of apparently persistent efforts of the
estate to collect the balance of the purchase price from the petitioner. The developments were chronicled
in an Order of July 6, 2000 issued by respondent Judge Ulric O. Caete. It appears that on October 15, 1999,
he directed petitioner to pay P4,259,400 to the estate minus expenses incurred by it in ejecting the
occupants of the land. The implementation of the Order was held in abeyance when the petitioner went
on certiorari to the Court of Appeals. The Fifteenth Division of the Court dismissed the petition prompting
the estate to pray for the immediate execution of the Order of October 15, 1999. But it also asked that
the petitioners Willy Te be required to manifest if he would prefer to have the sale rescinded and the
amount advanced returned. Judge Caete was thus constraint on July 6, 2000 to give the petitioner an
opportunity within a certain period to manifest its willingness to rescind the agreement. He finally said:

If no manifestation is filed within said period, WT Construction is further

ordered to pay the estate of Alberto Cabahug the amount of P4,259,400.00 less
expenses incurred in the ejectment case within a period of fifteen (15) days, otherwise,
failure to do so will prompt the court to issue writ of execution as prayed for by movant-
administratrix.

When the Order was issued, the petitioner had already obtained a decree of ejectment from the
MTCC. A week before the writ of execution in the ejectment case was served on the occupants, the estate
was able to obtain its own Order from Judge Caete denying the motion for reconsideration of the
petitioner and ordering the latter, in view of the lapse of the grace period, to pay the stated amount less
expenses. On October 5, 2000, the writ of execution was issued.

The determination of petitioner to resist payment of the balance was as dogged as ever. In
November 2000, it filed a motion to quash the writ, citing the existence of a complaint filed by third
parties for ownership and possession of a portion of the property in question and the failure of the estate
to exclude another portion from the computation of the balance as allegedly stipulated in the sales
agreement. In February 2001, some parties sought to intervene in the Special Proceedings 3562-R and
asked, in so many words, that their interest in the purchase price to be paid to the estate be recognized
and respected.

On May 15, 2001, the assailed Order was handed down denying the Motion to Quash Writ of
Execution, followed by the Order of June 28, 2001 denying the Motion for Reconsideration. The petitioner
arrayed several issues against these Orders, to wit:[13]

1. Public respondent gravely abused his discretion in failing to state the facts and the
law which served as the basis for his Order of June 28, 2001 denying herein
petitioners urgent motion to quash writ of execution;

2. Public respondent gravely abused his discretion in not quashing the writ of execution
for being prematurely issued;

3. Public respondent gravely abused his discretion in not quashing the writ of execution
on the ground that the Order sought to be executed was conditional and
incomplete; and

4. Public respondent gravely abused his discretion in not quashing the writ of execution
on the ground that a change in the situation of the parties had occurred.

We rule against the petitioner.

The disposition of the first argument turns on an understanding of the kind of issuances that
must contain the relevant facts and law that support them. The requirement appears in Section 4, Article
8 of the 1987 Constitution which says that no decision shall be rendered by any court without expressing
therein clearly and distinctly the facts and the law on which it is based, and Section 1, Rule 36 of the 1997
Rules of Civil Procedure, that a judgment or final order determining the merits of the case shall (state)
clearly and distinctly the facts and the law on which it is based. In fine, only decisions and final orders on
the merits need to reflect the relevant facts and law. The second paragraph of the cited provision of the
Constitution specifies two other issuances to which a different requirement applies. These are denials of
petitions for review and motions for reconsiderations of decisions, for which it is enough that the legal
basis is stated. The Constitution and the Rules of Court are silent as to all other issuances.

There are nonetheless Supreme Court decisions, promulgated before the 1987 Constitution,
which frown on minute orders by trial courts. In Continental Bank vs. Tiangco, 94 SCRA 715, the order did
not contain any reason for granting a motion to dismiss a complaint, in Eastern Assurance and Surety
Corporation vs. Cui, 195 SCRA 622, it only said that the motion to dismiss a third-party complaint was well-
taken, and in Barrera vs. Militante, 114 SRA 325, it held that the motion for reconsideration of an order of
dismissal was without merit. These orders were actually reviewed by the High Court in spite of the fact
that they were found to be minute orders, and the third was upheld for being supported with good
reasons.

Subsequent cases have taken the concept of legal basis in a liberal light. Lack of merit was
considered a legal basis for the denial of a motion for reconsideration of a decision. Prudential Bank vs.
 Castro, 158 SCRA 646, and order of dismissal of appeal, United Placement International vs. NLRC, 257
SCRA 404, while it should be deemed inferred from the statement of the High Court, in refusing due
course to a petition for certiorari, that the petitioner had failed to show grave abuse of discretion in the
action taken below. Nunal vs. Commission on Audit, 169 SCRA 356.

Applying these precepts, it is clear that the assailed Order of May 15, 2001, being merely a
resolution of the motion to quash the writ of execution, is neither a decision nor a final order on the
merits. As stated in Puertollano vs. Intermediate Appellate Court, 156 SCRA 188, a final judgment or order
is one that finally disposes of and determines the rights of the parties, either on the entire controversy or
a segment thereof, and concludes them until it is revised or set aside. The Order in question does not
purport to settle a right but assumes it already. The respondents are correct in pointing out that it was the
Order of October 15, 1999 that settled the rights of the parties to the matter of the balance of the
purchase price and became the subject of the writ of execution. The intervening proceeding was nothing
more than an attempt by the trial court to thresh out a settlement by the parties, which did not push
through because of the intransigence of the petitioner, leaving the court no choice but to enforce the
terms of the original order upon motion of the estate. On the basis of present jurisprudential trends, the
expression no merit may safely be used for ordinary motions such as the one in issue here.

Neither may it be said that the writ had been prematurely issued, simply because the ejectment
case, the expenses of which were to be deducted from the balance of the purchase price, was not yet
terminated. The respondent estate had correctly pointed out that the litigation expenses could be
determined beforehand. To allow petitioner to defer payment until it wound up the ejectment case would
only place in its hands a potestative power to determine the enforceability of its own obligations under
the contract.

The order sought to be enforced by the writ is not, as argued, the Order of July 6, 2000. Even a
cursory reading of this issuance will tell us that what the estate was praying for was the enforcement of
the October 15, 1999 Order. The trial court categorically stated that it would grant the writ as prayed for
by movant-administratrix if petitioner would not exercise the option extended to it by the estate within a
certain period. Nowhere do we see an instruction that the enforcement of the order of payment would
have to defend on the eviction of the occupants.

Finally, it is not meet for petitioner to argue its way out of its obligation by citing the intervention
of other parties in the case to claim a portion of the property. As it appears in their pleading, these parties
expect to be prejudiced by the turnover of the purchase price to the estate. They can take care of
themselves, and evidently, they are doing so by such intervention.

IN VIEW OF THE FOREGOING, the petition is dismissed.

SO ORDERED.

Petitioners motion for reconsideration was denied in a resolution dated February 12, 2003.

Petitioner raises the following issues:[14]

WHETHER OR NOT THE TRIAL COURT CAN DELEGATE THE AUTHORITY TO HEAR AND DETERMINE THE
AMOUNT TO BE LEVIED IN A WRIT OF EXECUTION TO THE SHERIFF; AND

II
 WHETHER OR NOT A PROBATE COURT HAS THE JURISDICTION TO DETERMINE THE RIGHTS AND
OBLIGATIONS OF THE PARTIES IN A CONTRACT, ONE OF WHICH IS A PRIVATE CORPORATION.

Petitioner argues as follows:

1. the writ of execution dated October 5, 2000 sought to be quashed by petitioner is inherently
defective, as it gives the sheriff the authority to determine the amount to be levied in violation of the
mandatory provision of Section 8(e), Rule 39 of the 1997 Rules of Civil Procedure;

2. the quashal of the writ of execution issued by public respondent is necessary and proper because,
aside from being inherently defective, it is the product of a null and void proceedings because the
jurisdiction to determine the rights and obligations of petitioner and private respondent under the
Agreement for Sale of Land with Downpayment exclusively belongs to courts of general jurisdiction;

3. the writ of execution sought to be quashed by petitioner is not one of those allowed to be issued by
probate courts under Section 6, Rule 88; Section 3, Rule 90 and Section 13, Rule 142 of the Revised
Rules of Court;

4. the writ of execution violates the doctrine that a contract is the law between parties, and courts have
no choice but to enforce such contract so long as it is not contrary to law, morals, customs or public
policy;

5. there was a supervening cause which made the implementation of the subject writ of execution
unjust and inequitable; and

6. certiorari is the appropriate remedy to assail the subject orders of public respondent for being issued
outside or in excess of his jurisdiction.

The petition is denied.

As correctly held by the CA, there was no discretion given to the sheriff as to the amount to be paid or executed on
under the writ of execution. While the writ of execution did say . . . the sum of P4,259,400.00, . . . minus the expenses
incurred by WT Construction in ejecting the occupants of the land, this simply means that petitioner was being given a
chance by the court to reduce the aforementioned amount upon proof of said deductible expenses, after which an alias
writ would be issued. In the absence of such proof, the sheriff would have to execute for the full amount. And as noted by
the CA, petitioner failed to prove such expenses within the period given by the probate/estate court. The issue is, therefore,
moot.

As to petitioners argument that the probate/estate court cannot adjudicate the rights and obligations of the
parties under the deed of sale, the CA rightly found that this was a new issue not raised in the probate/estate
court. Furthermore, the deed of sale in question is the sale of the property of the estate to pay for taxes, a matter definitely
within the power of the probate/estate court to order.

It is but logical that probate/estate courts can enforce obligations under such a deed of sale. Otherwise, they
would not be able to secure the proceeds to pay for the taxes and this would defeat the purpose of the proceedings to
settle the estate. Stated otherwise, the power to enforce obligations under the deed of sale of a property ordered sold to
pay debts of the estate is but a necessary incident of the power of a probate/estate court to order and effect such sale in
the first place.

In fine, this Court sees no error on the part of the CA in dismissing petitioners special civil action for certiorari.

WHEREFORE, the petition is DENIED and the Decision and Resolution of the Court of Appeals in CA-G.R. SP No.
65592 dated July 25, 2002 and February 12, 2003, respectively, are hereby AFFIRMED.

Costs against petitioner.

SO ORDERED.

Tamano vs. Ortiz, June 29, 1998

This Petition for Review on Certiorari seeks to reverse and set aside the decision of the Court of Appeals of 30
September 1996 in CA-G.R. SP. No. 39656 which affirmed the decision of the Regional Trial Court-Br. 89, Quezon City,
denying the motion to dismiss as well as the motion for reconsideration filed by petitioner Estrellita J. Tamano.
On 31 May 1958 Senator Mamintal Abdul Jabar Tamano (Tamano) married private respondent Haja Putri Zorayda A.
Tamano (Zorayda) in civil rites. Their marriage supposedly remained valid and subsisting until his death on 18 May
1994. Prior to his death, particularly on 2 June 1993, Tamano also married petitioner Estrellita J. Tamano (Estrellita) in civil
rites in Malabang, Lanao del Sur.
On 23 November 1994 private respondent Zorayda joined by her son Adib A. Tamano (Adib) filed a Complaint for
Declaration of Nullity of Marriage of Tamano and Estrellita on the ground that it was bigamous. They contended that
Tamano and Estrellita misrepresented themselves as divorced and single, respectively, thus making the entries in the
marriage contractfalse and fraudulent.
Private respondents alleged that Tamano never divorced Zorayda and that Estrellita was not single when she married
Tamano as the decision annulling her previous marriage with Romeo C. Llave never became final and executory for non-
compliance with publication requirements.
Estrellita filed a motion to dismiss alleging that the Regional Trial Court of Quezon City was without jurisdiction over
the subject and nature of the action. She alleged that "only a party to the marriage" could file an action for annulment of
marriage against the other spouse,[1] hence, it was only Tamano who could file an action for annulment of their
marriage. Petitioner likewise contended that since Tamano and Zorayda were both Muslims and married in Muslim rites the
jurisdiction to hear and try the instant case was vested in the sharia courts pursuant to Art. 155 of the Code of Muslim
Personal Laws.
The lower court denied the motion to dismiss and ruled that the instant case was properly cognizable by the Regional
Trial Court of Quezon City since Estrellita and Tamano were married in accordance with the Civil Code and not exclusively in
accordance with PD No. 1083[2] or the Code of Muslim Personal laws. The motion for reconsideration was likewise denied;
hence, petitioner filed the instant petition with this Court seeking to set aside the 18 July 1995 order of respondent
presiding judge of the RTC-Br. 89, Quezon City, denying petitioners motion to dismiss and the 22 August 1995 order denying
reconsideration thereof.
In a Resolution dated 13 December 1995 we referred the case to the Court of Appeals for consolidation with G.R. No.
118371. Zorayda and Adib A. Tamano however filed a motion, which the Court of Appeals granted, to resolve the Complaint
for Declaration of Nullity of Marriage ahead of the other consolidated cases.
 The Court of Appeals ruled that the instant case would fall under the exclusive jurisdiction of sharia courts only when
filed in places where there are sharia courts. But in places where there are no sharia courts, like Quezon City, the instant
case could properly be filed before the Regional Trial Court.
Petitioner is now before us reiterating her earlier argument that it is the sharia court and not the Regional Trial Court
which has jurisdiction over the subject and nature of the action.
Under The Judiciary Reorganization Act of 1980,[3] Regional Trial Courts have jurisdiction over all actions involving the
contract of marriage and marital relations.[4] Personal actions, such as the instant complaint for declaration of nullity of
marriage, may be commenced and tried where the plaintiff or any of the principal plaintiffs resides, or where the defendant
or any of the principal defendants resides, at the election of the plaintiff.[5] There should be no question by now that what
determines the nature of an action and correspondingly the court which has jurisdiction over it are the allegations made by
the plaintiff in this case.[6] In the complaint for declaration of nullity of marriage filed by private respondents herein, it was
alleged that Estrellita and Tamano were married in accordance with the provisions of the Civil Code. Never was it
mentioned that Estrellita and Tamano were married under Muslim laws or PD No. 1083.Interestingly, Estrellita never stated
in her Motion to Dismiss that she and Tamano were married under Muslim laws. That she was in fact married to Tamano
under Muslim laws was first mentioned only in her Motion for Reconsideration.
Nevertheless, the Regional Trial Court was not divested of jurisdiction to hear and try the instant case despite the
allegation in the Motion for Reconsideration that Estrellita and Tamano were likewise married in Muslim rites. This is
because a courts jurisdiction cannot be made to depend upon defenses set up in the answer, in a motion to dismiss, or in a
motion for reconsideration, but only upon the allegations of the complaint. [7] Jurisdiction over the subject matter of a case
is determined from the allegations of the complaint as the latter comprises a concise statement of the ultimate facts
constituting the plaintiffs causes of action.[8]
Petitioner argues that the sharia courts have jurisdiction over the instant suit pursuant to Art. 13, Title II, PD No.
1083,[9] which provides -
Art. 13. Application. - (1) The provisions of this Title shall apply to marriage and divorce wherein both parties are
Muslims, or wherein only the male party is a Muslim and the marriage is solemnized in accordance with Muslim
law or this Code in any part of the Philippines.
(2) In case of a marriage between a Muslim and a non-Muslim, solemnized not in accordance with Muslim law or
this Code, the Civil Code of the Philippines shall apply.
(3) Subject to the provisions of the preceding paragraphs, the essential requisites and legal impediments to
marriage, divorce, paternity and filiation, guardianship and custody of minors, support and maintenance, claims
for customary dower (mahr), betrothal, breach of contract to marry, solemnization and registration of marriage
and divorce, rights and obligations between husband and wife, parental authority, and the property relations
between husband and wife shall be governed by this Code and other applicable Muslim laws.
As alleged in the complaint, petitioner and Tamano were married in accordance with the Civil Code. Hence, contrary
to the position of petitioner, the Civil Code is applicable in the instant case. Assuming that indeed petitioner and Tamano
were likewise married under Muslim laws, the same would still fall under the general original jurisdiction of the Regional
Trial Courts.
Article 13 of PD No. 1083 does not provide for a situation where the parties were married both in civil and Muslim
rites. Consequently, the sharia courts are not vested with original andexclusive jurisdiction when it comes to marriages
celebrated under both civil and Muslim laws. Consequently, the Regional Trial Courts are not divested of their general
original jurisdiction under Sec. 19, par. (6) of BP Blg. 129 which provides -
Sec. 19. Jurisdiction in Civil Cases. - Regional Trial Courts shall exercise exclusive original jurisdiction: x x x (6) In all
cases not within the exclusive jurisdiction of any court, tribunal, person or body exercising judicial or quasi-judicial
functions x x x x
WHEREFORE, the instant petition is DENIED. The decision of the Court of Appeals sustaining the 18 July 1995 and 22
August 1995 orders of the Regional Trial Court - Br. 89, Quezon City, denying the motion to dismiss and reconsideration
thereof, is AFFIRMED. Let the records of this case be immediately remanded to the court of origin for further proceedings
until terminated.
SO ORDERED.

CONCURRENT JURISDICTION
Pat-og Sr. vs. Civil Service Commission, 2013

Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, which seeks to set aside the April
6, 2011 Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 101700, affirming the April 11, 2007 Decision 2 of the Civil
Service Commission (CSC), which ordered the dismissal of petitioner Alberto Pat-og, Sr. (Pat-og) from the service for grave
misconduct.

The Facts

On September 13, 2003, Robert Bang-on (Bang-on), then a 14-year old second year high school student of the Antadao
National High School in Sagada, Mountain Province, tiled an affidavit-complaint against Pat-og, a third year high school
teacher of the same school, before the Civil Service Commission-Cordillera Administrative Region (CSC-CAR).

Bang-on alleged that on the morning of August 26, 2003, he attended his class at the basketball court of the school, where
Pat-og and his third year students were also holding a separate class; that he and some of his classmates joined Pat-og's
third year students who were practicing basketball shots; that Pat-og later instructed them to form two lines; that thinking
that three lines were to be formed, he stayed in between the two lines; that Pat-og then held his right arm and punched his
stomach without warning for failing to follow instructions; and that as a result, he suffered stomach pain for several days
and was confined in a hospital from September 10-12, 2003, as evidenced by a medico-legal certificate, which stated that
he sustained a contusion hematoma in the hypogastric area.

Regarding the same incident, Bang-on filed a criminal case against Pat-og for the crime of Less Serious Physical Injury with
the Regional Trial Court (RTC) of Bontoc, Mountain Province.

Taking cognizance of the administrative case, the CSC-CAR directed Pat-og to file his counter-affidavit. He denied the
charges hurled against him and claimed that when he was conducting his Music, Arts, Physical Education and
Health (MAPEH) class, composed of third year students, he instructed the girls to play volleyball and the boys to play
basketball; that he later directed the boys to form two lines; that after the boys failed to follow his repeated instructions,
he scolded them in a loud voice and wrested the ball from them; that while approaching them, he noticed that there were
male students who were not members of his class who had joined the shooting practice; that one of those male students
was Bang-on, who was supposed to be having his own MAPEH class under another teacher; that he then glared at them,
continued scolding them and dismissed the class for their failure to follow instructions; and that he offered the sworn
statement of other students to prove that he did not box Bang-on.

On June 1, 2004, the CSC-CAR found the existence of a prima facie case for misconduct and formally charged Pat-og.

While the proceedings of the administrative case were ongoing, the RTC rendered its judgment in the criminal case and
found Pat-og guilty of the offense of slight physical injury. He was meted the penalty of imprisonment from eleven (11) to
twenty (20) days. Following his application for probation, the decision became final and executory and judgment was
entered.

Meanwhile, in the administrative case, a pre-hearing conference was conducted after repeated postponement by Pat-og.
With the approval of the CSC-CAR, the prosecution submitted its position paper in lieu of a formal presentation of evidence
and formally offered its evidence, which included the decision in the criminal case. It offered the affidavits of Raymund
Atuban, a classmate of Bang-on; and James Domanog, a third year high school student, who both witnessed Pat-og hit
Bang-on in the stomach.

For his defense, Pat-og offered the testimonies of his witnesses - Emiliano Dontongan (Dontongan), a teacher in another
school, who alleged that he was a member of the Municipal Council for the Protection of Children, and that, in such
capacity, he investigated the incident and came to the conclusion that it did not happen at all; and Ernest Kimmot, who
testified that he was in the basketball court at the time but did not see such incident. Pat-og also presented the affidavits of
thirteen other witnesses to prove that he did not punch Bang-on.

Ruling of the CSC-CAR

In its Decision,3 dated September 19, 2006, the CSC-CAR found Pat-og guilty and disposed as
follows:chanroblesvirtualawlibrary

WHEREFORE, all premises told, respondent Alberto Pat-og, Sr., Teacher Antadao National High School, is hereby found
guilty of Simple Misconduct.

Under the Uniform Rules on Administrative Cases in the Civil Service, the imposable penalty on the first offense of Simple
Misconduct is suspension of one (1) month and one (1) day to six (6) months.

Due to seriousness of the resulting injury to the fragile body of the minor victim, the CSC-CAR hereby imposed upon
respondent the maximum penalty attached to the offense which is six months suspension without pay.

The CSC-CAR gave greater weight to the version posited by the prosecution, finding that a blow was indeed inflicted by Pat-
og on Bang-on. It found that Pat-og had a motive for doing so - his students' failure to follow his repeated instructions
which angered him. Nevertheless, the CSC- CAR ruled that a motive was not necessary to establish guilt if the perpetrator of
the offense was positively identified. The positive identification of Pat-og was duly proven by the corroborative testimonies
of the prosecution witnesses, who were found to be credible and disinterested. The testimony of defense witness,
Dontongan, was not given credence considering that the students he interviewed for his investigation claimed that Pat-og
was not even angry at the time of the incident, contrary to the latter's own admission.

The CSC-CAR held that the actions of Pat-og clearly transgressed the proper norms of conduct required of a public official,
and the gravity of the offense was further magnified by the seriousness of the injury of Bang-on which required a healing
period of more than ten (10) days. It pointed out that, being his teacher, Pat-og's substitute parental authority did not give
him license to physically chastise a misbehaving student. The CSC-CAR added that the fact that Pat-og applied for probation
in the criminal case, instead of filing an appeal, further convinced it of his guilt.

The CSC-CAR believed that the act committed by Pat-og was sufficient to find him guilty of Grave Misconduct. It, however,
found the corresponding penalty of dismissal from the service too harsh under the circumstances. Thus, it adjudged
petitioner guilty of Simple Misconduct and imposed the maximum penalty of suspension for six (6) months.

On December 11, 2006, the motion for reconsideration filed by Pat-og was denied for lack of
merit.4chanroblesvirtuallawlibrary

The Ruling of the CSC

In its Resolution,5 dated April 11, 2007, the CSC dismissed Pat-og's appeal and affirmed with modification the decision of
the CSC-CAR as follows:chanroblesvirtualawlibrary

WHEREFORE, foregoing premises considered, the instant appeal is hereby DISMISSED. The decision of the CSC-CAR is
affirmed with the modification that Alberto Pat-og, Sr., is adjudged guilty of grave misconduct, for which he is meted out
the penalty of dismissal from the service with all its accessory penalties of cancellation of eligibilities, perpetual
disqualification from re- employment in the government service, and forfeiture of retirement benefits. 6

After evaluating the records, the CSC sustained the CSC-CAR's conclusion that there existed substantial evidence to sustain
the finding that Pat-og did punch Bang-on in the stomach. It gave greater weight to the positive statements of Bang-on and
his witnesses over the bare denial of Pat- og. It also highlighted the fact that Pat-og failed to adduce evidence of any ill
motive on the part of Bang-on in filing the administrative case against him. It likewise gave credence to the medico-legal
certificate showing that Bang-on suffered a hematoma contusion in his hypogastric area.

The CSC ruled that the affidavits of Bang-on's witnesses were not bereft of evidentiary value even if Pat-og was not
afforded a chance to cross- examine the witnesses of Bang-on. It is of no moment because the cross-examination of
witnesses is not an indispensable requirement of administrative due process.

The CSC noted that Pat-og did not question but, instead, fully acquiesced in his conviction in the criminal case for slight
physical injury, which was based on the same set of facts and circumstances, and involved the same parties and issues. It,
thus, considered his prior criminal conviction as evidence against him in the administrative case.

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

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

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

Ruling of the Court of Appeals

In its assailed April 6, 2011 Decision,8 the CA affirmed the resolutions of the CSC. It agreed that Pat-og was estopped from
questioning the jurisdiction of the CSC as the records clearly showed that he actively participated in the proceedings. It was
of the view that Pat-og was not denied due process when he failed to cross-examine Bang-on and his witnesses because he
was given the opportunity to be heard and present his evidence before the CSC-CAR and the CSC.

The CA also held that the CSC committed no error in taking into account the conviction of Pat-og in the criminal case. It
stated that his conviction was not the sole basis of the CSC for his dismissal from the service because there was substantial
evidence proving that Pat-og had indeed hit Bang-on.

In its assailed Resolution,9 dated September 13, 2011, the CA denied the motion for reconsideration filed by Pat-og.

Hence, the present petition with the followingcralaw lawlibrary

Assignment of Errors

WHETHER OR NOT RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT AFFIRMED
THE SUPREME PENALTY OF DISMISSAL FROM SERVICE WITH FORFEITURE OF RETIREMENT BENEFITS AGAINST THE
PETITIONER WITHOUT CONSIDERING PETITIONER'S LONG YEARS OF GOVERNMENT SERVICE?cralawlibrary
WHETHER OR NOT RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT RULED THAT
PETITIONER IS ESTOPPED FROM QUESTIONING THE JURISDICTION OF THE CIVIL SERVICE COMMISSION TO HEAR AND
DECIDE THE ADMINISTRATIVE CASE AGAINST HIM?cralawlibrary

WHETHER OR NOT RESPONDENT COURT OF APPEALS SERIOUSLY ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION
IN DISMISSING THE APPEAL DESPITE LACK OF SUBSTANTIAL EVIDENCE?

On Jurisdiction

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

The Court cannot sustain his position.

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

In Puse v. Santos-Puse,10 it was held that the CSC, the Department of Education (DepEd) and the Board of Professional
Teachers-Professional Regulatory Commission (PRC) have concurrent jurisdiction over administrative cases against public
school teachers.

Under Article IX-B of the 1987 Constitution, the CSC is the body charged with the establishment and administration of a
career civil service which embraces all branches and agencies of the government. 11 Executive Order (E.O.) No. 292 (the
Administrative Code of 1987)12 and Presidential Decree (P.D.) No. 807 (the Civil Service Decree of the
Philippines)13 expressly provide that the CSC has the power to hear and decide administrative disciplinary cases instituted
with it or brought to it on appeal. Thus, the CSC, as the central personnel agency of the government, has the inherent
power to supervise and discipline all members of the civil service, including public school teachers.

Indeed, under Section 9 of R.A. No. 4670, the jurisdiction over administrative cases of public school teachers is lodged with
the investigating committee constituted therein.14 Also, under Section 23 of R.A. No. 7836 (the Philippine Teachers
Professionalization Act of 1994), the Board of Professional Teachers is given the power, after due notice and hearing, to
suspend or revoke the certificate of registration of a professional teacher for causes enumerated
therein.15chanroblesvirtuallawlibrary

Concurrent jurisdiction is that which is possessed over the same parties or subject matter at the same time by two or more
separate tribunals. When the law bestows upon a government body the jurisdiction to hear and decide cases involving
specific matters, it is to be presumed that such jurisdiction is exclusive unless it be proved that another body is likewise
vested with the same jurisdiction, in which case, both bodies have concurrent jurisdiction over the
matter.16chanroblesvirtuallawlibrary

Where concurrent jurisdiction exists in several tribunals, the body that first takes cognizance of the complaint shall exercise
jurisdiction to the exclusion of the others. In this case, it was CSC which first acquired jurisdiction over the case because the
complaint was filed before it. Thus, it had the authority to proceed and decide the case to the exclusion of the DepEd and
the Board of Professional Teachers.17chanroblesvirtuallawlibrary

In CSC v. Alfonso,18 it was held that special laws, such as R.A. No. 4670, do not divest the CSC of its inherent power to
supervise and discipline all members of the civil service, including public school teachers. Pat-og, as a public school teacher,
is first and foremost, a civil servant accountable to the people and answerable to the CSC for complaints lodged against him
as a public servant. To hold that R.A. No. 4670 divests the CSC of its power to discipline public school teachers would negate
the very purpose for which the CSC was established and would impliedly amend the Constitution itself.

To further drive home the point, it was ruled in CSC v. Macud19 that R.A. No. 4670, in imposing a separate set of procedural
requirements in connection with administrative proceedings against public school teachers, should be construed to
refer only to the specific procedure to be followed in administrative investigations conducted by the DepEd. By no means,
then, did R.A. No. 4670 confer an exclusive disciplinary authority over public school teachers on the DepEd.

At any rate, granting that the CSC was without jurisdiction, the petitioner is indeed estopped from raising the issue.
Although the rule states that a jurisdictional question may be raised at any time, such rule admits of the exception where,
as in this case, estoppel has supervened.20 Here, instead of opposing the CSC's exercise of jurisdiction, the petitioner
invoked the same by actively participating in the proceedings before the CSC-CAR and by even filing his appeal before the
CSC itself; only raising the issue of jurisdiction later in his motion for reconsideration after the CSC denied his appeal. This
Court has time and again frowned upon the undesirable practice of a party submitting his case for decision and then
accepting the judgment only if favorable, but attacking it for lack of jurisdiction when adverse. 21chanroblesvirtuallawlibrary

On Administrative Due Process

On due process, Pat-og asserts that the affidavits of the complainant and his witnesses are of questionable veracity having
been subscribed in Bontoc, which is nearly 30 kilometers from the residences of the parties. Furthermore, he claimed that
considering that the said affiants never testified, he was never afforded the opportunity to cross-examine them. Therefore,
their affidavits were mere hearsay and insufficient to prove his guilt.

The petitioner does not persuade.

The essence of due process is simply to be heard, or as applied to administrative proceedings, a fair and reasonable
opportunity to explain one's side, or an opportunity to seek a reconsideration of the action or ruling complained
of.22 Administrative due process cannot be fully equated with due process in its strict judicial sense. In administrative
proceedings, a formal or trial-type hearing is not always necessary23 and technical rules of procedure are not strictly
applied. Hence, the right to cross-examine is not an indispensable aspect of administrative due process. 24 The petitioner
cannot, therefore, argue that the affidavit of Bang-on and his witnesses are hearsay and insufficient to prove his guilt.

At any rate, having actively participated in the proceedings before the CSC-CAR, the CSC, and the CA, the petitioner was
apparently afforded every opportunity to explain his side and seek reconsideration of the ruling against him.

As to the issue of the veracity of the affidavits, such is a question of fact which cannot now be raised before the Court under
Rule 45 of the Rules of Court. The CSC-CAR, the CSC and the CA did not, therefore, err in giving credence to the affidavits of
the complainants and his witnesses, and in consequently ruling that there was substantial evidence to support the finding
of misconduct on the part of the petitioner.

On the Penalty

Assuming that he did box Bang-on, Pat-og argues that there is no substantial evidence to prove that he did so with a clear
intent to violate the law or in flagrant disregard of the established rule, as required for a finding of grave misconduct. He
insists that he was not motivated by bad faith or ill will because he acted in the belief that, as a teacher, he was exercising
authority over Bang-on in loco parentis, and was, accordingly, within his rights to discipline his student. Citing his 33 years in
the government service without any adverse record against him and the fact that he is at the edge of retirement, being
already 62 years old, the petitioner prays that, in the name of substantial and compassionate justice, the CSC-CAR's finding
of simple misconduct and the concomitant penalty of suspension should be upheld, instead of dismissal.

The Court agrees in part.

Misconduct means intentional wrongdoing or deliberate violation of a rule of law or standard of behaviour. To constitute an
administrative offense, misconduct should relate to or be connected with the performance of the official functions and
duties of a public officer. In grave misconduct, as distinguished from simple misconduct, the elements of corruption, clear
intent to violate the law or t1agrant disregard of an established rule must be manifest. 25chanroblesvirtuallawlibrary

Teachers are duly licensed professionals who must not only be competent in the practice of their noble profession, but
must also possess dignity and a reputation with high moral values. They must strictly adhere to, observe, and practice the
set of ethical and moral principles, standards, and values laid down in the Code of Ethics of Professional Teachers, which
apply to all teachers in schools in the Philippines, whether public or private, as provided in the preamble of the said
Code.26 Section 8 of Article VIII of the same Code expressly provides that "a teacher shall not inflict corporal punishment
on offending learners."

Clearly then, petitioner cannot argue that in punching Bang-on, he was exercising his right as a teacher in loco parentis to
discipline his student. It is beyond cavil that the petitioner, as a public school teacher, deliberately violated his Code of
Ethics. Such violation is a flagrant disregard for the established rule contained in the said Code tantamount to grave
misconduct.

Under Section 52(A)(2) of Rule IV of the Uniform Rules on Administrative Cases in the Civil Service, the penalty for grave
misconduct is dismissal .from the service, which carries with it the cancellation of eligibility, forfeiture of retirement
benefits and perpetual disqualification from reemployment in the government service. 27 This penalty must, however, be
tempered with compassion as there was sufficient provocation on the part of Bang-on. Considering further the mitigating
circumstances that the petitioner has been in the government service for 33 years, that this is his first offense and that he is
at the cusp of retirement, the Court finds the penalty of suspension for six months as appropriate under the circumstances.

WHEREFORE, the Court PARTIALLY GRANTS the petition and MODIFIES the April 6, 2011 Decision of the Court of Appeals in
CA-G.R. SP No. 101700. Accordingly, Alberto Pat-og, Sr. is found GUILTY of Grave Misconduct, but the penalty is reduced
from dismissal from the service to SUSPENSION for SIX MONTHS.

SO ORDERED.