1
A. ADMINISTRATIVE ORGANIZATION Petitioners stated that del Rosario sold TCT No. 35101 to Goldkey Development Corporation (Goldkey).6
FIRST DIVISION
G.R. No. 131903 June 26, 2008
OSCAR R. BADILLO, GIOVANNI C. ONG, EDGAR A. RAGASA represented by heirs CYNTHIA G. RAGASA,
and their children JOSEPH, CATHERINE and CHARMAINE all surnamed RAGASA, ROLANDO SANCADA,
and DIONISIO UMBALIN, petitioners,
vs.
COURT OF APPEALS, REGISTER OF DEEDS OF QUEZON CITY, GOLDKEY DEVELOPMENT CORPORATION,
JOSEFA CONEJERO, IGNACIO D. SONORON, PEDRO DEL ROSARIO, and DOWAL REALTY AND
MANAGEMENT SYSTEM COMPANY, respondents.
DECISION
CARPIO, J.:
The Case
This petition for certiorari1 assails the 17 September 1997 Decision2 of the Court of Appeals in CA-G.R. CV
No. 50035. The Court of Appeals dismissed the appeal filed by petitioners Oscar R. Badillo, Giovanni C.
Ong, Edgar A. Ragasa, Rolando Sancada, and Dionisio Umbalin (petitioners) questioning the 5 June 1995
Order3 of Branch 222 of the Regional Trial Court of Quezon City in Civil Case No. Q-91-10510 for
Annulment of Documents with Prayer for Issuance of Prohibitory and Mandatory Injunction and
Damages.
The Facts
Petitioners alleged that they are the registered owners of several lots adjoining a road lot known as Lot
369-A-29 or Apollo Street of subdivision plan Psd-37971 (road lot). The road lot is a short access road
which connects petitioners’ properties to the main road known as Road 20. The road lot is covered by
Transfer Certificate of Title (TCT) No. RT-20895 (22682) and registered in the name of respondent Pedro
del Rosario (del Rosario). Annotated at the back of TCT No. RT-20895 is a court-ordered Entry No. 605/T-
22655 which reads as follows: "It is hereby made of record that as per order of the Court, the street lot
covered by this title shall not be closed or disposed of by the registered owner without previous approval
of the court."4
Petitioners alleged that in gross violation of the court order, del Rosario sold an unsegregated portion of
the road lot to his co-respondents Josefa Conejero (Conejero) and Ignacio Sonoron (Sonoron) without
obtaining prior court approval. Del Rosario, Conejero, and Sonoron then entered into a partition
agreement to divide the road lot into four lots which resulted in the partial cancellation of TCT No. RT-
20895 and the subsequent issuance of TCT Nos. 35899 and 35100 in the name of Conejero, TCT No.
35101 in the name of del Rosario, and TCT No. 35102 in the name of Sonoron.5
Petitioners alleged that the Register of Deeds violated the court order when it allowed the registration of
the sales and the subsequent issuance of new titles without first obtaining judicial approval. Petitioners
claimed that Goldkey had built cement fences on the lot, thus blocking the ingress and egress of
petitioners.7
Petitioners prayed that the sales made in favor of Conejero, Sonoron, and Goldkey and the partition of
the road lot be declared void.8
In its Comment, Goldkey alleged that the Housing and Land Use Regulatory Board (HLURB) has exclusive
jurisdiction over the cases mentioned in Section 1 of Presidential Decree No. (PD) 1344.9 Goldkey argued
that the Court of Appeals correctly dismissed petitioners’ appeal because petitioners merely assigned an
error involving a pure question of law. Goldkey added that petitioners are using the present petition as a
substitute for an already lost appeal since petitioners’ counsel had received the decision on 17 October
1997 and the present petition was posted only on 16 December 1997.10
In May 1991, petitioners filed an initial complaint with the Office of the Building Official (building official)
of Quezon City, docketed as Building Case No. R-10-91-006 entitled Giovanni C. Ong, et al. v. Manuel
Chua (building case).11Petitioners, who initiated the building case when Goldkey started putting up
fences in some portions of the property, claimed that the parcel of land was a road lot.12
On 10 September 1991, the HLURB issued a Development Permit to Goldkey allowing it to develop the
land into residential townhouse units. The permit also mentioned that the project is classified as
"Residential Townhouse Subdivision" and, as evaluated, the same is "in accordance with the Zoning
Ordinance of Quezon City."13
On 4 November 1991,14 petitioners filed a case for Annulment of Title and Damages15 with the Regional
Trial Court of Quezon City.
Subsequently, the building official of Quezon City resolved the building case against petitioners and this
decision became final and executory.16 The ruling held that the property is not a road lot but a residential
lot.17
On 5 June 1995, Branch 222 of the Regional Trial Court (trial court) of Quezon City issued an order
dismissing the case for lack of jurisdiction over the subject matter.
The Ruling of the Trial Court
The trial court dismissed petitioners’ case for lack of jurisdiction over the subject matter. The trial court
pointed out that there was a decision rendered by the building official of Quezon City declaring the
disputed property a residential lot and not a road lot; hence, the building official issued a building
permit. The HLURB also issued a permit for the development of the land into a townhouse project.
Petitioners did not appeal both rulings. The trial court stated that petitioners’ contention that the
property is a road lot had been rendered moot by the finding of the building official which made the
contrary declaration. If petitioners had any objection to the ruling, they should have appealed the same
to the Secretary of Public Works and Highways as provided in Section 307 of Executive Order No. (EO)

1096. The findings of administrative agencies which have expertise are generally accorded not only
respect but even finality.
The trial court also stated that the property had been approved by the HLURB for development into a
townhouse project. The subject land was therefore removed from the jurisdiction of the regular courts.
The HLURB’s decision was also not appealed to the Office of the President as provided in Section 4 of PD
1344 which gave the HLURB quasi-judicial powers.
The Ruling of the Appellate Court
On 17 September 1997, the Court of Appeals dismissed the appeal on the ground that it has no
jurisdiction to entertain the same. The appellate court stated that the original and amended complaints
filed by petitioners were both premised on the claim that the subject parcels of land were subdivision
road lots that were illegally converted into residential lots and thereafter disposed by del Rosario, the
subdivision developer. Therefore, petitioners’ complaints were filed for the purpose of enforcing a
contractual and statutory obligation of del Rosario to preserve a subdivision road lot for street purposes.
As such, the agency with jurisdiction is the HLURB, pursuant to the provisions of PD 957, 1216, and 1344,
EO 648 dated 7 February 1981 and EO 90 dated 17 December 1986.
Further, the appellate court ruled that the error assigned by petitioners involves the issue on what law
will apply to determine the jurisdiction of a tribunal over the subject matter of the complaints.
Petitioners’ assigned error involves a pure question of law; hence, petitioners appealed to the wrong
forum. Petitioners should have elevated their appeal to the Supreme Court and not to the Court of
Appeals by way of a simple appeal.
Hence, this petition.
The Issues
Petitioners raise three issues in this petition:
1. Whether the appellate court acted without or in excess of jurisdiction or with grave abuse
of discretion by dismissing petitioners’ appeal on the ground that jurisdiction does not lie with
the regular courts but with the HLURB;
2. Whether the Court of Appeals acted without or in excess of jurisdiction or grave abuse of
discretion by dismissing petitioners’ appeal on the ground that petitioners did not assign any
error of fact; and
3. Whether a petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure is the
proper remedy for petitioners.
The Ruling of the Court
The petition lacks merit.
2
The HLURB is the sole regulatory body for housing and land development.18 The extent to which an
administrative agency may exercise its powers depends on the provisions of the statute creating such
agency.19 Courts will not determine a controversy where the issues for resolution demand the exercise of
sound administrative discretion.20
Jurisdiction Lies with the HLURB
PD 957,21 otherwise known as "The Subdivision and Condominium Buyers’ Protective Decree," granted
the National Housing Authority (NHA) the exclusive jurisdiction to regulate the real estate business. The
scope of the regulatory authority lodged in the NHA is indicated in the second whereas clause which
states:
"WHEREAS, numerous reports reveal that many real estate subdivision owners, developers,
operators, and/or sellers have reneged on their representations and obligations to provide
and maintain properly subdivision roads, drainage, sewerage, water systems, lighting
systems, and other similar basic requirements, thus endangering the health and safety of
home and lot buyers," (Emphasis supplied)
Thus, Section 22 of PD 957 provides:
Sec. 22. Alteration of Plans. — No owner or developer shall change or alter the roads, open
spaces, infrastructures, facilities for public use and/or other form of subdivision development
as contained in the approved subdivision plan and/or represented in its
advertisements, without the permission of the Authority and the written conformity or
consent of the duly organized homeowners association, or in the absence of the latter, by
the majority of the lot buyers in the subdivision. (Emphasis supplied)
PD 134422 amended PD 957 by empowering the NHA to issue writs of execution in the enforcement of its
decisions. Section 1 of PD 1344 states:
Section 1. In the exercise of its functions to regulate the real estate trade and business and in addition to
its powers provided for in Presidential Decree No. 957, the National Housing Authority shall
have exclusive jurisdiction to hear and decide cases of the following nature:
a. Unsound real estate business practices;
b. Claims involving refund and any other claims filed by subdivision lot or condominium unit
buyer against the project owner, developer, dealer, broker or salesman; and
c. Cases involving specific performance of contractual and statutory obligations filed by
buyers of subdivision lot or condominium unit against the owner, developer, dealer, broker
or salesman. (Emphasis supplied)
Under EO 648,23 the NHA’s functions were transferred to the Human Settlement Regulatory Commission.
Section 8 of EO 648 provides:

Section 8. Transfer of Functions. — The regulatory functions of the National Housing
Authority pursuant to Presidential Decrees No. 957, 1216, 1344 and other related laws are
hereby transferred to the Commission, together with such applicable personnel,
appropriation, records, equipment and property necessary for the enforcement and
implementation of such functions. Among these regulatory functions are: (1) Regulation of
the real estate trade and business; (2) Registration of subdivision lots and condominium
projects; (3) Issuance of license to sell subdivision lots and condominium units in the
registered units; (4) Approval of performance bond and the suspension of license to sell; (5)
Registration of dealers, brokers and salesmen engaged in the business of selling subdivision
lots or condominium units; (6) Revocation of registration of dealers, brokers and salesmen;
(7) Approval or mortgage on any subdivision lot or condominium unit made by the owner or
developer; (8) Granting of permits for the alteration of plans and the extension of period for
completion of subdivision or condominium projects; (9) Approval of the conversion to other
purposes of roads and open spaces found within the project which have been donated to
the city or municipality concerned; (10) Regulation of the relationship between lessors and
lessees; and (11) Hear and decide cases on unsound real estate business practices; claims
involving refund filed against project owners, developers, dealers, brokers or salesmen
and cases of specific performance.(Emphasis supplied)
EO 9024 renamed the Human Settlement Regulatory Commission the Housing and Land Use Regulatory
Board. The HLURB retained the regulatory and adjudicatory functions of the NHA.
Clearly, the scope and limitation of the HLURB’s jurisdiction are well-defined. The HLURB’s jurisdiction to
hear and decide cases is determined by the nature of the cause of action, the subject matter or property
involved, and the parties.25 In the present case, petitioners are the registered owners of several lots
adjoining a subdivision road lot connecting their properties to the main road. Petitioners allege that the
subdivision lot owners sold the road lot to a developer who is now constructing cement fences, thus
blocking the passageway from their lots to the main road. In sum, petitioners are enforcing their
statutory and contractual rights against the subdivision owners. This is a specific performance case which
falls under the HLURB’s exclusive jurisdiction.
In Osea v. Ambrosio,26 the Court held that the provisions of PD 957 were intended to encompass all
questions relating to subdivisions. This intention was aimed to provide for an appropriate government
agency, which is the HLURB, to which all parties aggrieved in the implementation of provisions and the
enforcement of contractual rights with respect to said category of real estate may take recourse.
Petitioners claim that respondents violated the annotation at the back of TCT No. RT-20895 by selling an
unsegregated portion of the lot without obtaining prior court approval. The date of entry of this
annotation is 18 August 1953. When PD 957, PD 1344, and EO 648 were enacted in 1976, 1978, and
1981, respectively, this annotation was impliedly modified such that the conversion of the road lot in the
subdivision plan would fall under the HLURB’s jurisdiction pursuant to these laws.
Petitioners argue that they can file a specific performance case to compel respondents to comply with
their contractual and statutory obligation to maintain the road lot. However, petitioners can only be
granted complete relief if the subject sales are declared void and the subsequent partition is declared
illegal. Petitioners further contend that the HLURB, having only the jurisdiction to hear and decide
specific performance cases, can only compel petitioners to file a case for annulment of title and
prosecute the action. Petitioners insist that in the final analysis, a case for annulment of title would still
have to be filed with the ordinary courts.27
3
In Peña v. GSIS,28 the Court ruled that when an administrative agency is conferred quasi-judicial
functions, all controversies relating to the subject matter pertaining to its specialization are deemed to
be included within its jurisdiction. Split jurisdiction is not favored.
As observed in C.T. Torres Enterprises, Inc. v. Hibionada:29
The argument that only courts of justice can adjudicate claims resoluble under the provisions
of the Civil Code is out of step with the fast-changing times. There are hundreds of
administrative bodies now performing this function by virtue of a valid authorization from the
legislature. This quasi-judicial function, as it is called, is exercised by them as an incident of
the principal power entrusted to them of regulating certain activities falling under their
particular expertise.
In the Solid Homes case for example the Court affirmed the competence of the Housing and
Land Use Regulatory Board to award damages although this is an essentially judicial power
exercisable ordinarily only by the courts of justice. This departure from the traditional
allocation of governmental powers is justified by expediency, or the need of the government
to respond swiftly and competently to the pressing problems of the modern world.
Finally, in Cristobal v. Court of Appeals,30 we held that "questions relating to non-compliance with the
requisites for conversion of subdivision lots are properly cognizable by the NHA, now the HLURB,
pursuant to Section 22 of PD 957 and not by the regular courts."
Appeal by Certiorari Involving Questions of Law
Section 2, Rule 41 of the Rules of Court states:
Sec. 2. Mode of appeal.—
(a) Ordinary Appeal. — The appeal to the Court of Appeals in cases decided by the Regional
Trial Court in the exercise of its original jurisdiction shall be taken by filing a notice of appeal
with the court which rendered the judgment or final order appealed from and serving a copy
thereof upon the adverse party. No record on appeal shall be required except in special
proceedings and other cases of multiple or separate appeals where the law or these Rules so
require. In such cases, the record on appeal shall be filed and served in like manner.
(b) Petition for Review. — The appeal to the Court of Appeals in cases decided by the Regional
Trial Court in the exercise of its appellate jurisdiction shall be by petition for review in
accordance with Rule 42.
(c) Appeal by certiorari. — In all cases where only questions of law are raised or involved,
the appeal shall be to the Supreme Court by petition for review on certiorari in accordance
with Rule 45.(Emphasis supplied)
In Sevilleno v. Carilo,31 citing Macawiwili Gold Mining and Development Co., Inc. v. Court of Appeals, this
Court summarized the rule on appeals:
 4

(1) In all cases decided by the RTC in the exercise of its original jurisdiction, appeal may be Rule 65 is not a remedy for lost appeal.
made to the Court of Appeals by mere notice of appeal where the appellant raises questions
of fact or mixed questions of fact and law;
Petitioners should have directly taken their appeal to this Court by filing a petition for review
on certiorari under Rule 45 and not an ordinary appeal with the Court of Appeals under Rule 41 nor a
(2) In all cases decided by the RTC in the exercise of its original jurisdiction where the petition for certiorari with this Court under Rule 65.
appellant raises only questions of law, the appeal must be taken to the Supreme Court on a
petition for review on certiorari under Rule 45.
As held in Balayan v. Acorda,34 "the special civil action for certiorari is a limited form of review and is a
remedy of last recourse." It lies only where there is no appeal or plain, speedy, and adequate remedy in
(3) All appeals from judgments rendered by the RTC in the exercise of its appellate the ordinary course of law.
jurisdiction, regardless of whether the appellant raises questions of fact, questions of law, or
mixed questions of fact and law, shall be brought to the Court of Appeals by filing a petition
In the present case, petitioners chose the wrong mode of appeal. Hence, the instant petition cannot
for review under Rule 42. (Emphasis supplied)
prevail since a petition for certiorari is not a substitute for a lost appeal, especially if the loss or lapse was
an error in petitioners’ choice of remedy. We have held in David v. Cordova35 that:
In First Bancorp, Inc. v. Court of Appeals,32 this Court also explained the two modes of appeal from a final
order of the trial court in the exercise of its original jurisdiction:
A petition for certiorari cannot be a substitute for an appeal from a lower court decision.
Where appeal is available to the aggrieved party, the action for certiorari will not be
(1) by writ of error under Section 2(a), Rule 41 of the Rules of Court if questions of fact or entertained. The remedies of appeal (including petitions for review) and certiorari are
questions of fact and law are raised or involved; or mutually exclusive, not alternate or successive. Hence, certiorari is not and cannot be a
substitute for an appeal, especially if one’s own negligence or error in one’s choice of
remedy occasioned such loss or lapse. One of the requisites of certiorari is that there be no
(2) appeal by certiorari under Section 2(c), Rule 41, in relation to Rule 45, where only
available appeal or any plain, speedy and adequate remedy. Where an appeal is available,
questions of law are raised or involved. (Emphasis supplied)
certiorari will not prosper, even if the ground therefore is grave abuse of discretion.
(Emphasis supplied)
In the present case, petitioners raised only one issue in their Appellants’ Brief — whether "the Honorable
Trial Court a quo seriously erred in holding that it has no jurisdiction over the subject matter of the case
There were instances when the Court has relaxed the rule on the special civil action for certiorari as a
when in fact it has already acquired jurisdiction over the persons of the defendants and the subject
substitute for failure to file a timely petition for review on certiorari under Rule 45 such as where the
matter of the case."
application of this rule would result in a manifest failure or miscarriage of justice.36 Although the Court
has the discretion to treat a petition for certiorari as having been filed under Rule 45, there is nothing in
The question on jurisdiction is undoubtedly one of law. We have held that "a question of law exists when the present case to warrant a liberal application of the rules.
the doubt or controversy concerns the correct application of law or jurisprudence to a certain set of
facts; or when the issue does not call for an examination of the probative value of the evidence
WHEREFORE, we DISMISS the petition. We AFFIRM the 17 September 1997 Decision of the Court of
presented, the truth or falsehood of facts being admitted."33 Consequently, it is not disputed that the
Appeals. Costs against petitioners.
issue brought by petitioners to the Court of Appeals involves solely the trial court’s jurisdiction over the
subject matter of the case. The appellate court can determine the issue raised without reviewing or
evaluating the evidence. SO ORDERED.

As petitioners’ appeal solely involves a question of law, the appellate court did not err in dismissing the
appeal on the ground of lack of jurisdiction pursuant to Section 2, Rule 50 of the Rules of Court which
provides:

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

An appeal erroneously taken to the Court of Appeals shall not be transferred to the
appropriate court but shall be dismissed outright. (Emphasis supplied)

EN BANC
G.R. No. 175723 February 4, 2014
THE CITY OF MANILA, represented by MAYOR JOSE L. ATIENZA, JR., and MS. LIBERTY M. TOLEDO, in
her capacity as the City Treasurer of Manila, Petitioners,
vs.
HON. CARIDAD H. GRECIA-CUERDO, in her capacity as Presiding Judge of the Regional Trial Court,
Branch 112, Pasay City; SM MART, INC.; SM PRIME HOLDINGS, INC.; STAR APPLIANCES CENTER;
SUPERVALUE, INC.; ACE HARDWARE PHILIPPINES, INC.; WATSON PERSONAL CARE STORES, PHILS.,
INC.; JOLLIMART PHILS., CORP.; SURPLUS MARKETING CORPORATION and SIGNATURE
LINES, Respondents.
DECISION
PERALTA, J.:
Before the Court is a special civil action for certiorari under Rule 65 of the Rules of Court seeking to
reverse and set aside the Resolutions1 dated April 6, 2006 and November 29, 2006 of the Court of
Appeals (CA) in CA-G.R. SP No. 87948.
The antecedents of the case, as summarized by the CA, are as follows:
The record shows that petitioner City of Manila, through its treasurer, petitioner Liberty Toledo,
assessed taxes for the taxable period from January to December 2002 against private respondents SM
Mart, Inc., SM Prime Holdings, Inc., Star Appliances Center, Supervalue, Inc., Ace Hardware Philippines,
Inc., Watsons Personal Care Stores Phils., Inc., Jollimart Philippines Corp., Surplus Marketing Corp. and
Signature Lines. In addition to the taxes purportedly due from private respondents pursuant to Section
14, 15, 16, 17 of the Revised Revenue Code of Manila (RRCM), said assessment covered the local
business taxes petitioners were authorized to collect under Section 21 of the same Code. Because
payment of the taxes assessed was a precondition for the issuance of their business permits, private
respondents were constrained to pay the ₱19,316,458.77 assessment under protest.
On January 24, 2004, private respondents filed [with the Regional Trial Court of Pasay City] the complaint
denominated as one for "Refund or Recovery of Illegally and/or Erroneously-Collected Local Business
Tax, Prohibition with Prayer to Issue TRO and Writ of Preliminary Injunction"
which was docketed as Civil Case No. 04-0019-CFM before public respondent's sala [at Branch 112]. In
the amended complaint they filed on February 16, 2004, private respondents alleged that, in relation to
Section 21 thereof, Sections 14, 15, 16, 17, 18, 19 and 20 of the RRCM were violative of the limitations
and guidelines under Section 143 (h) of Republic Act. No. 7160 [Local Government Code] on double
taxation. They further averred that petitioner city's Ordinance No. 8011 which amended pertinent
portions of the RRCM had already been declared to be illegal and unconstitutional by the Department of
Justice.2
In its Order3 dated July 9, 2004, the RTC granted private respondents' application for a writ of
preliminary injunction.
5
Petitioners filed a Motion for Reconsideration4 but the RTC denied it in its Order5 dated October 15,
2004.
Petitioners then filed a special civil action for certiorari with the CA assailing the July 9, 2004 and October
15, 2004 Orders of the RTC.6
In its Resolution promulgated on April 6, 2006, the CA dismissed petitioners' petition for certiorari
holding that it has no jurisdiction over the said petition. The CA ruled that since appellate jurisdiction
over private respondents' complaint for tax refund, which was filed with the RTC, is vested in the Court
of Tax Appeals (CTA), pursuant to its expanded jurisdiction under Republic Act No. 9282 (RA 9282), it
follows that a petition for certiorari seeking nullification of an interlocutory order issued in the said case
should, likewise, be filed with the CTA.
Petitioners filed a Motion for Reconsideration,7 but the CA denied it in its Resolution dated November
29, 2006.
Hence, the present petition raising the following issues:
I- Whether or not the Honorable Court of Appeals gravely erred in dismissing the case for lack
of jurisdiction.
II- Whether or not the Honorable Regional Trial Court gravely abuse[d] its discretion
amounting to lack or excess of jurisdiction in enjoining by issuing a Writ of Injunction the
petitioners, their agents and/or authorized representatives from implementing Section 21 of
the Revised Revenue Code of Manila, as amended, against private respondents.
III- Whether or not the Honorable Regional Trial Court gravely abuse[d] its discretion
amounting to lack or excess of jurisdiction in issuing the Writ of Injunction despite failure of
private respondents to make a written claim for tax credit or refund with the City Treasurer of
Manila.
IV- Whether or not the Honorable Regional Trial Court gravely abuse[d] its discretion
amounting to lack or excess of jurisdiction considering that under Section 21 of the Manila
Revenue Code, as amended, they are mere collecting agents of the City Government.
V- Whether or not the Honorable Regional Trial Court gravely abuse[d] its discretion
amounting to lack or excess of jurisdiction in issuing the Writ of Injunction because petitioner
City of Manila and its constituents would result to greater damage and prejudice thereof.
(sic)8
Without first resolving the above issues, this Court finds that the instant petition should be denied for
being moot and academic.
Upon perusal of the original records of the instant case, this Court discovered that a Decision 9 in the
main case had already been rendered by the RTC on August 13, 2007, the dispositive portion of which
reads as follows:
 6

WHEREFORE, in view of the foregoing, this Court hereby renders JUDGMENT in favor of the plaintiff and Petitioners availed of the wrong remedy when they filed the instant special civil action for certiorari
against the defendant to grant a tax refund or credit for taxes paid pursuant to Section 21 of the under Rule 65 of the Rules of Court in assailing the Resolutions of the CA which dismissed their petition
Revenue Code of the City of Manila as amended for the year 2002 in the following amounts: filed with the said court and their motion for reconsideration of such dismissal. There is no dispute that
the assailed Resolutions of the CA are in the nature of a final order as they disposed of the petition
completely. It is settled that in cases where an assailed judgment or order is considered final, the remedy
To plaintiff SM Mart, Inc. - P 11,462,525.02 of the aggrieved party is appeal. Hence, in the instant case, petitioner should have filed a petition for
review on certiorari under Rule 45, which is a continuation of the appellate process over the original
To plaintiff SM Prime Holdings, Inc. - 3,118,104.63 case.15

To plaintiff Star Appliances Center - 2,152,316.54

Petitioners should be reminded of the equally-settled rule that a special civil action for certiorari under
To plaintiff Supervalue, Inc. - 1,362,750.34 Rule 65 is an original or independent action based on grave abuse of discretion amounting to lack or
excess of jurisdiction and it will lie only if there is no appeal or any other plain, speedy, and adequate
To plaintiff Ace Hardware Phils., Inc. - 419,689.04 remedy in the ordinary course of law.16 As such, it cannot be a substitute for a lost appeal.17

To plaintiff Watsons Personal Care Health - 231,453.62 Nonetheless, in accordance with the liberal spirit pervading the Rules of Court and in the interest of
substantial justice, this Court has, before, treated a petition for certiorari as a petition for review on
Stores Phils., Inc. certiorari, particularly (1) if the petition for certiorari was filed within the reglementary period within
which to file a petition for review on certiorari; (2) when errors of judgment are averred; and (3) when
To plaintiff Jollimart Phils., Corp. - 140,908.54
there is sufficient reason to justify the relaxation of the rules.18 Considering that the present petition was
filed within the 15-day reglementary period for filing a petition for review on certiorari under Rule 45,
To plaintiff Surplus Marketing Corp. - 220,204.70
that an error of judgment is averred, and because of the significance of the issue on jurisdiction, the
To plaintiff Signature Mktg. Corp. - 94,906.34 Court deems it proper and justified to relax the rules and, thus, treat the instant petition for certiorari as
a petition for review on certiorari.
TOTAL: - P 19,316,458.77
Having disposed of the procedural aspect, we now turn to the central issue in this case. The basic
question posed before this Court is whether or not the CTA has jurisdiction over a special civil action for
Defendants are further enjoined from collecting taxes under Section 21, Revenue Code of Manila from certiorari assailing an interlocutory order issued by the RTC in a local tax case.
herein plaintiff.
This Court rules in the affirmative.
SO ORDERED.10
On June 16, 1954, Congress enacted Republic Act No. 1125 (RA 1125) creating the CTA and giving to the
The parties did not inform the Court but based on the records, the above Decision had already become said court jurisdiction over the following:
final and executory per the Certificate of Finality11 issued by the same trial court on October 20, 2008. In
fact, a Writ of Execution12 was issued by the RTC on November 25, 2009. In view of the foregoing, it
(1) Decisions of the Collector of Internal Revenue in cases involving disputed assessments,
clearly appears that the issues raised in the present petition, which merely involve the incident on the
refunds of internal revenue taxes, fees or other charges, penalties imposed in relation
preliminary injunction issued by the RTC, have already become moot and academic considering that the
thereto, or other matters arising under the National Internal Revenue Code or other law or
trial court, in its decision on the merits in the main case, has already ruled in favor of respondents and
part of law administered by the Bureau of Internal Revenue;
that the same decision is now final and executory. Well entrenched is the rule that where the issues have
become moot and academic, there is no justiciable controversy, thereby rendering the resolution of the
same of no practical use or value.13 (2) Decisions of the Commissioner of Customs in cases involving liability for customs duties,
fees or other money charges; seizure, detention or release of property affected fines,
forfeitures or other penalties imposed in relation thereto; or other matters arising under the
In any case, the Court finds it necessary to resolve the issue on jurisdiction raised by petitioners owing to
Customs Law or other law or part of law administered by the Bureau of Customs; and
its significance and for future guidance of both bench and bar. It is a settled principle that courts will
decide a question otherwise moot and academic if it is capable of repetition, yet evading review.14
(3) Decisions of provincial or City Boards of Assessment Appeals in cases involving the
assessment and taxation of real property or other matters arising under the Assessment Law,
However, before proceeding, to resolve the question on jurisdiction, the Court deems it proper to
including rules and regulations relative thereto.
likewise address a procedural error which petitioners committed.

On March 30, 2004, the Legislature passed into law Republic Act No. 9282 (RA 9282) amending RA 1125
by expanding the jurisdiction of the CTA, enlarging its membership and elevating its rank to the level of a
collegiate court with special jurisdiction. Pertinent portions of the amendatory act provides thus:
Sec. 7. Jurisdiction. - The CTA shall exercise:
a. Exclusive appellate jurisdiction to review by appeal, as herein provided:
1. Decisions of the Commissioner of Internal Revenue in cases involving disputed
assessments, refunds of internal revenue taxes, fees or other charges, penalties in
relation thereto, or other matters arising under the National Internal Revenue or
other laws administered by the Bureau of Internal Revenue;
2. Inaction by the Commissioner of Internal Revenue in cases involving disputed
assessments, refunds of internal revenue taxes, fees or other charges, penalties in
relations thereto, or other matters arising under the National Internal Revenue
Code or other laws administered by the Bureau of Internal Revenue, where the
National Internal Revenue Code provides a specific period of action, in which case
the inaction shall be deemed a denial;
3. Decisions, orders or resolutions of the Regional Trial Courts in local tax cases
originally decided or resolved by them in the exercise of their original or appellate
jurisdiction;
4. Decisions of the Commissioner of Customs in cases involving liability for customs
duties, fees or other money charges, seizure, detention or release of property
affected, fines, forfeitures or other penalties in relation thereto, or other matters
arising under the Customs Law or other laws administered by the Bureau of
Customs;
5. Decisions of the Central Board of Assessment Appeals in the exercise of its
appellate jurisdiction over cases involving the assessment and taxation of real
property originally decided by the provincial or city board of assessment appeals;
6. Decisions of the Secretary of Finance on customs cases elevated to him
automatically for review from decisions of the Commissioner of Customs which are
adverse to the Government under Section 2315 of the Tariff and Customs Code;
7. Decisions of the Secretary of Trade and Industry, in the case of nonagricultural
product, commodity or article, and the Secretary of Agriculture in the case of
agricultural product, commodity or article, involving dumping and countervailing
duties under Section 301 and 302, respectively, of the Tariff and Customs Code,
and safeguard measures under Republic Act No. 8800, where either party may
appeal the decision to impose or not to impose said duties.
b. Jurisdiction over cases involving criminal offenses as herein provided:
7
1. Exclusive original jurisdiction over all criminal offenses arising from violations of
the National Internal Revenue Code or Tariff and Customs Code and other laws
administered by the Bureau of Internal Revenue or the Bureau of Customs:
Provided, however, That offenses or felonies mentioned in this paragraph where
the principal amount of taxes and fees, exclusive of charges and penalties, claimed
is less than One million pesos (₱1,000,000.00) or where there is no specified
amount claimed shall be tried by the regular Courts and the jurisdiction of the CTA
shall be appellate. Any provision of law or the Rules of Court to the contrary
notwithstanding, the criminal action and the corresponding civil action for the
recovery of civil liability for taxes and penalties shall at all times be simultaneously
instituted with, and jointly determined in the same proceeding by the CTA, the
filing of the criminal action being deemed to necessarily carry with it the filing of
the civil action, and no right to reserve the filing of such civil action separately
from the criminal action will be recognized.
2. Exclusive appellate jurisdiction in criminal offenses:
a. Over appeals from the judgments, resolutions or orders of the Regional Trial Courts in tax cases
originally decided by them, in their respected territorial jurisdiction.
b. Over petitions for review of the judgments, resolutions or orders of the Regional Trial Courts in the
exercise of their appellate jurisdiction over tax cases originally decided by the Metropolitan Trial Courts,
Municipal Trial Courts and Municipal Circuit Trial Courts in their respective jurisdiction.
c. Jurisdiction over tax collection cases as herein provided:
1. Exclusive original jurisdiction in tax collection cases involving final and executory
assessments for taxes, fees, charges and penalties: Provides, however, that
collection cases where the principal amount of taxes and fees, exclusive of charges
and penalties, claimed is less than One million pesos (₱1,000,000.00) shall be tried
by the proper Municipal Trial Court, Metropolitan Trial Court and Regional Trial
Court.
2. Exclusive appellate jurisdiction in tax collection cases:
a. Over appeals from the judgments, resolutions or orders of the Regional Trial Courts in tax collection
cases originally decided by them, in their respective territorial jurisdiction.
b. Over petitions for review of the judgments, resolutions or orders of the Regional Trial Courts in the
Exercise of their appellate jurisdiction over tax collection cases originally decided by the Metropolitan
Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts, in their respective jurisdiction.19
A perusal of the above provisions would show that, while it is clearly stated that the CTA has exclusive
appellate jurisdiction over decisions, orders or resolutions of the RTCs in local tax cases originally decided
or resolved by them in the exercise of their original or appellate jurisdiction, there is no categorical
statement under RA 1125 as well as the amendatory RA 9282, which provides that th e CTA has
jurisdiction over petitions for certiorari assailing interlocutory orders issued by the RTC in local tax cases
filed before it.

The prevailing doctrine is that the authority to issue writs of certiorari involves the exercise of original
jurisdiction which must be expressly conferred by the Constitution or by law and cannot be implied from
the mere existence of appellate jurisdiction.20 Thus, in the cases of Pimentel v. COMELEC,21 Garcia v. De
Jesus,22 Veloria v. COMELEC,23Department of Agrarian Reform Adjudication Board v. Lubrica,24 and Garcia
v. Sandiganbayan,25 this Court has ruled against the jurisdiction of courts or tribunals over petitions for
certiorari on the ground that there is no law which expressly gives these tribunals such power.26 It must
be observed, however, that with the exception of Garcia v. Sandiganbayan,27 these rulings pertain not to
regular courts but to tribunals exercising quasi-judicial powers. With respect to the Sandiganbayan,
Republic Act No. 824928 now provides that the special criminal court has exclusive original jurisdiction
over petitions for the issuance of the writs of mandamus, prohibition, certiorari, habeas corpus,
injunctions, and other ancillary writs and processes in aid of its appellate jurisdiction.
In the same manner, Section 5 (1), Article VIII of the 1987 Constitution grants power to the Supreme
Court, in the exercise of its original jurisdiction, to issue writs of certiorari, prohibition and mandamus.
With respect to the Court of Appeals, Section 9 (1) of Batas Pambansa Blg. 129 (BP 129) gives the
appellate court, also in the exercise of its original jurisdiction, the power to issue, among others, a writ of
certiorari,whether or not in aid of its appellate jurisdiction. As to Regional Trial Courts, the power to
issue a writ of certiorari, in the exercise of their original jurisdiction, is provided under Section 21 of BP
129.
The foregoing notwithstanding, while there is no express grant of such power, with respect to the CTA,
Section 1, Article VIII of the 1987 Constitution provides, nonetheless, that judicial power shall be vested
in one Supreme Court and in such lower courts as may be established by law and that judicial power
includes the duty of the courts of justice to settle actual controversies involving rights which are legally
demandable and enforceable, and to determine whether or not there has been a grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the
Government.
On the strength of the above constitutional provisions, it can be fairly interpreted that the power of the
CTA includes that of determining whether or not there has been grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of the RTC in issuing an interlocutory order in cases falling within
the exclusive appellate jurisdiction of the tax court. It, thus, follows that the CTA, by constitutional
mandate, is vested with jurisdiction to issue writs of certiorari in these cases.
Indeed, in order for any appellate court to effectively exercise its appellate jurisdiction, it must have the
authority to issue, among others, a writ of certiorari. In transferring exclusive jurisdiction over appealed
tax cases to the CTA, it can reasonably be assumed that the law intended to transfer also such power as
is deemed necessary, if not indispensable, in aid of such appellate jurisdiction. There is no perceivable
reason why the transfer should only be considered as partial, not total.
Consistent with the above pronouncement, this Court has held as early as the case of J.M. Tuason & Co.,
Inc. v. Jaramillo, et al.29 that "if a case may be appealed to a particular court or judicial tribunal or body,
then said court or judicial tribunal or body has jurisdiction to issue the extraordinary writ of certiorari, in
aid of its appellate jurisdiction."30 This principle was affirmed in De Jesus v. Court of Appeals,31 where the
Court stated that "a court may issue a writ of certiorari in aid of its appellate jurisdiction if said court has
jurisdiction to review, by appeal or writ of error, the final orders or decisions of the lower court." 32 The
rulings in J.M. Tuason and De Jesus were reiterated in the more recent cases of Galang, Jr. v.
Geronimo33 and Bulilis v. Nuez.34
8
Furthermore, Section 6, Rule 135 of the present Rules of Court provides that when by law, jurisdiction is
conferred on a court or judicial officer, all auxiliary writs, processes and other means necessary to carry it
into effect may be employed by such court or officer.
If this Court were to sustain petitioners' contention that jurisdiction over their certiorari petition lies with
the CA, this Court would be confirming the exercise by two judicial bodies, the CA and the CTA, of
jurisdiction over basically the same subject matter – precisely the split-jurisdiction situation which is
anathema to the orderly administration of justice.35 The Court cannot accept that such was the
legislative motive, especially considering that the law expressly confers on the CTA, the tribunal with the
specialized competence over tax and tariff matters, the role of judicial review over local tax cases
without mention of any other court that may exercise such power. Thus, the Court agrees with the ruling
of the CA that since appellate jurisdiction over private respondents' complaint for tax refund is vested in
the CTA, it follows that a petition for certiorari seeking nullification of an interlocutory order issued in
the said case should, likewise, be filed with the same court. To rule otherwise would lead to an absurd
situation where one court decides an appeal in the main case while another court rules on an incident in
the very same case.
Stated differently, it would be somewhat incongruent with the pronounced judicial abhorrence to split
jurisdiction to conclude that the intention of the law is to divide the authority over a local tax case filed
with the RTC by giving to the CA or this Court jurisdiction to issue a writ of certiorari against interlocutory
orders of the RTC but giving to the CTA the jurisdiction over the appeal from the decision of the trial
court in the same case. It is more in consonance with logic and legal soundness to conclude that the
grant of appellate jurisdiction to the CTA over tax cases filed in and decided by the RTC carries with it the
power to issue a writ of certiorari when necessary in aid of such appellate jurisdiction. The supervisory
power or jurisdiction of the CTA to issue a writ of certiorari in aid of its appellate jurisdiction should co-
exist with, and be a complement to, its appellate jurisdiction to review, by appeal, the final orders and
decisions of the RTC, in order to have complete supervision over the acts of the latter.36
A grant of appellate jurisdiction implies that there is included in it the power necessary to exercise it
effectively, to make all orders that will preserve the subject of the action, and to give effect to the final
determination of the appeal. It carries with it the power to protect that jurisdiction and to make the
decisions of the court thereunder effective. The court, in aid of its appellate jurisdiction, has authority to
control all auxiliary and incidental matters necessary to the efficient and proper exercise of that
jurisdiction.1âwphi1 For this purpose, it may, when necessary, prohibit or restrain the performance of
any act which might interfere with the proper exercise of its rightful jurisdiction in cases pending before
it.37
Lastly, it would not be amiss to point out that a court which is endowed with a particular jurisdiction
should have powers which are necessary to enable it to act effectively within such jurisdiction. These
should be regarded as powers which are inherent in its jurisdiction and the court must possess them in
order to enforce its rules of practice and to suppress any abuses of its process and to defeat any
attempted thwarting of such process.
In this regard, Section 1 of RA 9282 states that the CTA shall be of the same level as the CA and shall
possess all the inherent powers of a court of justice.
Indeed, courts possess certain inherent powers which may be said to be implied from a general grant of
jurisdiction, in addition to those expressly conferred on them. These inherent powers are such powers as
are necessary for the ordinary and efficient exercise of jurisdiction; or are essential to the existence,
 9

dignity and functions of the courts, as well as to the due administration of justice; or are directly
appropriate, convenient and suitable to the execution of their granted powers; and include the power to
maintain the court's jurisdiction and render it effective in behalf of the litigants.38
Thus, this Court has held that "while a court may be expressly granted the incidental powers necessary
to effectuate its jurisdiction, a grant of jurisdiction, in the absence of prohibitive legislation, implies the
necessary and usual incidental powers essential to effectuate it, and, subject to existing laws and
constitutional provisions, every regularly constituted court has power to do all things that are reasonably
necessary for the administration of justice within the scope of its jurisdiction and for the enforcement of
its judgments and mandates."39 Hence, demands, matters or questions ancillary or incidental to, or
growing out of, the main action, and coming within the above principles, may be taken cognizance of by
the court and determined, since such jurisdiction is in aid of its authority over the principal matter, even
though the court may thus be called on to consider and decide matters which, as original causes of
action, would not be within its cognizance.40
Based on the foregoing disquisitions, it can be reasonably concluded that the authority of the CTA to
take cognizance of petitions for certiorari questioning interlocutory orders issued by the RTC in a local
tax case is included in the powers granted by the Constitution as well as inherent in the exercise of its
appellate jurisdiction.
Finally, it would bear to point out that this Court is not abandoning the rule that, insofar as quasi-judicial
tribunals are concerned, the authority to issue writs of certiorari must still be expressly conferred by the
Constitution or by law and cannot be implied from the mere existence of their appellate jurisdiction. This
doctrine remains as it applies only to quasi-judicial bodies.
WHEREFORE, the petition is DENIED.
has no jurisdiction over the said petition. The CA ruled that since appellate jurisdiction over private
respondents’ complaint for tax refund, which was filed with the RTC, is vested in the Court of Tax
Appeals (CTA), pursuant to its expanded jurisdiction under Republic Act No. 9282 (RA 9282), it follows
that a petition for certiorari seeking nullification of an interlocutory order issued in the said case should,
likewise, be filed with the CTA.
Petitioners filed a Motion for Reconsideration,7 but the CA denied it in its Resolution hence, this petition
ISSUE: Whether or not the CTA has jurisdiction over a special civil action for certiorari assailing an
interlocutory order issued by the RTC in a local tax case.
HELD:
The CTA has jurisdiction over a special civil action for certiorari assailing an interlocutory order issued by
the RTC in a local tax case. In order for any appellate court to effectively exercise its appellate
jurisdiction, it must have the authority to issue, among others, a writ of certiorari. In transferring
exclusive jurisdiction over appealed tax cases to the CTA, it can reasonably be assumed that the law
intended to transfer also such power as is deemed necessary, if not indispensable, in aid of such
appellate jurisdiction. There is no perceivable reason why the transfer should only be considered as
partial, not total.
Consistent with the above pronouncement, the Court has held as early as the case of J.M. Tuason & Co.,
Inc. v. Jaramillo, et al. [118 Phil. 1022 (1963)] that “if a case may be appealed to a particular court or
judicial tribunal or body, then said court or judicial tribunal or body has jurisdiction to issue the
extraordinary writ of certiorari, in aid of its appellate jurisdiction.” This principle was affirmed in De Jesus
v. Court of Appeals (G.R. No. 101630, August 24, 1992) where the Court stated that “a court may issue a
writ of certiorari in aid of its appellate jurisdiction if said court has jurisdiction to review, by appeal or
writ of error, the final orders or decisions of the lower court.

SO ORDERED. FALLO: petition is denied

NATURE:
This is a special civil action for certiorari under Rule 65 of the Rules of Court seeking to reverse and set
aside the Resolutions1 dated April 6, 2006 and November 29, 2006 of the Court of Appeals.

FACTS:

Petitioner City of Manila, through its treasurer, petitioner Liberty Toledo, assessed taxes for the taxable
period from January to December 2002 against the private respondents.In addition to the taxes
purportedly due from private respondents pursuant to Section 14, 15, 16, 17 of the Revised Revenue
Code of Manila (RRCM), said assessment covered the local business taxes. private respondents were
constrained to pay the P 19,316,458.77 assessment under protest.

On January 24, 2004, private respondents filed before the RTC of Pasay City the complaint denominated
as one for “Refund or Recovery of Illegally and/or Erroneously–Collected Local Business Tax, Prohibition
with Prayer to Issue TRO and Writ of Preliminary Injunction
The RTC granted private respondents’ application for a writ of preliminary injunction.

Petitioners filed a Motion for Reconsideration4 but the RTC denied. Petitioners then filed a special civil
action for certiorari with the CA but the CA dismissed petitioners’ petition for certiorari holding that it

B. ADMINISTRATIVE RULE-MAKING
SECOND DIVISION
G.R. No. 164026 December 23, 2008
SECURITIES AND EXCHANGE COMMISSION, petitioner,
vs.
GMA NETWORK, INC., respondent.
DECISION
TINGA, J.:
Petitioner Securities and Exchange Commission (SEC) assails the Decision1 dated February 20, 2004 of the
Court of Appeals in CA-G.R. SP No. 68163, which directed that SEC Memorandum Circular No. 1, Series of
1986 should be the basis for computing the filing fee relative to GMA Network, Inc.’s (GMA’s) application
for the amendment of its articles of incorporation for purposes of extending its corporate term.
The undisputed facts as narrated by the appellate court are as follows:
On August 19, 1995, the petitioner, GMA NETWORK, INC., (GMA, for brevity), a domestic
corporation, filed an application for collective approval of various amendments to its Articles
of Incorporation and By-Laws with the respondent Securities and Exchange Commission, (SEC,
for brevity). The amendments applied for include, among others, the change in the corporate
name of petitioner from "Republic Broadcasting System, Inc." to "GMA Network, Inc." as well
as the extension of the corporate term for another fifty (50) years from and after June 16,
2000.
Upon such filing, the petitioner had been assessed by the SEC’s Corporate and Legal
Department a separate filing fee for the application for extension of corporate term
equivalent to 1/10 of 1% of its authorized capital stock plus 20% thereof or an amount
of P1,212,200.00.
On September 26, 1995, the petitioner informed the SEC of its intention to contest the
legality and propriety of the said assessment. However, the petitioner requested the SEC to
approve the other amendments being requested by the petitioner without being deemed to
have withdrawn its application for extension of corporate term.
On October 20, 1995, the petitioner formally protested the assessment amounting
to P1,212,200.00 for its application for extension of corporate term.
On February 20, 1996, the SEC approved the other amendments to the petitioner’s Articles of
Incorporation, specifically Article 1 thereof referring to the corporate name of the petitioner
as well as Article 2 thereof referring to the principal purpose for which the petitioner was
formed.
10
On March 19, 1996, the petitioner requested for an official opinion/ruling from the SEC on the
validity and propriety of the assessment for application for extension of its corporate term.
Consequently, the respondent SEC, through Associate Commissioner Fe Eloisa C. Gloria, on
April 18, 1996, issued its ruling upholding the validity of the questioned assessment, the
dispositive portion of which states:
"In light of the foregoing, we believe that the questioned assessment is in accordance with
law. Accordingly, you are hereby required to comply with the required filing fee."
An appeal from the aforequoted ruling of the respondent SEC was subsequently taken by the
petitioner on the ground that the assessment of filing fees for the petitioner’s application for
extension of corporate term equivalent to 1/10 of 1% of the authorized capital stock plus 20%
thereof is not in accordance with law.
On September 26, 2001, following three (3) motions for early resolution filed by the
petitioner, the respondent SEC En Banc issued the assailed order dismissing the petitioner’s
appeal, the dispositive portion of which provides as follows:
WHEREFORE, for lack of merit, the instant Appeal is hereby dismissed.
SO ORDERED.
In its petition for review3 with the Court of Appeals, GMA argued that its application for the extension of
its corporate term is akin to an amendment and not to a filing of new articles of incorporation. It further
averred that SEC Memorandum Circular No. 2, Series of 1994, which the SEC used as basis for
assessing P1,212,200.00 as filing fee for the extension of GMA’s corporate term, is not valid.
The appellate court agreed with the SEC’s submission that an extension of the corporate term is a grant
of a fresh license for a corporation to act as a juridical being endowed with the powers expressly
bestowed by the State. As such, it is not an ordinary amendment but is analogous to the filing of new
articles of incorporation.
However, the Court of Appeals ruled that Memorandum Circular No. 2, Series of 1994 is legally invalid
and ineffective for not having been published in accordance with law. The challenged memorandum
circular, according to the appellate court, is not merely an internal or interpretative rule, but affects the
public in general. Hence, its publication is required for its effectivity.
The appellate court denied reconsideration in a Resolution4 dated June 9, 2004.
In its Memorandum5 dated September 6, 2005, the SEC argues that it issued the questioned
memorandum circular in the exercise of its delegated legislative power to fix fees and charges. The filing
fees required by it are allegedly uniformly imposed on the transacting public and are essential to its
supervisory and regulatory functions. The fees are not a form of penalty or sanction and, therefore,
require no publication.

For its part, GMA points out in its Memorandum,6 dated September 23, 2005, that SEC Memorandum
Circular No. 1, Series of 1986 refers to the filing fees for amended articles of incorporation where the
amendment consists of extending the term of corporate existence. The questioned circular, on the other
hand, refers only to filing fees for articles of incorporation. Thus, GMA argues that the former circular,
being the one that specifically treats of applications for the extension of corporate term, should apply to
its case.
Assuming that Memorandum Circular No. 2, Series of 1994 is applicable, GMA avers that the latter did
not take effect and cannot be the basis for the imposition of the fees stated therein for the reasons that
it was neither filed with the University of the Philippines Law Center nor published either in the Official
Gazette or in a newspaper of general circulation as required under existing laws.
It should be mentioned at the outset that the authority of the SEC to collect and receive fees as
authorized by law is not in question.7 Its power to collect fees for examining and filing articles of
incorporation and by-laws and amendments thereto, certificates of increase or decrease of the capital
stock, among others, is recognized. Likewise established is its power under Sec. 7 of P.D. No. 902-A to
recommend to the President the revision, alteration, amendment or adjustment of the charges which it
is authorized to collect.
The subject of the present inquiry is not the authority of the SEC to collect and receive fees and charges,
but rather the validity of its imposition on the basis of a memorandum circular which, the Court of
Appeals held, is ineffective.
Republic Act No. 3531 (R.A. No. 3531) provides that where the amendment consists in extending the
term of corporate existence, the SEC "shall be entitled to collect and receive for the filing of the
amended articles of incorporation the same fees collectible under existing law as the filing of articles of
incorporation."8 As is clearly the import of this law, the SEC shall be entitled to collect and receive the
same fees it assesses and collects both for the filing of articles of incorporation and the filing of an
amended articles of incorporation for purposes of extending the term of corporate existence.
The SEC, effectuating its mandate under the aforequoted law and other pertinent laws,9 issued SEC
Memorandum Circular No. 1, Series of 1986, imposing the filing fee of 1/10 of 1% of the authorized
capital stock but not less than P300.00 nor more than P100,000.00 for stock corporations, and 1/10 of
1% of the authorized capital stock but not less than P200.00 nor more than P100,000.00 for stock
corporations without par value, for the filing of amended articles of incorporation where the
amendment consists of extending the term of corporate existence.
Several years after, the SEC issued Memorandum Circular No. 2, Series of 1994, imposing new fees and
charges and deleting the maximum filing fee set forth in SEC Circular No. 1, Series of 1986, such that the
fee for the filing of articles of incorporation became 1/10 of 1% of the authorized capital stock plus 20%
thereof but not less than P500.00.
A reading of the two circulars readily reveals that they indeed pertain to different matters, as GMA
points out. SEC Memorandum Circular No. 1, Series of 1986 refers to the filing fee for the amendment of
articles of incorporation to extend corporate life, while Memorandum Circular No. 2, Series of 1994
pertains to the filing fee for articles of incorporation. Thus, as GMA argues, the former circular, being
squarely applicable and, more importantly, being more favorable to it, should be followed.
11
What this proposition fails to consider, however, is the clear directive of R.A. No. 3531 to impose the
same fees for the filing of articles of incorporation and the filing of amended articles of incorporation to
reflect an extension of corporate term. R.A. No. 3531 provides an unmistakable standard which should
guide the SEC in fixing and imposing its rates and fees. If such mandate were the only consideration, the
Court would have been inclined to rule that the SEC was correct in imposing the filing fees as outlined in
the questioned memorandum circular, GMA’s argument notwithstanding.
However, we agree with the Court of Appeals that the questioned memorandum circular is invalid as it
does not appear from the records that it has been published in the Official Gazette or in a newspaper of
general circulation. Executive Order No. 200, which repealed Art. 2 of the Civil Code, provides that "laws
shall take effect after fifteen days following the completion of their publication either in the Official
Gazette or in a newspaper of general circulation in the Philippines, unless it is otherwise provided."
In Tañada v. Tuvera,10 the Court, expounding on the publication requirement, held:
We hold therefore that all statutes, including those of local application and private laws, shall
be published as a condition for their effectivity, which shall begin fifteen days after
publication unless a different effectivity date is fixed by the legislature.
Covered by this rule are presidential decrees and executive orders promulgated by the
President in the exercise of legislative powers whenever the same are validly delegated by the
legislature, or, at present, directly conferred by the Constitution. Administrative rules and
regulations must also be published if their purpose is to enforce or implement existing law
pursuant also to a valid delegation.
Interpretative regulations and those merely internal in nature, that is, regulating only the
personnel of the administrative agency and not the public, need not be published. Neither is
publication required of the so-called letters of instructions issued by administrative superiors
concerning the rules or guidelines to be followed by their subordinates in the performance of
their duties.11
The questioned memorandum circular, furthermore, has not been filed with the Office of the National
Administrative Register of the University of the Philippines Law Center as required in the Administrative
Code of 1987.12
In Philsa International Placement and Services Corp. v. Secretary of Labor and
Employment,13 Memorandum Circular No. 2, Series of 1983 of the Philippine Overseas Employment
Administration, which provided for the schedule of placement and documentation fees for private
employment agencies or authority holders, was struck down as it was not published or filed with the
National Administrative Register.
The questioned memorandum circular, it should be emphasized, cannot be construed as simply
interpretative of R.A. No. 3531. This administrative issuance is an implementation of the mandate of R.A.
No. 3531 and indubitably regulates and affects the public at large. It cannot, therefore, be considered a
mere internal rule or regulation, nor an interpretation of the law, but a rule which must be declared
ineffective as it was neither published nor filed with the Office of the National Administrative Register.
 12

A related factor which precludes consideration of the questioned issuance as interpretative in nature
merely is the fact the SEC’s assessment amounting to P1,212,200.00 is exceedingly unreasonable and
amounts to an imposition. A filing fee, by legal definition, is that charged by a public official to accept a
document for processing. The fee should be just, fair, and proportionate to the service for which the fee
is being collected, in this case, the examination and verification of the documents submitted by GMA to
warrant an extension of its corporate term.
Rate-fixing is a legislative function which concededly has been delegated to the SEC by R.A. No. 3531 and
other pertinent laws. The due process clause, however, permits the courts to determine whether the
regulation issued by the SEC is reasonable and within the bounds of its rate-fixing authority and to strike
it down when it arbitrarily infringes on a person’s right to property.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 68163, dated
February 20, 2004, and its Resolution, dated June 9, 2004, are AFFIRMED. No pronouncement as to
costs.
former circular should apply to its case. Assuming that MC No. 2, Series of 1994 is applicable, GMA avers
that the latter did not take effect for it was neither filed with the UP Law Center nor published either in
the Official Gazette or in a newspaper of general circulation.
R.A. No. 3531 provides SEC shall be entitled to collect and receive the same fees it assesses and collects
both for the filing of articles of incorporation and the filing of an amended articles of incorporation for
purposes of extending the term of corporate existence.
R.A. No. 3531 provides a standard which should guide the SEC in fixing and imposing its rates and fees. If
such mandate were the only consideration, the Court would have been inclined to rule that the SEC was
correct in imposing the filing fees as outlined in the questioned MC.
However, we agree with the CA that the questioned MC is invalid as it was not published in the Official
Gazette or in a newspaper of general circulation. Furthermore it has not been filed with the Office of the
National Administrative Register of the University of the Philippines Law Center as required in the
Administrative Code of 1987.

SO ORDERED. The MC cannot be construed as simply interpretative of R.A. No. 3531. This is an implementation of the
mandate of R.A. No. 3531 and indubitably regulates and affects the public at large. It cannot be
considered a mere internal rule or regulation, nor an interpretation of the law.
Facts:
The petition is denied.
Petitioner GMA filed an application for various amendments to its Articles of Incorporation and By-Laws
with the respondent SEC. The amendments include, among others, the change in the corporate name of
from "Republic Broadcasting System, Inc." to "GMA Network, Inc." as well as the extension of the
corporate term for another 50 years.

The petitioner had been assessed by the SEC’s Corporate and Legal Department a separate filing fee for
the application for extension of corporate term (P1,212,200.00) The petitioner formally protested the
assessment. SEC approved the other amendments. (corporate name and the principal purpose)

The petitioner requested for an official opinion/ruling from the SEC on the validity and propriety of the
assessment. SEC, through Assoc. Commissioner Fe Eloisa C. Gloria, issued its ruling upholding the validity
of the questioned assessment.
An appeal was taken by the petitioner on the ground that the assessment is not in accordance with law.
SEC En Banc issued the assailed order dismissing the petitioner’s appeal for lack of merit.

It filed an appeal with CA. GMA argued that its application for the extension of its corporate term is akin
to an amendment and not to a filing of new articles of incorporation. It further averred that the basis for
the assessment is not valid. (SEC Memorandum Circular No. 2, Series of 1994)

CA agreed with the SEC’s submission that an extension of the corporate term is a grant of a fresh license
for a corporation. As such, it is not an ordinary amendment. However, the CA ruled that the
Memorandum Circular is invalid and ineffective for not having been published in accordance with law.

Issue: Whether or not the Memorandum Circular (MC) is valid.

Held:

GMA points out that the MC No. 1, Series of 1986 refers to the filing fees for amended articles of
incorporation where the amendment consists of extending the term of corporate existence. The
questioned circular, on the other hand, refers only to filing fees for articles of incorporation. Thus, the

FIRST DIVISION
G.R. No. 183173 | August 24, 2016
THE CHAIRMAN and EXECUTIVE DIRECTOR, PALAWAN COUNCIL FOR SUSTAINABLE DEVELOPMENT,
and THE PALAWAN COUNCIL FOR SUSTAINABLE DEVELOPMENT, Petitioners
vs.
EJERCITO LIM DOING BUSINESS AS BONANZA AIR SERVICES, AS REPRESENTED BY HIS ATTORNEY-IN-
FACT, CAPT. ERNESTO LIM, Respondent
DECISION
BERSAMIN, J.:
This appeal seeks the reversal of the decision promulgated on May 28, 2008, 1 whereby the Court of
Appeals (CA) granted the petition for prohibition of the respondent,2 and enjoined the petitioners from
enforcing Administrative Order (A.O.) No. 00-05, Series of 2002; Resolution No. 03- 211; any and all of
their revisions; and the Notice of Violation and Show Cause Order for being null and void.
Antecedents
Petitioners Ex.ecutive Director and Chairman of the Palawan Council for Sustainable Development
(PCSD), Messrs. Winston G. Arzaga and Vicente A. Sandoval, respectively, were the public officials tasked
with the duty of executing and implementin A.O. No. 00-05 and the Notice of Violation and Show Cause
Order, while the PCSD was the government agency responsible for the governance, implementation, and
policy direction of the Strategic Environment Plan (SEP) for Pala wan. On the other hand, the respondent
was the operator of a domestic air carrier doing business under the name and style Bonanza Air Services,
with authority to engage in nonscheduled air taxi transportation of passengers and cargo for the public.
His business operation was primarily that of transporting live fish from Palawan to fish traders.3
The PCSD issued A.O. No. 00-05 on February 25, 2002 to ordain that the transport of live fish from
Palawan would be allowed only through traders and carriers who had sought and secured accreditation
from the PCSD. On September 4, 2002, the Air Transportation Office (ATO) sent to the PCSD its
communication to the effect that A TO-authorized carriers were considered common carriers, and, as
such, should be exempt from the PCSD accreditation requirement. It attached to the communication a
list of its authorized carriers, which included the respondent's air transport service.4
The respondent asserted that he had continued his trade without securing the PCSD-required
accreditation; that the PCSD Chairman had started harassing his clients by issuing Memorandum Circular
No. 02, Series of 2002, which contained a penal clause imposhig sanctions on the availment of transfer
services by unaccredited aircraft carriers such as cancellation of the PCSD accreditation and perpetual
disqualification from engaging in live fish trading in Palawan; that due to the serious effects of the
memorandum, the respondent had sent a grievance letter to the Office of the President; and that the
PCSD Chairman had nonetheless maintained that the respondent's business was not a common carrier,
and should comply with the requirement for PCSD accreditation.
In disregard of the prohibition, the respondent continued his business operation in Palawan until a
customer showed him the Notice of Violation and Show Cause Order issued by the PCSD to the effect
13
that he had still made 19 flights in October 2002 despite his failure to secure accreditation from the
PCSD; and that he should explain his actuations within 15 days, otherwise, he would be sanctioned with
a fine of ₱50,000.00. 5
According to the respondent, he had not received the Notice of Violation and Show Cause Order. 6
The respondent filed a petition for prohibition in the CA, which issued a temporary restraining order
(TRO) upon his application after finding that there were sufficient grounds to issue the TR0. 7 After the
petitioners did not file their comment despite notice, the CA issued the writ of preliminary injunction
upon his posting of the injunction bond for P.50,000.00.8
The petitioners countered that the petition for prohibition should have been dismissed because A.O. No.
00-05 was in accord with the mandate of the Constitution and of Republic Act No. 7611 (Strategic
Environmental Plan for Palawan Act);9 that Resolution No. 03-211 had meanwhile amended or repealed
portions of A.O. No. 00-05, thereby rendering the issues raised by the petition for prohibition moot and
academic; 10 that by virtue of such developments, the PCSD accreditation was now required for all
carriers, except those belonging to the Government; that on August 18, 2003, the respondent had
received another notice regarding the enactment of Resolution No. 03-211; and that they had
subsequently dispatched to the respondent on September 9, 2003 another show cause order in view of
his continued non-compliance with Resolution No. 03-211. 11
The salient portions of Resolution No 03-211 read:
SECTION 3. A new Paragraph 1.5 is hereby added to Section 1 of Administrative Order No. 00-05, as
amended, as follows:
"CARRIER - any natural or juridical person or entity, except the Government, that is engaged or involved
in the transportation of live fish or any other aquatic fresh or saltwater products, whether or not on a
daily or regular manner or schedule and whether or not for compensation, from any point within or out
of the Province of Palawan under a contract or transportation, whether or not in writing, through the use
of aircrafts, seacrafts, land vehicles or any other mode of transportation, whether or not registered,
mechanical or motorized in nature, and whether or not such persons or entities are common carriers or
not as defined by law and regardless of the place of registration of such persons or entities as well as the
crafts and vehicles used or employed by them."
SECTION 5. The new section 2 for Administrative Order No. 00- 05, as amended, shall read as follows:
"Section 2. Accreditation. Before it can proceed with the transport or carriage of live fish or any other
aquatic fresh or saltwater products within or out of the Province of Palawan, a CARRIER must secure a
CERTIFICATE OF ACCREDITATION from the PCSD." 12
The respondent then filed a supplemental petition alleging that due to the implementation of Resolution
No. 03-211, his carriers were forbidden to transport or deliver fish from Palawan to his clients resulting
in loss of income amounting to ₱132,000.00; and that such supervening event was a mere scheme to
circumvent the TRO and the writ of preliminary injunction issued by the CA.
As stated, the CA promulgated its assailed decision on May 28, 2008, disposing as follows:

WHEREFORE, the instant petition is GRANTED. Administrative Order No. 00-05, Series of 2002,
Resolution No. 03-211, and any and all of its revisions, and the Notice of Violation and Show-Cause
Order are declared NULL and VOID. The injunctive writ previously issued by this Court prohibiting the
Respondents from implementing or enforcing the said issuance(s) is declared PERMANENT. Costs against
the Respondents.
SO ORDERED. 13
Hence, this appeal by the petitioners.
Issues
The sole issue for determination is whether or not the CA erred in declaring A.O. No. 00-05, Series of
2002; Resolution No. 03-211; and the the Notice of Violation and Show Cause Order null and void for
having been issued in excess of the PCSD’s authoity.
The petitioners submit the following grounds for consideration, to wit:
I No. 7611, as limitations on the power of the PCSD to promulgate A.O. No. 00-05. Clearly, what was
THE COURT OF APPEALS ERRED IN INTERPRETING SECTIONS 4, 6, 16, AND 19 OF RA 7611 AS
LIMITATIONS TO THE POWER OF THE PCSD TO PROMULGATE ADMINISTRATIVE ORDER NO 00-05.
II
THE COURT OF APPEALS ERRED IN HOLDING THAT THE PCSD'S ISSUANCE OF ADMINISTRATIVE ORDER
NO. 05 (sic) IS AN ENCROACHMENT OF THE LEGISLATIVE FUNCTION OF THE SANGGUNIANG PANLALA
WIGAN OF PALA WAN,
A. ADMINISTRATIVE ORDER NO. 00-05 AND ITS REVISIONS WERE PROMULGATED PURSUANT TO THE
RULE-MAKING POWER OF THE PCSD.
B. ADMINISTRATIVE ORDER NO. 00-05 AND ITS REVISIONS POSSESS ALL THE REQUISITES OF A VALID
ADMINISTRATIVE REGULATION.
III
THE COURT OF APPEALS ERRED IN RULING THAT THE PROMULGATION OF ADMINISTRATIVE ORDER NO.
00-05 AND ITS REVISIONS IS VESTED SOLELY IN THE SANGGUNIANG PANLALAWIGAN OF PALAWAN. 14
Ruling of the Court
We grant the petition for review on certiorari, and reverse the decision of the CA
1.
14
Procedural Matters
We first deal with the propriety of the petition for prohibition for the purpose of annulling the
challenged administrative issuances.
Administrative agencies possess two kinds of powers, the quasi-legislative or rule-making power, and the
quasi-judicial or administrative adjudicatory power. The first is the power to make rules and regulations
that results in delegated legislation that is within the confines of the granting statute and the doctrine of
non-delegability and separability of powers. 15 The issuance of the assailed A.O. No. 00-05, Resolution.
No. 03-211 and the other issuances by the PCSD was in the exercise of the agency's quasilegislative
powers. The second is the power to hear and determine questions of fact to which the legislative policy
is to apply and to decide in accordance with the standards laid down by the law itself in enforcing and
administering the same law. The administrative body exercises its quasi-judicial power when it performs
in a judicial manner an act that is essentially of an executive or administrative nature, where the power
to act in such manner is incidental to or reasonably necessary for the performance of the executive or
administrative duty entrusted to it. 16
The challenge being brought by the petitioners rests mainly on the theory that the CA should not have
interpreted the functions of the PCSD, particularly those provided for in Sections 4, 6, 16, and 19 of R.A.
assailed before the CA was the validity or constitutionality of a rule or regulation issued by the PCSD as
an administrative agency in the performance of its quasi-legislative function. The question thus
presented was a matter incapable of pecuniary estimation, and exclusively and originally pertained to
the proper Regional Trial Court pursuant to Section 19(1) of Batas Pambansa Blg. 129. Indeed, Section 1,
Rule 63 of the Rules of Court expressly states that any person "whose rights are affected by a statute,
executive order or regulation, ordinance, or any other governmental regulation" may bring an action in
the appropriate Regional Trial Court "to determine any question of construction or validity arising, and
for a declaration of his rights or duties, thereunder." The judicial course to raise the issue against such
validity should have adhered to the doctrine of hierarchy of courts except only if the respondent had
sufficient justification to do otherwise. Yet, he utterly failed to show justification to merit the exception
of bypassing the Regional Trial Court. Moreover, by virtue of Section 5, Article VIII of the
Constitution,17 the Court's power to evaluate the validity of an implementing rule or regulation is
generally appellate in nature.
In this regard, the Court has categorically observed in Smart Communications, Inc. v. National
Telecommunications Commission 18 that if what is being assailed is the validity or constitutionality of a
rule or regulation issued by an administrative agency in the performance of its quasi-legislative
functions, then the Regional Trial Court has jurisdiction to pass upon the same. The determination of
whether a specific rule or set of rules issued by an administrative agency contravenes the law or the
Constitution is within the jurisdiction of the Regional Trial Court. 19
To accord with the doctrine of hierarchy of courts, therefore, the petition for prohibition should have
been originally brought in the proper Regional Trial Court as a petition for declaratory relief.
We also need to remind that a petition for prohibition is not the proper remedy to assail an
administrative order issued in the exercise of a quasilegislative function. Prohibition is an extraordinary
writ directed against any tribunal, corporation, board, officer or person, whether exercising judicial,
quasi-judicial or ministerial functions, ordering said entity or person to desist from further proceedings
when said proceedings are without or in excess of said entity's or person's jurisdiction, or are

accompanied with grave abuse of discretion, and there is no appeal or any other plain, speedy and
adequate remedy in the ordinary course of law. 20 Its lies against the exercise of judicial or ministerial
functions, not against the exercise of legislative or quasi-legislative functions. Generally, the purpose of
the writ of prohibition is to keep a lower court within the limits of its jurisdiction in order to maintain the
administration of justice in orderly channels.21 In other words, prohibition is the proper remedy to afford
relief against usurpation of jurisdiction or power by an inferior court, or when, in the exercise of
jurisdiction in handling matters clearly within its cognizance the inferior court transgresses the bounds
prescribed to it by the law, or where there is no adequate remedy available in the ordinary course of law
by which such relief can be obtained.22
Nevertheless, the Court will not shirk from its duty to rule on this case on the merits if only to facilitate
its speedy resolution. In proper cases, indeed, the rigidity of procedural rules may be relaxed or
suspended in the interest of substantial justice. The power of the Court to except a particular case from
its rules whenever the purposes of justice so require cannot be questioned. 23
2.
Substantive Matters
Were A.O. No. 00-05, Series of 2002; Resolution No. 03-211; and the the Notice of Violation and Show
Cause Order null and void for having been issued in excess of the PCSD's authority?
We answer the query in the negative.
R.A. No. No. 7611 has adopted the Strategic Environmental Plan (SEP) for Palawan consistent with the
declared policy of the State to protect, develop, and conserve its natural resources. The SEP is a
comprehensive framework for the sustainable development of Palawan to protect and enhance the
Province's natural resources and endangered environment.
Towards this end, the PCSD was established as the administrative machinery for the SEP' s
implementation.1avvphi1 The creation of the PCSD has been set forth in Section 16 ofR.A. No. 7611, to
wit:
SEC. 16. Palawan Council for Sustainable Development. - The governance, implementation and policy
direction of the Strategic Environmental Plan shall be exercised by the herein created Palawan Council
for Sustainable Development (PCSD), hereinafter referred to as the Council, which shall be under the
Office of the President. x x x
The functions of the PCSD are specifically enumerated in Section 19 of R.A. No. 7611, which relevantly
provides:
SEC. 19. Powers and Functions. - In order to successfully implement the provisions of this Act, the
Council is hereby vested with the following powers and functions:
1. Formulate plans and policies as may be necessary to carry out the provisions of this Act;
15
2. Coordinate with the local governments to ensure that the latter's plans, programs and projects are
aligned with the plans, programs and policies of the SEP;
3. Call on any department, bureau, office, agency or instrumentality of the Government, and on private
entities and organizations for cooperation and assistance in the performance of its functions;
4. Arrange, negotiate for, and accept donations, grants, gifts, loans, and other funding from domestic
and foreign sources to carry out the activities and purposes of the SEP;
5. Recommend to the Congress of the Philippines such matters that may require legislation in support of
the objectives of the SEP;
6. Delegate any or all of its powers and functions to its support staffs, as hereinafter provided, except
those which by provisions of law cannot be delegated;
7. Establish policies and guidelines for employment on the basis of merit, technical competence and
moral character and prescribe a compensation and staffing pattern;
8. Adopt, amend and rescind such rules and regulations and impose penalties therefor for the effective
implementation of the SEP and the other provisions of this Act;
9. Enforce the provisions of this Act and other existing laws, rules and regulations similar to or
complementary with this Act;
10. Perform related functions which shall promote the development, conservation, management,
protection, and utilization of the natural resources of Palawan; and
11. Perform such other powers and functions as may be necessary in carrying out its functions, powers,
and the provisions of this Act.1âwphi1 (Emphasis supplied)
Accordingly, the PCSD had the explicit authority to fill in the details as to how to carry out the objectives
of R.A. No. 7611 in protecting and enhancing Palawan's natural resources consistent with the SEP. In that
task, the PCSD could establish a methodology for the effective implementation of the SEP. Moreover, the
PCSD was expressly given the authority to impose penalties and sanctions in relation to the
implementation of the SEP and the other provisions of R.A. No. 7611. As such, the PCSD's issuance of
A.O. No. 00-95 and Resolution No. 03-211 was well within its statutory authority.
WHEREFORE, the Court GRANTS the petition for review on certiorari; ANNULS and SETS ASIDE the
decision promulgated on May 28, 2008; DECLARES VALID and EFFECTIVE Administrative Order No. 00-
05, Series of 2002; Resolution No. 03-211; and all their revisions, as well as the Notice of Violation and
Show Cause Order issued to the respondent; LIFTS the permanent injunction issued by the Court of
Appeals enjoining petitioner Palawan Council for Sustainable Development from enforcing
Administrative Order No. 00-05, Series of 2002; Resolution No. 03-211; and all their revisions, as well as
the Notice of Violation and Show Cause Order issued to the respondent; and ORDERS the respondent to
pay the costs of suit.
SO ORDERED.

C. ADMINISTRATIVE ADJUDICATIO AND JUDICIAL REVIEW
FIRST DIVISION
G.R. No. 162784 June 22, 2007
NATIONAL HOUSING AUTHORITY, petitioner,
vs.
SEGUNDA ALMEIDA, COURT OF APPEALS, and RTC of SAN PEDRO, LAGUNA, BR. 31, respondents.
DECISION
PUNO, C.J.:
This is a Petition for Review on Certiorari under Rule 45 filed by the National Housing Authority (NHA)
against the Court of Appeals, the Regional Trial Court of San Pedro Laguna, Branch 31, and private
respondent Segunda Almeida.
On June 28, 1959, the Land Tenure Administration (LTA) awarded to Margarita Herrera several portions
of land which are part of the Tunasan Estate in San Pedro, Laguna. The award is evidenced by an
Agreement to Sell No. 3787.1 By virtue of Republic Act No. 3488, the LTA was succeeded by the
Department of Agrarian Reform (DAR). On July 31, 1975, the DAR was succeeded by the NHA by virtue of
Presidential Decree No. 757.2 NHA as the successor agency of LTA is the petitioner in this case.
The records show that Margarita Herrera had two children: Beatriz Herrera-Mercado (the mother of
private respondent) and Francisca Herrera. Beatriz Herrera-Mercado predeceased her mother and left
heirs.
Margarita Herrera passed away on October 27, 1971.3
On August 22, 1974, Francisca Herrera, the remaining child of the late Margarita Herrera executed a
Deed of Self-Adjudication claiming that she is the only remaining relative, being the sole surviving
daughter of the deceased. She also claimed to be the exclusive legal heir of the late Margarita Herrera.
The Deed of Self-Adjudication was based on a Sinumpaang Salaysay dated October 7, 1960, allegedly
executed by Margarita Herrera. The pertinent portions of which are as follows:
SINUMPAANG SALAYSAY
SA SINO MAN KINAUUKULAN;
Akong si MARGARITA HERRERA, Filipina, may 83 taong gulang, balo, kasalukuyang
naninirahan at tumatanggap ng sulat sa Nayon ng San Vicente, San Pedro Laguna, sa ilalim ng
panunumpa ay malaya at kusang loob kong isinasaysay at pinagtitibay itong mga sumusunod:
16
1. Na ako ay may tinatangkilik na isang lagay na lupang tirikan (SOLAR), tumatayo sa Nayon ng
San Vicente, San Pedro, Laguna, mayroong PITONG DAAN AT PITUMPU'T ISANG (771)
METRONG PARISUKAT ang laki, humigit kumulang, at makikilala sa tawag na Lote 17, Bloke
55, at pag-aari ng Land Tenure Administration;
2. Na ang nasabing lote ay aking binibile, sa pamamagitan ng paghuhulog sa Land Tenure
Administration, at noong ika 30 ng Julio, 1959, ang Kasunduang sa Pagbibile (AGREEMENT TO
SELL No. 3787) ay ginawa at pinagtibay sa Lungsod ng Maynila, sa harap ng Notario Publico na
si G. Jose C. Tolosa, at lumalabas sa kaniyang Libro Notarial bilang Documento No. 13, Pagina
No. 4; Libro No. IV, Serie ng 1959;
3. Na dahilan sa ako'y matanda na at walang ano mang hanap buhay, ako ay nakatira at
pinagsisilbihan nang aking anak na si Francisca Herrera, at ang tinitirikan o solar na nasasabi
sa unahan ay binabayaran ng kaniyang sariling cuarta sa Land Tenure Administration;
4. Na alang-alang sa nasasaysay sa unahan nito, sakaling ako'y bawian na ng Dios ng aking
buhay, ang lupang nasasabi sa unahan ay aking ipinagkakaloob sa nasabi kong anak na
FRANCISCA HERRERA, Filipina, nasa katamtamang gulang, kasal kay Macario Berroya,
kasalukuyang naninirahan at tumatanggap ng sulat sa Nayong ng San Vicente, San Pedro
Laguna, o sa kaniyang mga tagapagmana at;
5. Na HINIHILING KO sa sino man kinauukulan, na sakaling ako nga ay bawian na ng Dios ng
aking buhay ay KILALANIN, IGALANG at PAGTIBAYIN ang nilalaman sa pangalan ng aking anak
na si Francisca Herrera ang loteng nasasabi sa unahan.
SA KATUNAYAN NG LAHAT, ako ay nag-didiit ng hinlalaki ng kanan kong kamay sa ibaba nito
at sa kaliwang gilid ng unang dahon, dito sa Lungsod ng Maynila, ngayong ika 7 ng Octubre,
1960.4
The said document was signed by two witnesses and notarized. The witnesses signed at the left-hand
side of both pages of the document with the said document having 2 pages in total. Margarita Herrera
placed her thumbmark5above her name in the second page and at the left-hand margin of the first page
of the document.
The surviving heirs of Beatriz Herrera-Mercado filed a case for annulment of the Deed of Self-
Adjudication before the then Court of First Instance of Laguna, Branch 1 in Binan, Laguna (now, Regional
Trial Court Branch 25). The case for annulment was docketed as Civil Case No. B-1263.6
On December 29, 1980, a Decision in Civil Case No. B-1263 (questioning the Deed of Self-Adjudication)
was rendered and the deed was declared null and void.7
During trial on the merits of the case assailing the Deed of Self-Adjudication, Francisca Herrera filed an
application with the NHA to purchase the same lots submitting therewith a copy of the "Sinumpaang
Salaysay" executed by her mother. Private respondent Almeida, as heir of Beatriz Herrera-Mercado,
protested the application.
In a Resolution8 dated February 5, 1986, the NHA granted the application made by Francisca Herrera,
holding that:

From the evidence of the parties and the records of the lots in question, we gathered the
following facts: the lots in question are portions of the lot awarded and sold to the late
Margarita Herrera on July 28, 1959 by the defunct Land Tenure Administration; protestant is
the daughter of the late Beatriz Herrera Mercado who was the sister of the protestee;
protestee and Beatriz are children of the late Margarita Herrera; Beatriz was the transferee
from Margarita of Lot Nos. 45, 46, 47, 48 and 49, Block 50; one of the lots transferred to
Beatriz, e.g. Lot 47, with an area of 148 square meters is in the name of the protestant;
protestant occupied the lots in question with the permission of the protestee; protestee is a
resident of the Tunasan Homesite since birth; protestee was born on the lots in question;
protestee left the place only after marriage but resided in a lot situated in the same Tunasan
Homesite; her (protestee) son Roberto Herrera has been occupying the lots in question; he
has been there even before the death of the late Margarita Herrera; on October 7, 1960,
Margarita Herrera executed a "Sinumpaang Salaysay" whereby she waived or transferred
all her rights and interest over the lots in question in favor of the protestee; and protestee
had paid the lots in question in full on March 8, 1966 with the defunct Land Tenure
Administration.
This Office finds that protestee has a better preferential right to purchase the lots in question.9
Private respondent Almeida appealed to the Office of the President.10 The NHA Resolution was affirmed
by the Office of the President in a Decision dated January 23, 1987.11
On February 1, 1987, Francisca Herrera died. Her heirs executed an extrajudicial settlement of her estate
which they submitted to the NHA. Said transfer of rights was approved by the NHA.12 The NHA executed
several deeds of sale in favor of the heirs of Francisca Herrera and titles were issued in their
favor.13 Thereafter, the heirs of Francisca Herrera directed Segunda Mercado-Almeida to leave the
premises that she was occupying.
Feeling aggrieved by the decision of the Office of the President and the resolution of the NHA, private
respondent Segunda Mercado-Almeida sought the cancellation of the titles issued in favor of the heirs of
Francisca. She filed a Complaint on February 8, 1988, for "Nullification of Government Lot's Award,"
with the Regional Trial Court of San Pedro, Laguna, Branch 31.
In her complaint, private respondent Almeida invoked her forty-year occupation of the disputed
properties, and re-raised the fact that Francisca Herrera's declaration of self-adjudication has been
adjudged as a nullity because the other heirs were disregarded. The defendant heirs of Francisca Herrera
alleged that the complaint was barred by laches and that the decision of the Office of the President was
already final and executory.14 They also contended that the transfer of purchase of the subject lots is
perfectly valid as the same was supported by a consideration and that Francisca Herrera paid for the
property with the use of her own money.15 Further, they argued that plaintiff's occupation of the
property was by mere tolerance and that they had been paying taxes thereon.16
The Regional Trial Court issued an Order dated June 14, 1988 dismissing the case for lack of
jurisdiction.17 The Court of Appeals in a Decision dated June 26, 1989 reversed and held that the Regional
Trial Court had jurisdiction to hear and decide the case involving "title and possession to real property
within its jurisdiction."18 The case was then remanded for further proceedings on the merits.
A pre-trial was set after which trial ensued.
17
On March 9, 1998, the Regional Trial Court rendered a Decision setting aside the resolution of the NHA
and the decision of the Office of the President awarding the subject lots in favor of Francisca Herrera. It
declared the deeds of sale executed by NHA in favor of Herrera's heirs null and void. The Register of
Deeds of Laguna, Calamba Branch was ordered to cancel the Transfer Certificate of Title issued.
Attorney's fees were also awarded to private respondent.
The Regional Trial Court ruled that the "Sinumpaang Salaysay" was not an assignment of rights but a
disposition of property which shall take effect upon death. It then held that the said document must first
be submitted to probate before it can transfer property.
Both the NHA and the heirs of Francisca Herrera filed their respective motions for reconsideration which
were both denied on July 21, 1998 for lack of merit. They both appealed to the Court of Appeals. The
brief for the heirs of Francisca Herrera was denied admission by the appellate court in a Resolution dated
June 14, 2002 for being a "carbon copy" of the brief submitted by the NHA and for being filed seventy-
nine (79) days late.
On August 28, 2003, the Court of Appeals affirmed the decision of the Regional Trial Court, viz:
There is no dispute that the right to repurchase the subject lots was awarded to Margarita
Herrera in 1959. There is also no dispute that Margarita executed a "Sinumpaang Salaysay" on
October 7, 1960. Defendant NHA claims that the "Sinumpaang Salaysay" is, in effect, a waiver
or transfer of rights and interest over the subject lots in favor of Francisca Herrera. This Court
is disposed to believe otherwise. After a perusal of the "Sinumpaang Salaysay" of Margarita
Herrera, it can be ascertained from its wordings taken in their ordinary and grammatical
sense that the document is a simple disposition of her estate to take effect after her death.
Clearly the Court finds that the "Sinumpaang Salaysay" is a will of Margarita Herrera.
Evidently, if the intention of Margarita Herrera was to merely assign her right over the lots to
her daughter Francisca Herrera, she should have given her "Sinumpaang Salaysay" to the
defendant NHA or to Francisca Herrera for submission to the defendant NHA after the full
payment of the purchase price of the lots or even prior thereto but she did not. Hence it is
apparent that she intended the "Sinumpaang Salaysay" to be her last will and not an
assignment of rights as what the NHA in its resolution would want to make it appear. The
intention of Margarita Herrera was shared no less by Francisca Herrera who after the former's
demise executed on August 22, 1974 a Deed of Self-Adjudication claiming that she is her sole
and legal heir. It was only when said deed was questioned in court by the surviving heirs of
Margarita Herrera's other daughter, Beatriz Mercado, that Francisca Herrera filed an
application to purchase the subject lots and presented the "Sinumpaang Salaysay" stating
that it is a deed of assignment of rights.19
The Court of Appeals ruled that the NHA acted arbitrarily in awarding the lots to the heirs of Francisca
Herrera. It upheld the trial court ruling that the "Sinumpaang Salaysay" was not an assignment of rights
but one that involved disposition of property which shall take effect upon death. The issue of whether it
was a valid will must first be determined by probate.
Petitioner NHA elevated the case to this Court.
Petitioner NHA raised the following issues:

A. WHETHER OR NOT THE RESOLUTION OF THE NHA AND THE DECISION OF THE OFFICE OF
THE PRESIDENT HAVE ATTAINED FINALITY, AND IF SO, WHETHER OR NOT THE PRINCIPLE OF
ADMINISTRATIVE RES JUDICATA BARS THE COURT FROM FURTHER DETERMINING WHO
BETWEEN THE PARTIES HAS PREFERENTIAL RIGHTS FOR AWARD OVER THE SUBJECT LOTS;
B. WHETHER OR NOT THE COURT HAS JURISDICTION TO MAKE THE AWARD ON THE SUBJECT
LOTS; AND
C. WHETHER OR NOT THE AWARD OF THE SUBJECT LOTS BY THE NHA IS ARBITRARY.
We rule for the respondents.
Res judicata is a concept applied in review of lower court decisions in accordance with the hierarchy of
courts. But jurisprudence has also recognized the rule of administrative res judicata: "the rule which
forbids the reopening of a matter once judicially determined by competent authority applies as well to
the judicial and quasi-judicial facts of public, executive or administrative officers and boards acting within
their jurisdiction as to the judgments of courts having general judicial powers . . . It has been declared
that whenever final adjudication of persons invested with power to decide on the property and rights of
the citizen is examinable by the Supreme Court, upon a writ of error or a certiorari, such final
adjudication may be pleaded as res judicata."20 To be sure, early jurisprudence were already mindful that
the doctrine of res judicata cannot be said to apply exclusively to decisions rendered by what are usually
understood as courts without unreasonably circumscribing the scope thereof and that the more
equitable attitude is to allow extension of the defense to decisions of bodies upon whom judicial powers
have been conferred.
In Ipekdjian Merchandising Co., Inc. v. Court of Tax Appeals,21 the Court held that the rule prescribing
that "administrative orders cannot be enforced in the courts in the absence of an express statutory
provision for that purpose" was relaxed in favor of quasi-judicial agencies.
In fine, it should be remembered that quasi-judicial powers will always be subject to true judicial
power—that which is held by the courts. Quasi-judicial power is defined as that power of adjudication of
an administrative agency for the "formulation of a final order."22 This function applies to the actions,
discretion and similar acts of public administrative officers or bodies who are required to investigate
facts, or ascertain the existence of facts, hold hearings, and draw conclusions from them, as a basis for
their official action and to exercise discretion of a judicial nature.23 However, administrative agencies are
not considered courts, in their strict sense. The doctrine of separation of powers reposes the three great
powers into its three (3) branches—the legislative, the executive, and the judiciary. Each department is
co-equal and coordinate, and supreme in its own sphere. Accordingly, the executive department may
not, by its own fiat, impose the judgment of one of its agencies, upon the judiciary. Indeed, under the
expanded jurisdiction of the Supreme Court, it is empowered to "determine whether or not there has
been grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government."24 Courts have an expanded role under the 1987 Constitution in the
resolution of societal conflicts under the grave abuse clause of Article VIII which includes that duty to
check whether the other branches of government committed an act that falls under the category of
grave abuse of discretion amounting to lack or excess of jurisdiction.25
Next, petitioner cites Batas Pambansa Blg. 129 or the Judiciary Reorganization Act of 198026 where it is
therein provided that the Intermediate Appellate Court (now, Court of Appeals) shall exercise the
"exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards, of the
18
Regional Trial Courts and Quasi-Judicial agencies, instrumentalities, boards or commissions, except those
falling within the jurisdiction of the Supreme Court in accordance with the Constitution…"27 and
contends that the Regional Trial Court has no jurisdiction to rule over awards made by the NHA.
Well-within its jurisdiction, the Court of Appeals, in its decision of August 28, 2003, already ruled that the
issue of the trial court's authority to hear and decide the instant case has already been settled in the
decision of the Court of Appeals dated June 26, 1989 (which has become final and executory on August
20, 1989 as per entry of judgment dated October 10, 1989).28 We find no reason to disturb this ruling.
Courts are duty-bound to put an end to controversies. The system of judicial review should not be
misused and abused to evade the operation of a final and executory judgment.29 The appellate court's
decision becomes the law of the case which must be adhered to by the parties by reason of policy.30
Next, petitioner NHA contends that its resolution was grounded on meritorious grounds when it
considered the application for the purchase of lots. Petitioner argues that it was the daughter Francisca
Herrera who filed her application on the subject lot; that it considered the respective application and
inquired whether she had all the qualifications and none of the disqualifications of a possible awardee. It
is the position of the petitioner that private respondent possessed all the qualifications and none of the
disqualifications for lot award and hence the award was not done arbitrarily.
The petitioner further argues that assuming that the "Sinumpaang Salaysay" was a will, it could not bind
the NHA.31That, "insofar as [the] NHA is concerned, it is an evidence that the subject lots were indeed
transferred by Margarita Herrera, the original awardee, to Francisca Herrera was then applying to
purchase the same before it."32
We are not impressed. When the petitioner received the "Sinumpaang Salaysay," it should have noted
that the effectivity of the said document commences at the time of death of the author of the
instrument; in her words "sakaling ako'y bawian na ng Dios ng aking buhay…" Hence, in such period, all
the interests of the person should cease to be hers and shall be in the possession of her estate until they
are transferred to her heirs by virtue of Article 774 of the Civil Code which provides that:
Art. 774. Succession is a mode of acquisition by virtue of which the property, rights and
obligations to the extent of the value of the inheritance, of a person are transmitted through
his death to another or others either by his will or by operation of law.33
By considering the document, petitioner NHA should have noted that the original applicant has already
passed away. Margarita Herrera passed away on October 27, 1971.34 The NHA issued its resolution35 on
February 5, 1986. The NHA gave due course to the application made by Francisca Herrera without
considering that the initial applicant's death would transfer all her property, rights and obligations to the
estate including whatever interest she has or may have had over the disputed properties. To the extent
of the interest that the original owner had over the property, the same should go to her estate.
Margarita Herrera had an interest in the property and that interest should go to her estate upon her
demise so as to be able to properly distribute them later to her heirs—in accordance with a will or by
operation of law.
The death of Margarita Herrera does not extinguish her interest over the property. Margarita Herrera
had an existing Contract to Sell36 with NHA as the seller. Upon Margarita Herrera's demise, this Contract
to Sell was neither nullified nor revoked. This Contract to Sell was an obligation on both parties—
Margarita Herrera and NHA. Obligations are transmissible.37 Margarita Herrera's obligation to pay
became transmissible at the time of her death either by will or by operation of law.

If we sustain the position of the NHA that this document is not a will, then the interests of the decedent
should transfer by virtue of an operation of law and not by virtue of a resolution by the NHA. For as it
stands, NHA cannot make another contract to sell to other parties of a property already initially paid for
by the decedent. Such would be an act contrary to the law on succession and the law on sales and
obligations.38
When the original buyer died, the NHA should have considered the estate of the decedent as the next
"person"39likely to stand in to fulfill the obligation to pay the rest of the purchase price. The opposition
of other heirs to the repurchase by Francisca Herrera should have put the NHA on guard as to the award
of the lots. Further, the Decision in the said Civil Case No. B-1263 (questioning the Deed of Self-
Adjudication) which rendered the deed therein null and void40 should have alerted the NHA that there
are other heirs to the interests and properties of the decedent who may claim the property after a
testate or intestate proceeding is concluded. The NHA therefore acted arbitrarily in the award of the lots.
We need not delve into the validity of the will. The issue is for the probate court to determine. We affirm
the Court of Appeals and the Regional Trial Court which noted that it has an element of testamentary
disposition where (1) it devolved and transferred property; (2) the effect of which shall transpire upon
the death of the instrument maker.41
IN VIEW WHEREOF, the petition of the National Housing Authority is DENIED. The decision of the Court
of Appeals in CA-G.R. No. 68370 dated August 28, 2003, affirming the decision of the Regional Trial Court
of San Pedro, Laguna in Civil Case No. B-2780 dated March 9, 1998, is hereby AFFIRMED.
No cost.
SO ORDERED.
FACTS:
On June 28, 1959, the Land Tenure Administration (LTA) awarded to Margarita Herrera several portions
of land which are part of the Tunasan Estate in San Pedro, Laguna.The records show that Margarita
Herrera had two children: Beatriz Herrera-Mercado (the mother of private respondent) and Francisca
Herrera. Beatriz Herrera-Mercado predeceased her mother and left heirs.
Margarita Herrera passed away on October 27, 1971.On August 22, 1974, Francisca Herrera, the
remaining child of the late Margarita Herrera executed a Deed of Self-Adjudication claiming that she is
the only remaining relative, being the sole surviving daughter of the deceased. She also claimed to be
the exclusive legal heir of the late Margarita Herrera.
The Deed of Self-Adjudication was based on a Sinumpaang Salaysay dated October 7, 1960, allegedly
executed by Margarita Herrera.
The surviving heirs of Beatriz Herrera-Mercado filed a case for annulment of the Deed of Self-
Adjudication before the then Court of First Instance of Laguna.
On December 29, 1980, a decision on the case questioning the Deed of Self-Adjudication was rendered
and the deed was declared null and void.
During trial on the merits of the case assailing the Deed of Self-Adjudication, Francisca Herrera filed an
19
application with the NHA to purchase the same lots submitting therewith a copy of the "Sinumpaang
Salaysay" executed by her mother. Private respondent Almeida, as heir of Beatriz Herrera-Mercado,
protested the application.
In a Resolution dated February 5, 1986, the NHA granted the application made by Francisca Herrera.
Private respondent Almeida appealed to the Office of the President. The NHA Resolution was affirmed by
the Office of the President in a Decision dated January 23, 1987. On February 1, 1987, Francisca Herrera
died. Her heirs executed an extrajudicial settlement of her estate which they submitted to the NHA. Said
transfer of rights was approved by the NHA. The NHA executed several deeds of sale in favor of the heirs
of Francisca Herrera and titles were issued in their favor. Thereafter, the heirs of Francisca Herrera
directed Segunda Mercado-Almeida to leave the premises that she was occupying.
Feeling aggrieved by the decision of the Office of the President and the resolution of the NHA, private
respondent Segunda Mercado-Almeida sought the cancellation of the titles issued in favor of the heirs of
Francisca. She filed a Complaint on February 8, 1988, for "Nullification of Government Lot's Award," with
the Regional Trial Court of San Pedro, Laguna.
In her complaint, private respondent Almeida invoked her forty-year occupation of the disputed
properties, and re-raised the fact that Francisca Herrera's declaration of self-adjudication has been
adjudged as a nullity because the other heirs were disregarded.
The defendant heirs of Francisca Herrera alleged that the complaint was barred by laches and that the
decision of the Office of the President was already final and executory.
The Regional Trial Court issued an Order dated June 14, 1988 dismissing the case for lack of jurisdiction.
The Court of Appeals in a Decision dated June 26, 1989 reversed and held that the Regional Trial Court
had jurisdiction to hear and decide the case involving "title and possession to real property within its
jurisdiction." The case was then remanded for further proceedings on the merits.
On March 9, 1998, the Regional Trial Court rendered a Decision setting aside the resolution of the NHA
and the decision of the Office of the President awarding the subject lots in favor of Francisca Herrera. It
declared the deeds of sale executed by NHA in favor of Herrera's heirs null and void.
The Regional Trial Court ruled that the "Sinumpaang Salaysay" was not an assignment of rights but a
disposition of property which shall take effect upon death. It then held that the said document must first
be submitted to probate before it can transfer property.
Both the NHA and the heirs of Francisca Herrera filed their respective motions for reconsideration which
were both denied on July 21, 1998 for lack of merit. They both appealed to the Court of Appeals.
On August 28, 2003, the Court of Appeals affirmed the decision of the Regional Trial Court. Petitioner
NHA elevated the case to this Court.
ISSUE: Whether or not the resolution of the NHA and the decision of the Office of the President have
attained finality, and if so, whether or not the principle of administrative res judicata bars the court from
further determining who between the parties has preferential rights for award over the subject lots
RULING:
Yes. Res judicata is a concept applied in review of lower court decisions in accordance with the hierarchy
of courts. But jurisprudence has also recognized the rule of administrative res judicata: "the rule which
forbids the reopening of a matter once judicially determined by competent authority applies as well to
 20

the judicial and quasi-judicial facts of public, executive or administrative officers and boards acting within judgment of a court of law, such that when they attain finality, they have the effect of res judicata that
their jurisdiction as to the judgments of courts having general judicial powers . It has been declared that even the courts of justice have to respect.
whenever final adjudication of persons invested with power to decide on the property and rights of the
citizen is examinable by the Supreme Court, upon a writ of error or a certiorari, such final adjudication
may be pleaded as res judicata.

To be sure, early jurisprudence were already mindful that the doctrine of res judicata cannot be said to
apply exclusively to decisions rendered by what are usually understood as courts without unreasonably
circumscribing the scope thereof and that the more equitable attitude is to allow extension of the
defense to decisions of bodies upon whom judicial powers have been conferred.

the rule prescribing that "administrative orders cannot be enforced in the courts in the absence of an
express statutory provision for that purpose" was relaxed in favor of quasi-judicial agencies.

In fine, it should be remembered that quasi-judicial powers will always be subject to true judicial
power—that which is held by the courts. Quasi-judicial power is defined as that power of adjudication of
an administrative agency for the "formulation of a final order."

This function applies to the actions, discretion and similar acts of public administrative officers or bodies
who are required to investigate facts, or ascertain the existence of facts, hold hearings, and draw
conclusions from them, as a basis for their official action and to exercise discretion of a judicial nature.

However, administrative agencies are not considered courts, in their strict sense. The doctrine of
separation of powers reposes the three great powers into its three (3) branches—the legislative, the
executive, and the judiciary. Each department is co-equal and coordinate, and supreme in its own
sphere. Accordingly, the executive department may not, by its own fiat, impose the judgment of one of
its agencies, upon the judiciary. Indeed, under the expanded jurisdiction of the Supreme Court, it is
empowered to "determine whether or not there has been grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality of the Government."

Courts have an expanded role under the 1987 Constitution in the resolution of societal conflicts under
the grave abuse clause of Article VIII which includes that duty to check whether the other branches of
government committed an act that falls under the category of grave abuse of discretion amounting to
lack or excess of jurisdiction.

Petitioner cites Batas Pambansa Blg. 129 or the Judiciary Reorganization Act of 1980 where it is therein
provided that the Intermediate Appellate Court (now, Court of Appeals) shall exercise the "exclusive
appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards, of the Regional
Trial Courts and Quasi-Judicial agencies, instrumentalities, boards or commissions, except those falling
within the jurisdiction of the Supreme Court in accordance with the Constitution." and contends that the
Regional Trial Court has no jurisdiction to rule over awards made by the NHA.

Well-within its jurisdiction, the Court of Appeals, in its decision of August 28, 2003, already ruled that the
issue of the trial court's authority to hear and decide the instant case has already been settled in the
decision of the Court of Appeals dated June 26, 1989 (which has become final and executory on August
20, 1989 as per entry of judgment dated October 10, 1989). We find no reason to disturb this ruling.
Courts are duty-bound to put an end to controversies. The system of judicial review should not be
misused and abused to evade the operation of a final and executory judgment. The appellate court's
decision becomes the law of the case which must be adhered to by the parties by reason of policy.

RATIO: A government agency performs adjudicatory functions when it renders decisions or awards that
determine the rights of adversarial parties, which decisions or awards have the same binding effect as a

SECOND DIVISION
G.R. No. 140656 September 13, 2007
MAYOR FELIPE K. CONSTANTINO, petitioner,
vs.
HON. SANDIGANBAYAN (FIRST DIVISION) and THE PEOPLE OF THE PHILIPPINES, respondents.
DECISION
TINGA, J.:
Before us are two (2) consolidated petitions, the determination of both rests ultimately on whether
Felipe K. Constantino (Constantino), mayor of Malungon, Sarangani Province, was indeed guilty beyond
reasonable doubt of violating Section 3(e) of Republic Act No. 3019 (R.A. No. 3019), otherwise known
as The Anti-Graft and Corrupt Practices Act.
In G.R. No. 140656, Constantino filed a petition for review on certiorari under Rule 45 of the 1997 Rules
of Civil Procedure, assailing the 15 November 1999 decision1 and the 15 March 2000 resolution2 of the
Sandiganbayan (First Division) in Criminal Case No. 23433 finding him and his co-accused, petitioner
Norberto N. Lindong (Lindong) guilty beyond reasonable doubt of violating Section 3(e) of R.A. No. 3019.
On the other hand, G.R. No. 154482 is a petition for certiorari with prayer for preliminary injunction
under Rule 65 of the 1997 Rules of Civil Procedure, filed by Lindong questioning three (3) orders3 of the
Sandiganbayan (First Division) relative to the execution of judgment against him also in Criminal Case No.
23433.
The Antecedents
In an Information dated 31 July 1996, Constantino, in his capacity as mayor of Malungon, Sarangani
Province, together with his co-accused Lindong, was charged with violation of Section 3 (e) of R.A. No.
3019 before the Sandiganbayan, to wit:
That on or about February 28, 1996, in Davao City, Philippines, and within the jurisdiction of
this Honorable Court, accused Felipe K. Constantino, a public officer, being then the Mayor of
the Municipality of Malungon, Sarangani Province, committing the crime herein-charged in
relation to, while in the performance and taking advantage of his official functions, with
evident bad faith, manifest partiality or through gross inexcusable negligence, and conspiring
and confederating with accused Norberto N. Lindong, President and Chairman of the Board
of the Norlovanian Corporation, Davao City, did then and there wil[l]fully, unlawfully and
criminally enter into a Lease Agreement for the rental of various heavy equipments (sic) for a
period of six (6) years for and in consideration of the sum of PESOS: TWO HUNDRED FIFTY-
SEVEN THOUSAND ONE HUNDRED ELEVEN and 11/100 (P257,111.11) per month or a total
consideration of PESOS: EIGHTEEN MILLION FIVE HUNDRED ELEVEN THOUSAND NINE
HUNDRED NINETY-NINE and 92/100 (P18,511,999.92) and a guaranty deposit of PESOS: ONE
MILLION SEVEN HUNDRED EIGHTY THOUSAND (P1,780,000.00) contrary to the express
mandate of Resolution No. 2, series of 1995, of the Municipal Planning and Development
Council implementing Sangguniang Bayan Resolution No. 198, series of 1995 and Sangguniang
21
Bayan Resolution No. 21 dated February 22, 1996 authorizing the Municipal Mayor of
Malungon to enter into an agreement for the purchase of heavy equipments (sic) on a five-
year term basis for and in consideration of the amount of PESOS: TWO MILLION TWO
HUNDRED THOUSAND (P2,200,000.00) per year or a total consideration of only
PESOS: ELEVEN MILLION (P11,000,000.00), thus, giving said Norlovanian Corporation, which
was fully paid for the Guaranty Deposit and was actually paid heavy equipment rentals for the
period March 5 to May 6,
1996 in the aggregate sum of PESOS: TWO MILLION ONE HUNDRED SEVENTY-SEVEN
THOUSAND NINETY and 91/100 (P2,177,090.91), unwarranted benefits and advantage and
causing undue injury to the government.
CONTRARY TO LAW.4
Both accused pleaded not guilty to the charge. In the ensuing trial, the prosecution presented Nazario B.
Tomanan (Tomanan), Commission on Audit (COA) Auditor III of the COA Regional Office No. XI. In
rebuttal, it presented Benjamin C. Asgapo (Asgapo), councilor of Malungon, Sarangani Province and one
of the complainants below. The prosecution sought to establish the facts as follows:
The Municipality of Malungon listed as one of its priority programs, the acquisition of a fleet of heavy
equipment needed by the municipality in its development projects.5 For this purpose, it appropriated an
amount of P2.2 Million per annum for a period of five (5) years beginning in 1996 for the amortization of
such purchase.6 Pursuant thereto, the municipality conducted two (2) public biddings for suppliers of the
required fleet of heavy equipment. Both attempts, however, failed. Hence, the Sangguniang
Bayan instead passed Resolution No. 21 on 22 February 1996, authorizing petitioner Constantino to
enter into a negotiated contract for the lease/purchase of the needed fleet of heavy equipment.7
On 28 February 1996, Constantino entered into a Lease Agreement8 with Norlovanian Corporation,
represented by Lindong. The agreement required, among others, the municipality to provide
Norlovanian Corporation with a guaranty deposit. The following day, Lindong appeared before
the Sangguniang Bayan to discuss the Lease Agreement. Not one of the members of
the Sanggunian questioned the legality of the agreement.9
The seven (7) units of heavy equipment subject of the agreement were thus delivered to the municipality
on 4 March 1996.10 On 6 March 1996, the Municipality of Malungon paid Norlovanian Corporation a total
amount of P2,177,090.91 representing the guaranty deposit as well as the rental for the period of 5
March 1996 to 5 April 1996 and partial rental for the period of 5 April 1996 to 6 May 1996.11
Thereafter, on 18 April 1996, the Sangguniang Bayan unanimously passed Resolution No. 3812 requesting
petitioner to operate the newly acquired fleet of heavy equipment. The municipality subsequently
utilized the fleet.13
However, only five (5) days later, or on 23 April 1996, Sanggunian members Benjamin C. Asgapo, Rafael
J. Suson, Sr. (Suson), Leo G. Ingay (Ingay), Pablo V. Octavio (Octavio) and Wilfredo P. Espinosa (Espinosa),
and Vice Mayor Primitiva L. Espinosa (Vice Mayor Espinosa) filed a formal complaint against petitioners
Constantino and Lindong for violation of R.A. No. 3019.

On 6 June 1996, the Sangguniang Bayan passed Resolution No. 47, urging the municipality to "stop all
forms of unauthorized payment/expenditure relative to the illegally acquired pool of heavy equipment
by the Municipality of Malungon."14
In particular, Tomanan testified that he was directed by the COA Regional Office XI to conduct a special
and comprehensive audit of the municipality of Malungon for the period of 1 May 1995 to 31 May
199615 in view of a complaint filed by certain officials therein. In January 1997, Tomanan submitted his
report detailing the following adverse findings relative to the purchase of the subject fleet of heavy
equipment: (a) the lease/purchase contract was disadvantageous to the municipal government because
of the rigid terms and conditions therein required of the municipality before the latter could acquire
ownership over the pool of heavy equipment; (b) Norlovanian Corporation had no proof of ownership of
the fleet of equipment as the audit revealed that title to the equipment was in the name of Lindong; (c)
the lease/purchase procedure violated Sections 27 and 28 of the Rules and Regulations on Supply and
Property Management in Local Governments;16 and (d) the lease/purchase procedure utilized by the
municipality was uneconomical and resulted to a wastage of P9,658,000.00 of government funds.17
Asgapo, on the other hand, testified that he was present during the 29 February 1996 meeting where
Lindong appeared before the Sanggunian. The witness asserted that the lease contract was never
concurred in by the municipal council as required by Resolution No. 21. He admitted, however, that
neither was there any resolution passed opposing, objecting to or rejecting the lease contract.
Moreover, Asgapo alleged that at the time he first obtained a copy of the lease contract from the
municipal treasurer on 6 March 1996, he did not see the Undertaking dated 28 February 199618 attached
or annexed thereto. He was only able to get a copy of the latter document about three (3) or four (4)
days thereafter, following an inquiry with the provincial auditor.19
The defense presented Lindong as its sole witness. According to Lindong, after negotiations between
himself and petitioner Constantino, together with some members of the Sanggunian, the parties agreed
to a lease/purchase scheme in accordance with the mandate of Resolution No. 21. They agreed that
since the municipality did not have sufficient funds to buy the fleet of heavy equipment outright at P8.9
Million, the latter would purchase the subject equipment on installment basis but with allowance for
Norlovanian Corporation to recover some incremental cost. Thus, on the very same day, 28 February
1996, Lindong as representative of Norlovanian Corporation and Constantino as representative of the
municipality entered into the lease/purchase agreement. They contemporaneously executed the Lease
Agreement and Undertaking in the presence of the members of the Sanggunian who accompanied the
mayor.20
Lindong further testified that he attended the municipal council meeting on 29 February 1996 to provide
the members thereof with a copy of the lease contract and to explain the transaction. Moreover, he
explained that notwithstanding the fact that the main agreement was captioned only as a "Lease
Agreement," the same being a standard pre-printed form of his corporation, the intent of the parties was
to enter into a lease/purchase agreement. Hence, he clarified that the Undertaking he executed bound
him to convey ownership over the fleet of heavy equipment to the municipality upon the full payment
thereof.21
Finally, Lindong averred that more than two (2) months after he delivered the fleet of equipment to the
municipality, he received a Certificate of Concurrence dated 9 May 1996 issued by Nemesio Liray,
Chairman of the Committee of Finance of the Sangguniang Bayan, certifying that the Lease
Agreement was concurred in by the members of the Committee on 29 February 1996. Likewise, he
received a Certification dated 17 May 1996 from the Pre-Qualification, Bids and Awards Committee of
22
the Municipality of Malungon, that the members thereof approved, concurred in and signed the contract
of lease between the municipality and Norlovanian Corporation.22
Finding that the prosecution had proven beyond reasonable doubt the guilt of Constantino and Lindong
of the offense as charged, the Sandiganbayan rendered the assailed decision sentencing them both,
thus:
WHEREFORE, judgment is hereby rendered finding accused FELIPE K. CONSTANTINO and
NORBERTO N. LINDONG GUILTY beyond reasonable doubt of the crime of violation of Section
3 (e) of R.A. No. 3019, otherwise known as "The Anti-Graft and Corrupt Practices Act," and
said accused are hereby sentenced, as follows:
(a) to suffer an indeterminate sentence of imprisonment for a period of six (6) years and one
(1) month as minimum to twelve (12) years and one (1) month as maximum;
(b) to suffer perpetual disqualification from public office;
(c) to jointly and severally indemnify the Municipality of Malungon, Province of Sarangani the
sum of Two Million One Hundred Seventy-Seven Thousand [sic] and 91/1000 [sic] Pesos
(P2,177,090.91), representing the amount actually paid to Norlovanian Corporation, with
interest at the legal rate computed from March 6, 1996 until fully paid; and
(d) to pay the costs of suit.
SO ORDERED.23
The Sandiganbayan held that neither manifest partiality nor evident bad faith attended the commission
of the offense. However, it found that petitioner Constantino caused undue injury to the Municipality of
Malungon through his gross inexcusable negligence in executing only a lease agreement over the fleet of
heavy equipment. Anent Lindong, the graft court upheld his culpability as co-conspirator of Constantino
despite its finding that the latter violated the anti-graft law through negligence only. The Sandiganbayan
ratiocinated that since the law violated is a special law, proof that he intended to commit the particular
offense was not essential, as it otherwise would have been for a felony punishable by the Revised Penal
Code. The Sandiganbayan ruled that it was sufficient for the prosecution to have proven, as it did, that
Lindong allowed or failed to prevent Constantino from entering into an agreement which was clearly
contrary to law. Thus, even if petitioner was found guilty of causing undue injury to the municipality
through gross inexcusable negligence, the anti-graft court concluded that his co-conspirator could
likewise be held liable.24
It appears that during trial, both accused were represented by the same counsel. However, after
judgment was rendered against them, Constantino and Lindong filed separate appeals to the Supreme
Court which have taken disparate routes. On 25 April 2006, during the pendency of his present appeal,
Constantino passed away.25
Lindong himself likewise filed a petition for review on certiorari, docketed as G.R. No. 142379, to seek a
reversal of the Sandiganbayan decision finding him guilty as Constantino’s co-conspirator. On 10 July
2000, this Court denied Lindong’s petition for failure to state the material date of receipt of the assailed

decision of the Sandiganbayan. His subsequent attempts for reconsideration proved futile. On 25 July
2001, the Court issued the Entry of Judgment in the case.
Thereafter, the Sandiganbayan (First Division) issued three (3) orders relative to the execution of
judgment against Lindong, all of which are assailed by the latter, in his petition for certiorari in G.R. No.
154482, for having been issued with grave abuse of discretion. The Sandiganbayan issued on 16 May
2002 the first challenged order which directed petitioner Lindong to appear before it in person for the
execution of judgment. On 6 June 2002, the respondent court issued a resolution, the second assailed
order herein, denying Lindong’s urgent motion to defer execution of judgment. The third assailed order,
a resolution issued on 3 July 2002, directed the issuance of a bench warrant against petitioner Lindong
and the confiscation of his cash bond for provisional liberty pending appeal, and required him to
surrender his person to the court and explain why judgment should not be rendered against the cash
bond.
With the demise of Constantino during the pendency of his appeal, the same should normally be
regarded as moot and academic following the norm that the death of the accused marks the extinction
of his criminal liability.26However, the present two petitions are so intertwined that the absolution of
Constantino is ultimately determinative of the absolution of Lindong. Indeed, the exoneration of
Constantino will necessarily signify the injustice of carrying out the penalty imposed on Lindong. Thus,
the Court in this instance has to ascertain the merits of Constantino’s appeal to prevent a developing
miscarriage of justice against Lindong.
The "moot and academic" principle is not a magical formula that can automatically dissuade the courts in
resolving a case. Courts will decide cases, otherwise moot and academic, if: First, there is a grave
violation of the Constitution;27 Second, the exceptional character of the situation and the paramount
public interest is involved;28Third, when constitutional issue raised requires formulation of controlling
principles to guide the bench, the bar, and the public;29 and Fourth, the case is capable of repetition yet
evading review.30 In the instant case, the exceptional character of the appeals of Constantino and
Lindong in relation to each other, as well as the higher interest of justice, requires that the Court
determine the merits of the petition and not dismiss the same outright on the ground of mootness.
The Ruling of the Court
G.R. No. 140656
Petitioner Constantino impugned his conviction and asserted that the Sandiganbayan erred in convicting
him based on its finding that he violated Resolution No. 21 by entering into a "Lease Agreement" with
the Norlovanian Corporation and for his failure to sign the accompanying "Undertaking." Likewise, he
argued that the evidence adduced by the prosecution was insufficient to overcome the constitutional
presumption of innocence in his favor. Finally, Constantino contended that it was error for the
Sandiganbayan to disregard the findings of the Supreme Court en banc in the earlier case of Constantino
v. Hon. Ombudsman Desierto.31
Constantino’s petition would have been granted and he would have been absolved of criminal liability
had he been still alive today. This is why it is so.
Section 3(e) of R.A. No. 3019 provides:
23
SEC. 3. Corrupt practices of public officers. — In addition to acts or omissions of public officers
already penalized by existing law, the following shall constitute corrupt practices of any public
officer and are hereby declared to be unlawful:
(e) Causing any undue injury to any party, including the Government, or giving any private
party any unwarranted benefits, advantage, or preference in the discharge of his official,
administrative or judicial functions through manifest partiality, evident bad faith or gross
inexcusable negligence. This provision shall apply to officers and employees of offices or
government corporations charged with the grant of licenses or permits or other concessions.
In order to be liable for violating the law, the following elements must concur: (1) the accused is a public
officer or a private person charged in conspiracy with the former; (2) he or she causes undue injury to
any party, whether the government or a private party; (3) the said public officer commits the prohibited
acts during the performance of his or her official duties or in relation to his or her public positions; (4)
such undue injury is caused by giving unwarranted benefits, advantage or preference to such parties;
and (5) the public officer has acted with manifest partiality, evident bad faith or gross inexcusable
negligence.32
There are two (2) modes of committing the offense, thus: (1) the public officer caused any undue injury
to any party, including the government; or (2) the public officer gave any private party unwarranted
benefits, advantage or preference in the discharge of his functions.33 An accused may be charged under
either mode34 or under both should both modes concur.35
Additionally, Section 3(e) poses the standard of manifest partiality, evident bad faith or gross inexcusable
negligence before liability can be had under the provision. Manifest partiality is characterized by a clear,
notorious or plain inclination or predilection to favor one side rather than the other.36 Evident bad faith
connotes a manifest deliberate intent on the part of the accused to do wrong or cause damage.37 Gross
inexcusable negligence is defined as negligence characterized by the want of even slight care, acting or
omitting to act in a situation where there is a duty to act, not inadvertently but willfully and intentionally
with a conscious indifference to consequences insofar as other persons may be affected.38 Mere bad
faith or partiality and negligence per se are not enough for one to be held liable under the law since the
act of bad faith or partiality must in the first place be evident or manifest, respectively, while the
negligent deed should both be gross and inexcusable.39
As discussed previously, the Sandiganbayan held that manifest partiality could not be rightfully imputed
to Constantino.40 The prosecution did not present proof that he was actuated with malice or fraud
sufficient to meet the requirement of proof beyond reasonable doubt.41 However, the respondent court
found that Constantino’s act of entering into a purportedly pure lease agreement instead of a
lease/purchase agreement was a flagrant violation of Resolution No. 21. In view of the rigid terms of the
subject contract to which Constantino assented, coupled by his failure to secure the concurrence of
the Sangguniang Bayan before entering into the agreement, the Sandiganbayan found that his conduct
constituted gross inexcusable negligence.42 Likewise, the anti-graft court ruled that Constantino’s acts
resulted in undue injury to the Municipality of Malungon.43 Notably, in the course of trial, the
prosecution admitted that it had no proof that unwarranted benefits and advantage had been given to
Norlovanian Corporation.44
Undoubtedly, the standard of culpability imposed by Section 3 of R.A. No. 3019 is quite high which, in
this case, was not hurdled by the evidence presented against Constantino. Verily, the prosecution failed
to satisfy the requisite proof to demonstrate Constantino’s guilt beyond reasonable doubt. While

Constantino should have exercised more prudence when he transacted with Norlovanian Corporation,
he could not however be held liable for "gross inexcusable negligence" as contemplated in R.A. No. 3019.
Indeed, in the earlier case of Constantino v. Desierto,45the Court had already made an express finding
that petitioner Constantino did not violate the mandate of Resolution No. 21 but instead merely carried
out its directive.
That case was a special civil action for certiorari filed by Constantino to seek the invalidation of the
resolution of the Ombudsman finding him guilty of grave misconduct prejudicial to the best interest of
the service and/or gross neglect of duty, and on that account, dismissing him from service. The
controversy arose from the same transaction entered into between Constantino and Norlovanian
Corporation and involved the same subject matter as in the case at bar. The administrative complaint
was initiated through a letter-complaint and joint affidavit signed by Vice Mayor Espinosa and to it was
appended a certification signed by the Vice Mayor and Councilors Suson, Ingay, Asgapo, Espinosa and
Octavio.
In exonerating Constantino from the administrative charges, the Court found that the evidence against
him was inadequate to warrant his dismissal from service on the grounds of grave misconduct, conduct
prejudicial to the best interest of the service and gross neglect of duty. More particularly, we made the
following pronouncements:
The explicit terms of Resolution No. 21, Series of 1996 clearly authorized Mayor Constantino
to "lease/purchase one (1) fleet of heavy equipment" composed of seven (7) generally
described units, through a "negotiated contract." That resolution, as observed at the
outset, contained no parameters as of rate of rental, period of lease, purchase price. Pursuant
thereto, Mayor Constantino, representing the Municipality of Malungon, and Norberto
Lindong, representing the Norlovanian Corporation, executed two written instruments of the
same date and occasion, viz.:
One — an agreement(on a standard printed form) dated Febr[ua]ry 28, 1996 for the lease by
the corporation to the municipality of heavy equipment of the number and description
required by Resolution no. 21, and
Two — an undertaking for the subsequent conveyance and transfer of ownership of the
equipment to the municipality at the end of the term of the lease.
That the Members of the Sangguniang Bayan knew of this "lease/purchase" is evident from
Resolution No. 38, Series of 1996 unanimously enacted by them shortly after delivery of the
equipment. In that resolution they (1) declared that "the Municipal Government ** has just
acquired its fleet of heavy equipment leased/purchased from the Norlovanian Corporation,"
and (2) requested Mayor Constantino "to operate the newly acquired heavy equipment **
leased/purchase from the Norlovanian Corporation." The Resolution is consistent with the
allegations of Mayor Constantino — which in any event are not denied by the Councilors or
Vice-Mayor Espinosa — that:
1) the equipment was delivered to the Municipality by Norlovanian Corporation on February
28, 1996 and duly inspected by Councilors Guilley, Ruñez, Nallos and Liray, as well as the
Municipal Engineer and the Municipal Treasurer;
24
2) prior to the delivery of the units, the Vice Mayor and other Members of the Sanguniang
Bayan had opportunity to read the "Lease Agreement" as well as the "Undertaking" but then
raised no objections thereto;
3) neither did they raise any objections (a) at the session of the Municipal Council on February
29, 1996, when Norberto Lindong explained the terms of the "negotiated contract" of
"lease/purchase," or (b) at the time that the units were delivered and inspected by
designated minicipal officials.
Now, it is germane to advert to the deplorable inaccuracies in the Joint Affidavit of private
respondents (P.L. Espinosa, Suson, Sr., Ingay, W. P. Espinosa, Octavio, Asgapo) submitted as
part of their complaint in the Ombudsman’s Office. The affidavit contains a clearly distorted
version of Resolution No. 21 of February 22, 1996. In that document of the affiants described
Resolution No. 21 as authorizing Mayor Constantino "to purchase and acquire ** heavy
equipments (sic) to be paid within five (5) years at the yearly amortization of P2.2 million **."
This is a misleading reading of Resolution No. 21. As the most cursory perusal of that
resolution at once discloses, what the Mayor was thereby empowered to do was "to enter
into a negotiated contract" in the Municipality’s behalf with "interested parties," in line with
the expressed wish of the Municipality to "lease/purchase one (1) fleet of heavy
equipment **" —not simply to "purchase and acquire" said equipment (as complainant
Councilors aver). Neither does Resolution No. 21 state (contrary to complainant’s description
of it) that the price shall be "paid within five (5) years at the yearly amortization of P2.2
million **;" indeed, as already above stressed, the resolution is completely silent as regards
any terms and conditions of the "negotiated contract" that the Mayor was assigned to
execute in the town’s behalf. Such obvious distortions cannot but erode the complainant
councilors’ credibility and bona fides.
It is also relevant to draw attention to the flagrantly inaccurate statements and inferences
about the Mayor’s "negotiated contract" regarding the heavy equipment, contained in
Resolution No. 47 approved only by four (4) Members of the Municipal Council at its session
of June 6, 1996 (the four (4) being Councilors Octavio, Espinosa, Asgapo and Ingay). That
Resolution No. 47, it will be recalled, stopped all "rental payment/expenditures relative to the
pool of heavy equipment of the Norlovanian Company." The stoppage was based on prior
resolutions of the Council — allegedly setting down the terms under which the heavy
equipment should be acquired, and which terms were supposedly violated by the Mayor. but
— unaccountably and again indicative of bad faith, if not malice, on the part of private
respondents — Resolution No. 47 made absolutely no reference to two (2) resolution which
on their face justify the Mayor’s contract with Norlovanian Corporation, to wit: (1) Resolution
No. 21 which, having been enacted after the cited resolutions, must be deemed to have
superseded them, and which, to repeat, motivated and constitutes the justification for
the lease-purchase agreement entered into by the Mayor and Norlovanian Corporation, and
(2) Resolution No. 38 in which the Councilors not only expressly aknowledged that "the
municipal government ** (had) just acquired its fleet of heavy equipment leased/purchased
from the Norlovanian Corporation," but also "requested ** (the) Mayor ** to operate the
newly acquired heavy equipment of the municipality leased/purchased from the Norlovanian
Corporation."
In light of the forego[i]ng facts, which appear to the Court to be quite apparent on the
record, it is difficult to perceive how the Office of the Ombudsman could have arrived at a
conclusion of any wrongdoing by the Mayor in relation to the transaction in question. It is

difficult to see how the transaction between the Mayor and Norlovanian Corporation —
entered into pursuant to Resolution No. 21 — and tacitly accepted and approved by the
town Council through its Resolution No. 38 —could be deemed an infringement of the same
Resolution No. 21. In truth, an examination of the pertinent writings (the resolution, the
two (2) instruments constituting the negotiated contract, and the certificate of delivery)
unavoidably confirms their integrity and congruity. It is in fine, difficult to see how those
pertinent written instrument, could establish a prima facie case to warrant the preventive
suspension of Mayor Constantino. A person with the most elementary grasp of the English
language would, from merely scanning those material documents, at once realize that the
Mayor had done nothing but carry out the expressed wishes of the Sangguniang Bayan.
The investigator also opined that Resolution No. 21 should be interpreted in light of other
official documents, executed a year earlier. He [Graft Prosecutor Buena] does not explain why
he did not adopt the more obvious construction of Resolution No. 21 indicated by the
elementary doctrine that it is within the power and prerogative of the town council to repeal
its prior acts, either expressly, or by the passage of essentially inconsistent resolutions. When
the town council passed Resolution No. 21 without any mention whatever of those prior
official documents respecting the acquisition to heavy equipment, the evident intention
was to supersede them and to have such acquisition governed solely by Resolution No. 21.
This conclusion is strongly supported by the fact that the Sanggunian expressly admitted —
in the Second Whereas Clause of its Resolution No. 21 — that there had been a "failure of
bidders to submit bids despite of two biddings ... public announcement" [sic] — the two
biddings being obviously related to said earlier official acts of the town council. The
conclusion is further bolstered by the fact that the Council (with full awareness of said
"negotiated contract,") and of the delivery of equipment thereunder, had requested the
Mayor to put the equipment into operation for the town projects. The Court is thus
satisfied that it was in fact the Council’s intention, which it expressed in clear language, to
confer on the Mayor ample discretion to execute a "negotiated contract" with any
interested party, without regard to any official acts of the Council prior to Resolution No.
21.
It is also difficult to see why the patent inaccuracies in the affidavit-complaint and Resolution
No. 47 were ignored — as difficult to understand how the execution of two writings to
embody one contract of "lease/purchase" could be regarded as fatally defective, and even
indicative of a criminal conspiracy, or why said two writings should be interpreted in such a
way as to magnify their seeming inconsistencies. The fundamental and familiar legal
principle — which the Office of the Ombudsman ignored — is that it is perfectly legitimate
for a bilateral contract to be embodied in two or more separate writings, and that in such
an event the writings should be read and interpreted together in such a way as to eliminate
seeming inconsistencies and render the parties’ intention effectual.
The statement in the appealed Resolution — as to the absence of prior consent of the Council
to the "negotiated contract" executed by Mayor Constantino and Norlovanian Corporation —
flies in the teeth of the evidence; there is unrebutted proof that the heavy equipment
delivered to the Municipality pursuant to the contract, was inspected by designated
councilors and municipal officers; that shortly thereafter, the negotiated contract —
composed of two documents — was explained and discussed at the session of the town
Council of February 29, 1996; and that afterwards the Council requested Mayor Constantino
to put the equipment into operation. (Emphasis supplied)46
25
Although the instant case involves a criminal charge whereas Constantino involved an administrative
charge, still the findings in the latter case are binding herein because the same set of facts are the
subject of both cases. What is decisive is that the issues already litigated in a final and executory
judgment preclude— by the principle of bar by prior judgment, an aspect of the doctrine of res judicata,
and even under the doctrine of "law of the case," —the re-litigation of the same issue in another
action.47 It is well established that when a right or fact has been judicially tried and determined by a
court of competent jurisdiction, so long as it remains unreversed, it should be conclusive upon the
parties and those in privity with them.48 The dictum therein laid down became the law of the case and
what was once irrevocably established as the controlling legal rule or decision continues to be binding
between the same parties as long as the facts on which the decision was predicated continue to be the
facts of the case before the court. Hence, the binding effect and enforceability of that dictum can no
longer be resurrected anew since such issue had already been resolved and finally laid to rest, if not by
the principle of res judicata, at least by conclusiveness of judgment.49
It may be true that the basis of administrative liability differs from criminal liability as the purpose of
administrative proceedings on the one hand is mainly to protect the public service, based on the time-
honored principle that a public office is a public trust. On the other hand, the purpose of the criminal
prosecution is the punishment of crime.50 However, the dismissal by the Court of the administrative case
against Constantino based on the same subject matter and after examining the same crucial evidence
operates to dismiss the criminal case because of the precise finding that the act from which liability is
anchored does not exist.
It is likewise clear from the decision of the Court in Constantino that the level of proof required in
administrative cases which is substantial evidence was not mustered therein. The same evidence is again
before the Court in connection with the appeal in the criminal case. Ineluctably, the same evidence
cannot with greater reason satisfy the higher standard in criminal cases such as the present case which is
evidence beyond reasonable doubt.
The elementary principle is that it is perfectly legitimate for a bilateral contract to be embodied in two or
more separate writings, and that in such an event the writings should be read and interpreted together
in such a way as to eliminate seeming inconsistencies and render the intention of the parties
effectual.51 In construing a written contract, the reason behind and the circumstances surrounding its
execution are of paramount importance to place the interpreter in the situation occupied by the parties
concerned at the time the writing was executed.52Construction of the terms of a contract, which would
amount to impairment or loss of right, is not favored. Conservation and preservation, not waiver,
abandonment or forfeiture of a right, is the rule.53 In case of doubts in contracts, the same should be
settled in favor of the greatest reciprocity of interests.54
G.R. No. 154482
Lindong ascribes grave abuse of discretion on the part of respondent court in issuing the challenged
orders. He argues that the Sandiganbayan erred in not holding in abeyance the execution of judgment
against him in light of the pending petition for review by his co-accused before this Court of the same
decision for which he was convicted. Should the decision be set aside by the Supreme Court, petitioner
Lindong contends, he will be benefited to the extent that there can no longer be any judgment to legally
execute against both himself and Constantino.
The virtual acquittal of Constantino inevitably puts a welcome end to the tribulations of Lindong. Thus,
we grant the petition.
 26

One of the essential elements for violating Section 3(e) of R.A. No. 3019 is that the respondent is a public
officer discharging administrative, judicial or official functions, or that he or she is a private individual in
conspiracy with such public officer. In the instant case, the essential acquittal of Constantino, as
presaged in G.R. No. 140656 and presented in the disquisition, renders an absence in the critical
requisite of a public officer with whom Lindong, the private individual, allegedly conspired to commit the
crime charged.
It is therefore apparent that in light of the prevailing milieu in the instant case, we cannot sustain the
execution of judgment against Lindong. The reversal of the decision of the Sandiganbayan in Criminal
Case No. 23433 makes it legally absurd to execute any such judgment against him.
Moreover, Rule 122, Section 11(a) of the Revised Rules of Criminal Procedure operates in his favor. The
Rule provides:

Hence, we now have before us an incongruous situation where execution of judgment has been entered
against a private person accused with conspiring with a public officer for violation of the anti-graft law,
but at the same time said public officer would unequivocably be entitled to exoneration had he not died
in the meantime. Yet, it is utterly illogical to absolve Constantino who entered into the contract on
behalf of the government and send the private person to prison.
The case of Marcos v. Sandiganbayan (1st Division)55 is instructive. Here, the Court granted the motion
for reconsideration filed by former First Lady Imelda Marcos and acquitted her of the charge of violating
Section 3(g) of R.A. No. 3019. Her acquittal was based on the finding that she signed the subject lease
agreement not as a public officer, but as a private person. Thus, the Court found that the first element of
the offense, i.e., that the accused is a public officer, was lacking. However, the acquittal of the former
First Lady was taken in conjunction with the acquittal of the public officer with whom she was accused.56
SEC. 11. Effect of appeal by any of several accused.—
(a) An appeal taken by one or more of several accused shall not affect those who did not
appeal, except insofar as the judgment of the appellate court is favorable and applicable to
the latter.
Although the rule states that a favorable judgment shall benefit those who did not appeal, we have held
that a literal interpretation of the phrase "did not appeal" will not give justice to the purpose of the
provision. It should be read in its entirety and should not be myopically construed so as to defeat its
reason, i.e., to benefit an accused who did not join in the appeal of his co-accused in case where the
appellate judgment is favorable.58

The case of Go v. The Fifth Division, Sandiganbayan, et al.57 further elucidates the matter as illustrated In fact, the Court has at various times applied the foregoing provision without regard to the filing or non-
in Marcos, to wit: filing of an appeal by a co-accused, so long as the judgment was favorable to him. In such cases, the co-
accused already withdrew his appeal,59 failed to file an appellant’s brief,60 or filed a notice of appeal with
the trial court but eventually withdrew the same.61 Even more, in these cases, all the accused appealed
x x x [T]he acquittal of the former First Lady should be taken in the context of the Court’s
from the judgment of conviction but for one reason or another, their conviction had already become
Decision dated January 29, 1198, in Dans, Jr. v. People, which the former First Lady sought to
final and executory. Nevertheless, the Court still applied to them the favorable judgment in favor of their
reconsider and, finding merit in her motion, gave rise to the Court’s Resolution in Marcos.
co-accused.62 Therefore, we cannot find a reason to treat Lindong differently, especially so in this case
In Dans, the Information filed against the former First Lady and Jose P. Dans, Jr., then Minister
where the public officer accused of violating the anti-graft law has been acquitted, and the appeal by
of Transportation and Communications, for violation of Section 3(g) of R[.]A[.] [No.] 3019,
Lindong was dismissed on a technicality.
alleged that they were both public officers and, conspiring with each other, entered into the
subject lease agreement covering the LRTA property with the PGHFI, a private entity, under
terms and conditions manifestly and grossly disadvantageous to the government. WHEREFORE, the petition in G.R. No. 140656, although meritorious, is DENIED on the ground of
mootness. The petition in G.R. No. 154482 is GRANTED. The challenged orders of the
The Court in its original decision affirmed the former First Lady’s conviction for violation of
Section 3(g) of R[.]A[.] [No.] 3019 but acquitted her co-accused, Dans, Jr., of the said offense. Sandiganbayan in Criminal Case No. 23433 are NULLIFIED and SET ASIDE. The Sandiganbayan is
As stated earlier, upon the former First Lady’s motion for reconsideration, the Court reversed permanently enjoined from executing said orders.
her conviction in its Resolution in Marcos.
SO ORDERED.
It can be gleaned from the entire context of Marcos and Dans that the reversal of the former
First Lady’s conviction was based on the fact that it was later held that she signed the subject
lease agreement as a private person, not a public officer. However, this acquittal should also
be taken in conjunction with the fact that the public officer with whom she had supposedly
conspired, her co-accused Dans, had earlier been acquitted. In other words, the element that
the accused is a public officer, was totally wanting in the former First Lady’s case because
Dans, the public officer with whom she had allegedly conspired in committing Section 3(g)
of R[.]A[.] [No.] 3019, had already been acquitted. Obviously, the former First Lady could
not be convicted, on her own as a private person, of the same offense. (Emphasis supplied)

FIRST DIVISION
G.R. No. 160876 January 18, 2008
AZUCENA MAGALLANES, EVELYN BACOLOD and HEIRS OF JUDITH COTECSON, petitioners,
vs.
SUN YAT SEN ELEMENTARY SCHOOL, PAZ GO, ELENA CUBILLAN, WILLY ANG GAN TENG, BENITO ANG,
and TEOTIMO TAN, respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:
For our resolution is the instant Petition for Review on Certiorari seeking to reverse the Resolution of the
Court of Appeals (Seventh Division) dated October 29, 2001 in CA-G.R. SP No. 67068; its Resolution of
May 8, 2003 denying the motion for reconsideration; and its Resolution of October 10, 2003, denying the
motion for reconsideration of the Resolution of May 8, 2003.
The facts of the case are:
Azucena Magallanes, Evelyn Bacolod, Judith Cotecson (represented by her heirs), petitioners, Grace
Gonzales, and Bella Gonzales were all employed as teachers in the Sun Yat Sen Elementary School in
Surigao City.
Paz Go and Elena Cubillan are principals of the said school. Willy Ang Gan Teng and Benito Ang are its
directors, while Teotimo Tan is the school treasurer. They are all respondents herein.
On May 22, 1994, respondents terminated the services of petitioners. Thus, on August 3, 1994, they filed
with the Sub-Regional Arbitration Branch No. X, National Labor Relations Commission (NLRC), Butuan
City, complaints against respondents for illegal dismissal, underpayment of wages, payment of
backwages, 13th month pay, ECOLA, separation pay, moral damages, and attorney’s fees. Likewise, on
August 22, 1994, petitioner Cotecson filed a separate complaint praying for the same reliefs.
On June 3, 1995, Labor Arbiter Rogelio P. Legaspi rendered a Decision declaring that petitioners were
illegally dismissed from the service and ordering respondents to reinstate them to their former or
equivalent positions without loss of seniority rights, and to pay them their backwages, salary differential,
13th month pay differential, and service incentive leave benefits "as of June 20, 1995." Respondents were
likewise directed to pay petitioners moral and exemplary damages.
On appeal by respondents, the NLRC, in its Decision dated February 20, 1996, reversed the Arbiter’s
judgment, holding that petitioners are contractual employees and that respondents merely allowed their
contracts to lapse.
Petitioners timely filed a motion for reconsideration, but it was denied by the NLRC in its Resolution
dated April 17, 1996.
27
Petitioners then filed with the Court of Appeals a petition for certiorari, docketed as CA-G.R. SP No.
50531.
On October 28, 1999, the Court of Appeals (Special Sixteenth Division) rendered its Decision,1 the
dispositive portion of which reads:
WHEREFORE, the instant petition is GRANTED with respect to petitioners Cotecson, Bacolod,
and Magallanes, the questioned Resolutions of the NLRC dated February 20 and April 1996
are hereby REVERSED and SET ASIDE as to them.
The Decision dated July 3, 1995 of the Labor Arbiter is hereby REINSTATED as to the said
petitioners except as to the award of moral and exemplary damages which is hereby
DELETED.
SO ORDERED.
The Court of Appeals (Special Sixteenth Division) ruled that in lieu of reinstatement, petitioners
Cotecson, Bacolod, and Magallanes "shall be entitled to separation pay equivalent to one month salary
and backwages computed from the time of their illegal dismissal up to the time of the promulgation of
its Decision." With respect to Bella Gonzales and Grace Gonzales, the Court of Appeals found that that
they have not acquired the status of regular employees having rendered only two years of service.
Consequently, their dismissal from the service is valid. Under the Manual of Regulations for Private
Schools, only full-time teachers who have rendered three (3) years of consecutive service shall be
considered permanent.
Respondents filed a motion for reconsideration but it was denied by the appellate court in its Resolution
dated January 13, 2000.
Respondents then filed with this Court a petition for certiorari, docketed as G.R. No. 142270. However, it
was dismissed for lack of merit in a Minute Resolution dated April 12, 2000. Their motion for
reconsideration was denied with finality by this Court on July 19, 2000.
Meanwhile, on October 4, 2000, petitioners filed with the Labor Arbiter a motion for execution of his
Decision as modified by the Court of Appeals.
In an Order dated January 8, 2001, the Labor Arbiter computed the petitioners’ monetary awards
reckoned from the time of their illegal dismissal in June 1994 up to October 29, 1999, pursuant to the
Decision of the Court of Appeals (Special Sixteenth Division) in CA-G.R. SP No. 50531. Respondents
interposed an appeal to the NLRC (docketed as NLRC Case No. M-006176-2001), contending that the
computation should only be up to June 20, 1995 (the date indicated in the Labor Arbiter’s Decision).
In an Order dated March 30, 2001, the NLRC modified the Labor Arbiter’s computation and ruled that
the monetary awards due to petitioners should be computed from June 1994 up to June 20, 1995.
Petitioners then filed a petition for certiorari with the Court of Appeals, docketed as CA-G.R. SP No.
67068, raffled off to the Seventh Division. However, in its Resolution of October 29, 2001, the petition

was dismissed outright for their failure to attach to their petition copies of the pleadings filed with the
Labor Arbiter, thus:
No copies of the pleadings filed before the Labor Arbiter appear to have been attached to the
petition in violation of the provisions of Section 1, Rule 65 and Section 3, Rule 46 of the 1997
Rules of Civil Procedure, as amended, which requires that the petition:
x x x shall be accompanied by a clearly legible duplicate original or certified true
copy of the judgment, order, resolution or ruling subject thereof, such material
portions of the record as are referred to therein and other documents relevant or
pertinent thereto x x x
WHEREFORE, the instant petition is DISMISSED OUTRIGHT pursuant to Section 3, Rule 46 of
the 1997 Rules of Civil Procedure.
SO ORDERED.
Petitioners filed a motion for reconsideration, but they erroneously indicated therein the case number
as CA-G.R. SP No. 50531, instead of CA-G.R. SP No. 67068. Their error was compounded by stating that
the petition was with the Special Sixteenth Division, instead of the Seventh Division. As a result, the
Special Sixteenth Division issued a Minute Resolution dated April 22, 2002 which merely noted the
motion, thus:
The petitioners’ motion for reconsideration dated November 22, 2001 and filed by registered
mail on November 26, 2001 is merely noted since there was no October 29, 2001 resolution
that was issued in this case which the motion for reconsideration seeks to be reconsidered.
On realizing their mistake, petitioners then filed with the Seventh Division a Motion to Transfer The Case
to it.
In a Resolution promulgated on May 8, 2003, the Seventh Division denied petitioners’ Motion To
Transfer The Case on the ground, among others, that the motion is "non-existent" since it does not bear
the correct case number, hence, could not be attached to the records of CA-G.R. SP No. 67068.
Unfazed, petitioners filed a motion for reconsideration, but it was denied by the Seventh Division in its
Resolution of October 10, 2003.
At first glance, the petition before us appears to be a futile attempt to revive an extinct motion denied
by the appellate court (Seventh Division) by reason of technicality. But in the interest of speedy
administration of justice, we should not only delve in technicalities. We shall then address these two
issues: (1) whether the Court of Appeals (Seventh Division) erred in holding that affixing a wrong docket
number on a motion renders it "non-existent;" and (2) whether the issuance by the NLRC of the Order
dated March 30, 2001, amending the amounts of separation pay and backwages, awarded by the Court
of Appeals (Sixteenth Division) to petitioners and computed by the Labor Arbiter, is tantamount to grave
abuse of discretion amounting to lack or excess of jurisdiction.
28
On the first issue, the Court of Appeals (Seventh Division) is correct when it ruled that petitioners’
motion for reconsideration of its Resolution dated October 29, 2001 in CA-G.R. SP No. 67068 is "non-
existent." Petitioners’ counsel placed a wrong case number in their motion, indicating CA-G.R. SP No.
50531 (Special Sixteenth Division) instead of CA-G.R. SP No. 50531 (Seventh Division), the correct case
number. In Llantero v. Court of Appeals,2 we ruled that where a pleading bears an erroneous docket
number and thus "could not be attached to the correct case," the said pleading is, for all intents and
purposes, "non-existent." As aptly stated by the Special Sixteenth Division, it has neither the duty nor the
obligation to correct the error or to transfer the case to the Seventh Division. In Mega Land Resources
and Development Corporation v. C-E Construction Corporation,3 which likewise involves a wrong docket
number in a motion, we ruled that the duty to correct the mistake falls solely on the party litigant whose
fault caused the anomaly. To hold otherwise would be to impose upon appellate courts the burden of
being nannies to appellants, ensuring the absence of pitfalls that hinder the perfection of petitions and
appeals. Strictly speaking, it is a dogma that the mistake or negligence of counsel binds the clients4 and
appellate courts have no share in that burden.
However, we opt for liberality in the application of the rules to the instant case in light of the following
considerations. First, the rule that negligence of counsel binds the client may be relaxed where
adherence thereto would result in outright deprivation of the client’s liberty or property or where the
interests of justice so require.5 Second, this Court is not a slave of technical rules, shorn of judicial
discretion – in rendering justice, it is guided by the norm that on the balance, technicalities take a
backseat against substantive rights. Thus, if the application of the rules would tend to frustrate rather
than promote justice, it is always within this Court’s power to suspend the rules or except a particular
case from its application.6
This case involving a labor dispute has dragged on for over a decade now. Petitioners have waited too
long for what is due them under the law. One of the original petitioners, Judith Cotecson, died last
September 28, 2003 and has been substituted by her heirs. It is time to write finis to this controversy.
The Labor Code was promulgated to promote the welfare and well-being of the working man. Its spirit
and intent mandate the speedy administration of justice, with least attention to technicalities but
without sacrificing the fundamental requisites of due process.7
We recall that in CA-G.R. SP No. 50531, the Court of Appeals (Special Sixteenth Division) held that
petitioners Cotecson, Bacolod, and Magallanes "shall be entitled to separation pay equivalent to one
month salary and backwages computed from the time of their illegal dismissal up to the time of the
promulgation of this decision." This Decision was promulgated on October 28, 1999. The respondents’
motion for reconsideration was denied by the Court of Appeals (Former Special Sixteenth Division) on
January 13, 2000. On April 12, 2000, this Court dismissed respondents’ petition for certiorari, docketed
as G.R. No. 142270, and denied their motion for reconsideration with finality as early as July 19, 2000.
Clearly, the Decision in CA-G.R. SP No. 50531 had long become final and executory. The Labor Arbiter
computed the monetary awards due to petitioners corresponding to the period from June 1994 to
October 28, 1999, in accordance with the Decision of the Court of Appeals (Special Sixteenth Division).
The award for backwages and money claims is in the total sum of P912,086.15.
It does not escape our attention that upon respondents’ appeal from the Labor Arbiter’s Order
computing the benefits due to petitioners, the NLRC modified the final and executory Decision of the
Court of Appeals (Special Sixteenth Division) when it decreed that the monetary award due to
petitioners should be computed up to June 20, 1995 only (not October 28, 1999), thus, amounting to a
lesser amount of P147,673.16.
 29

We sustain petitioners’ contention that the NLRC, in modifying the award of the Court of Appeals, The labor arbiter in its computation of the monetary award abused its jurisdiction when it lowered the
committed grave abuse of discretion amounting to lack or excess of jurisdiction. Quasi-judicial agencies year from 1999 to 1995 because the CA decision in the prior case was already final and executory. Hence
have neither business nor power to modify or amend the final and executory Decisions of the such decision is null and void.
appellate courts. Under the principle of immutability of judgments, any alteration or amendment which
substantially affects a final and executory judgment is void for lack of jurisdiction.8 We thus rule that the
Order dated March 30, 2001 of the NLRC directing that the monetary award should be computed from
June 1994, the date petitioners were dismissed from the service, up to June 20, 1995 only, is void.

WHEREFORE, we GRANT the petition. The challenged Resolutions dated October 29, 2001, May 8, 2003,
and October 10, 2003 in CA-G.R. SP No. 67068 are REVERSED. The Order of the NLRC dated March 30,
2001 in NLRC Case No. M-006176-2001 is SET ASIDE. The Order of the Labor Arbiter dated January 8,
2001 is REINSTATED.

SO ORDERED.

Facts:

Petitioners Azucena Magallanes, Evelyn Bacolod Judith Cotecson (represented by her heirs), Grace
Gonzales and Bella Gonzales were all teachers at Sun Yat Sen Elementary School in Surigao City that were
dismissed on May 22, 1994 for which the petitioners filed an action in the NLRC for illegal dismissal,
underpayment, payment of backwages, 13th month pay, ECOLA, separation pay, moral damages and
atty’s fees.

Labor arbiter decided in favor of petitioners, NLRC reversed it.

CA (16th division) reinstated Labor Arbiter’s ruling but deleted moral and exemplary damages and further
ruled that G. Gonzales and B. Gonzales have no cause of action because they have not passed the
probationary period of 3 years of service hence their dismissal is valid.

Petitioners filed a motion for execution of decision. Labor Arbiter computed the damages but lowered
amount up to 1995 when CA said 1999. Petitioners filed certiorari to the CA BUT they got the GR number
and the division wrong. They indicated GR number and division that applied to the proceedings stated
above, this new appeal was raffled to 7th division under a different docket number. The CA (7th division)
dismissed the appeal due to the procedural mishaps. Hence this case.

Doctrine:

Although the court does not have a duty to correct the error or transfer the case to the proper division
since the duty falls on the one who caused such fault, it can waive mere technicalities in lieu of the
speedy administration of justice.

The court disregarded the technicalities because

The negligence of their counsel resulted in the deprivation of petitioner’s property rights.

The court is not a slave of technical rules, shorn of discretion. If the application of rules would tend to
frustrate rather than promote justice, it is always within this Court’s power to suspend the rules or
except a particular case from its application.

This labor dispute has taken over 10 years already. Petitioners have already waited too long for what is
due to them under the law.

SECOND DIVISION
RACHEL BEATRIZ RUIVIVAR, G.R. No. 165012
Petitioner, Present:
- versus - Promulgated:
OFFICE OF THE OMBUDSMAN September 16, 2008
and DR. CONNIE BERNARDO,
Respondents.
x------------------------------------------------------------------------------------------------------------------------------------x
DECISION
BRION, J.:
Before us is the petition for review on certiorari under Rule 45 of the Rules of Court commenced by
Rachel Beatriz Ruivivar (petitioner). It seeks to set aside:
(a) the Decision of the Court of Appeals (CA)1 dated May 26, 20042 dismissing the petition
for certiorari filed by the petitioner and affirming the Decision dated November 4, 20023(November 4,
2002 Decision) and the Order dated February 12, 20034 (February 12, 2003 Order) of the Office of the
Ombudsman (Ombudsman); the Ombudsman's Decision and Order found the petitioner administratively
liable for discourtesy in the course of official duties as Chairperson of the Land Transportation Office
(LTO) Accreditation Committee on Drug Testing, and imposed on her the penalty of reprimand; and
(b) the CA Resolution dated August 20, 20045 which denied the petitioner's subsequent motion for
reconsideration.
THE ANTECEDENTS
On May 24, 2002, the private respondent filed an Affidavit-Complaint charging the petitioner before the
Ombudsman of serious misconduct, conduct unbecoming of a public official, abuse of authority, and
violations of the Revised Penal Code and of the Graft and Corrupt Practices Act.6 The private respondent
stated in her complaint that she is the President of the Association of Drug Testing Centers (Association)
that conducts drug testing and medical examination of applicants for driver’s license. In this capacity, she
went to the Land Transportation Office (LTO) on May 17, 2002 to meet with representatives from the
Department of Transportation and Communication (DOTC) and to file a copy of the Association’s request
to lift the moratorium imposed by the LTO on the accreditation of drug testing clinics. Before proceeding
to the office of the LTO Commissioner for these purposes, she passed by the office of the petitioner to
conduct a follow up on the status of her company’s application for accreditation. While there, the
petitioner -- without provocation or any justifiable reason and in the presence of other LTO employees
30
and visitors -- shouted at her in a very arrogant and insulting manner, hurled invectives upon her person,
and prevented her from entering the office of the LTO Commissioner. The petitioner also accused the
private respondent of causing intrigues against her at the DOTC. To prove her allegations, the private
respondent presented the affidavits of three witnesses.7
The Ombudsman furnished the petitioner a copy of the Complaint-Affidavit and required her to file her
counter-affidavit. In her Counter-Affidavit, the petitioner denied the private respondent's allegations and
claimed that she merely told the private respondent to bring her request to the LTO Assistant Secretary
who has the authority to act on the matter, not to the DOTC.8 The petitioner also claimed that the
private respondent also asked her to lift the moratorium and pressured her to favorably act on the
private respondent’s application for accreditation. To prove these claims, petitioner presented the
affidavits of her two witnesses.9
The Ombudsman called for a preliminary conference that the parties attended. The petitioner
manifested her intent to submit the case for resolution. The Ombudsman then directed the parties to
submit their respective memoranda. Only the petitioner filed a Memorandum where she stressed that
the complaint is not properly substantiated for lack of supporting affidavits and other evidence.10
The Office of the Ombudsman
The Ombudsman rendered the November 4, 2002 Decision based on the pleadings and the submitted
affidavits. It found the petitioner administratively liable for discourtesy in the course of her official
functions and imposed on her the penalty of reprimand.
The Ombudsman ruled that the petitioner's verbal assault on the private respondent was sufficiently
established by the affidavits of the private respondent’s witnesses who had not been shown by evidence
to have any motive to falsely testify against petitioner. In contrast, the petitioner’s witnesses, as her
officemates, were likely to testify in her favor. Given that the incident happened at the LTO and that the
petitioner had authority to act on the private respondent’s application for accreditation, the
Ombudsman also found that the petitioner's ascendancy over the private respondent made the
petitioner’s verbal assault more likely. The Ombudsman concluded that such verbal assault might have
been caused by the private respondent’s decision to air the LTO moratorium issue (on accreditation for
drug testing centers) before the DOTC; this decision also negated the petitioner’s defense that the case
was filed to exert pressure on her to act favorably on private respondent’s application for accreditation.
The petitioner filed a Motion for Reconsideration arguing that she was deprived of due process because
she was not furnished copies of the affidavits of the private respondent’s witnesses.11 In the same
motion, petitioner questioned the Ombudsman’s disregard of the evidence she had presented, and
disagreed with the Ombudsman’s statement that she has ascendancy over the private respondent.
The Ombudsman responded to the petitioner’s motion for reconsideration by ordering that the
petitioner be furnished with copies of the affidavits of the private respondent’s witnesses. 12 The
Ombudsman’s order also contained the "directive to file, within ten (10) days from receipt of this Order,
such pleading which she may deem fit under the circumstances."
Records show that the petitioner received copies of the private respondent’s witnesses’ affidavits but
she did not choose to controvert these affidavits or to file a supplement to her motion for
reconsideration. She simply maintained in her Manifestation that her receipt of the affidavits did not

alter the fact the she was deprived of due process nor cure the irregularity in the November 4, 2002
Decision.
Under these developments, the Ombudsman ruled that the petitioner was not denied due process. It
also maintained the findings and conclusions in its November 4, 2002 Decision, declaring them
supported by substantial evidence.13
The Court of Appeals
The petitioner’s chosen remedy, in light of the Ombudsman ruling, was to file a petition for certiorari
(docketed as CA-GR SP No. 77029) with the CA. In its Decision dated May 26, 2004, the CA dismissed the
petition on the ground that the petitioner used the wrong legal remedy and failed to exhaust
administrative remedies before the Ombudsman.14 The CA said:
"… as held in Fabian v. Desierto, a party aggrieved by the decision of the Office of the Ombudsman may
appeal to this Court by way of a petition for review under Rule 43. As succinctly held by the Supreme
Court:
‘As a consequence of our ratiocination that Section 27 of Republic Act No. 6770 should be struck down as
unconstitutional, and in line with regulatory philosophy adopted in appeals from quasi-judicial agencies
in the 1997 Revised Rules of Civil Procedure, appeals from decision of the Office of the Ombudsman in
administrative disciplinary cases should be taken to the CA under the provisions of Rule 43.’
Even assuming, argumentatis, that public respondent committed grave abuse of discretion, such fact is
not sufficient to warrant the issuance of the extraordinary writ of certiorari, as was held in Union of
Nestle Workers Cagayan de Oro Factory vs. Nestle Philippines, Inc.:
‘x x x .For certiorari to prosper, it is not enough that the trial court committed grave abuse of discretion
amounting to lack or excess of jurisdiction, as alleged by petitioners. The requirement that there is no
appeal nor any plain, speedy and adequate remedy in the ordinary course of law must likewise be
satisfied. x x x’
Petitioner was given the opportunity by public respondent to rebut the affidavits submitted by private
respondent, in its Order dated January 17, 2003. Petitioner, therefore, had a speedy and adequate
remedy, but she failed to avail thereof for reasons only known to her.
Moreover, instead of filing a petition for review under Rule 43, she filed the present petition for
certiorari under Rule 65. In view of our above disquisition, We find no further reason to discuss the
merits of the case. Petitioner having resorted to the wrong remedy, the dismissal of the present petition
is in order.15
After the CA’s negative ruling on the motion for reconsideration, the petitioner filed the present petition
for review on certiorari with this Court, raising the following issues:
THE ISSUES
31
I. WHETHER OR NOT A PETITION FOR CERTIORARI UNDER RULE 65 IS THE PROPER AND ONLY AVAILABLE
REMEDY WHEN THE PENALTY IMPOSED IN AN ADMINISTRATIVE COMPLAINT WITH THE OFFICE OF THE
OMBUDSMAN IS CONSIDERED FINAL AND UNAPPEALABLE.
II. WHETHER OR NOT PETITIONER WAS DENIED OF (sic) THE CONSTITUTIONAL GUARANTEE TO DUE
PROCESS WHEN SHE WAS DEPRIVED OF HER RIGHT TO CONFRONT THE EVIDENCE SUBMITTED AGAINST
HER BEFORE THE DECISION OF THE OFFICE OF THE OMBUDSMAN WAS RENDERED.
On the first issue, the petitioner argued that the ruling in Fabian v. Desierto16 can only be applied when
the decision of the Ombudsman is appealable. The ruling in Fabian is not applicable to the Ombudsman
rulings under the express provisions of Section 27 of Republic Act (R.A.) No. 677017 and Section 7, Rule III
of Administrative Order (A.O.) No. 718 since the penalty of reprimand imposed is final and unappealable.
The appropriate remedy, under the circumstances, is not the appellate remedy provided by Rule 43 of
the Rules of Court but a petition for certiorari under Rule 65 of these Rules.
On the second issue, the petitioner maintained that she was denied due process because no competent
evidence was presented to prove the charge against her. While she was belatedly furnished copies of the
affidavits of the private respondent’s witnesses, this was done after the Ombudsman had rendered a
decision. She posited that her belated receipt of the affidavits and the subsequent proceedings before
the Ombudsman did not cure the irregularity of the November 4, 2002 Decision as she was not given the
opportunity to refute the private respondent’s evidence before the Ombudsman’s decision was
rendered. The petitioner advanced the view that on this ground alone, she should be allowed to
question the arbitrary exercise of the Ombudsman’s discretion.
The Ombudsman’s Comment,19 filed through the Office of the Solicitor General, maintained that the
proper remedy to assail the November 4, 2002 Decision and February 12, 2003 Order was to file a
petition for review under Rule 43 as laid down in Fabian,20 and not the petition for certiorari that the
petitioner filed. The Ombudsman argues further that since no petition for review was filed within the
prescribed period (as provided under Section 4, Rule 43),21 the November 4, 2002 Decision and February
12, 2003 Order had become final and executory. The Ombudsman maintained, too, that its decision
holding the petitioner administratively liable is supported by substantial evidence; the petitioner’s denial
of the verbal assault cannot prevail over the submitted positive testimony. The Ombudsman also
asserted that the petitioner was not denied due process as she was given the opportunity to be heard on
the affidavits that were belatedly furnished her when she was directed to "file any pleading as she may
consider fit."
The private respondent shared the positions of the Ombudsman in her Comment.22 Both the Office of
the Solicitor General and the private respondent also asserted the doctrine that factual findings of
administrative agencies should be given great respect when supported by substantial evidence.
We initially denied the petition in our Resolution dated December 12, 2005 for the petitioner’s failure to
comply with our Resolutions dated March 30, 2005 and April 25, 2005. However, we reconsidered the
denial in a subsequent Resolution (dated February 27, 2006)23 and reinstated the petition on the
petitioner’s motion for reconsideration after she complied with our directives. We required the parties
to submit their respective memoranda where they reiterated the positions presented in their previous
submissions.
 32

THE COURT’S RULING legal recourse is to file a petition for certiorari under Rule 65 of the Rules of Court, applied as rules
suppletory to the Rules of Procedure of the Office of the Ombudsman.32 The use of this recourse should
take into account the last paragraph of Section 4, Rule 65 of the Rules of Court – i.e., the petition shall be
We deny the Petition.
filed in and be cognizable only by the CA if it involves the acts or omissions of a quasi-judicial agency,
unless otherwise provided by law or by the Rules.33
While we find that the Court of Appeals erred in its ruling on the appropriate mode of review the
petitioner should take, we also find that the appellate court effectively ruled on the due process issue
In the present case, the Ombudsman’s decision and order imposing the penalty of reprimand on the
raised – the failure to provide the petitioner the affidavits of witnesses - although its ruling was not
petitioner are final and unappealable. Thus, the petitioner availed of the correct remedy when she filed a
directly expressed in due process terms. The CA’s finding that the petitioner failed to exhaust
petition for certiorari before the CA to question the Ombudsman’s decision to reprimand her.
administrative remedies (when she failed to act on the affidavits that were belatedly furnished her)
effectively embodied a ruling on the due process issue at the same time that it determined the propriety
of the petition for certiorari that the CA assumed arguendo to be the correct remedy. The Due Process Issue

Under this situation, the error in the appellate court’s ruling relates to a technical matter – the mode of
review that the petitioner correctly took but which the CA thought was erroneous. Despite this
erroneous conclusion, the CA nevertheless fully reviewed the petition and, assuming it arguendo to be
the correct mode of review, also ruled on its merits. Thus, while it erred on the mode of review aspect, it
correctly ruled on the exhaustion of administrative remedy issue and on the due process issue that the
exhaustion issue implicitly carried. In these lights, the present petition essentially has no merit so that its
denial is in order.
The Mode of Review Issue
The CA Decision dismissed the petition for certiorari on the ground that the petitioner failed to exhaust
all the administrative remedies available to her before the Ombudsman. This ruling is legally correct as
exhaustion of administrative remedies is a requisite for the filing of a petition for certiorari.34 Other than
this legal significance, however, the ruling necessarily carries the direct and immediate implication that
the petitioner has been granted the opportunity to be heard and has refused to avail of this opportunity;
hence, she cannot claim denial of due process. In the words of the CA ruling itself: "Petitioner was given
the opportunity by public respondent to rebut the affidavits submitted by private respondent. . . and had
a speedy and adequate administrative remedy but she failed to avail thereof for reasons only known to
her."

For a fuller appreciation of our above conclusion, we clarify that although they are separate and distinct
The case of Fabian v. Desierto24 arose from the doubt created in the application of Section 27 of R.A. No.
concepts, exhaustion of administrative remedies and due process embody linked and related principles.
6770 (The Ombudsman’s Act) and Section 7, Rule III of A.O. No. 7 (Rules of Procedure of the Office of the
The "exhaustion" principle applies when the ruling court or tribunal is not given the opportunity to re-
Ombudsman) on the availability of appeal before the Supreme Court to assail a decision or order of the
examine its findings and conclusions because of an available opportunity that a party seeking recourse
Ombudsman in administrative cases. In Fabian, we invalidated Section 27 of R.A. No. 6770 (and Section
against the court or the tribunal’s ruling omitted to take.35 Under the concept of "due process," on the
7, Rule III of A.O. No. 7 and the other rules implementing the Act) insofar as it provided for appeal
other hand, a violation occurs when a court or tribunal rules against a party without giving him or her the
by certiorari under Rule 45 from the decisions or orders of the Ombudsman in administrative cases. We
opportunity to be heard.36 Thus, the exhaustion principle is based on the perspective of the ruling court
held that Section 27 of R.A. No. 6770 had the effect, not only of increasing the appellate jurisdiction of
or tribunal, while due process is considered from the point of view of the litigating party against whom a
this Court without its advice and concurrence in violation of Section 30, Article VI of the Constitution; it
ruling was made. The commonality they share is in the same "opportunity" that underlies both. In the
was also inconsistent with Section 1, Rule 45 of the Rules of Court which provides that a petition for
context of the present case, the available opportunity to consider and appreciate the petitioner’s
review on certiorari shall apply only to a review of "judgments or final orders of the Court of Appeals, the
counter-statement of facts was denied the Ombudsman; hence, the petitioner is barred from seeking
Sandiganbayan, the Court of Tax Appeals, the Regional Trial Court, or other courts authorized by
recourse at the CA because the ground she would invoke was not considered at all at the Ombudsman
law."25 We pointedly said:
level. At the same time, the petitioner – who had the same opportunity to rebut the belatedly-furnished
affidavits of the private respondent’s witnesses – was not denied and cannot now claim denial of due
As a consequence of our ratiocination that Section 27 of Republic Act No. 6770 should be struck down as process because she did not take advantage of the opportunity opened to her at the Ombudsman level.
unconstitutional, and in line with the regulatory philosophy adopted in appeals from quasi-judicial
agencies in the 1997 Revised Rules of Civil Procedure, appeals from decisions of the Office of the
The records show that the petitioner duly filed a motion for reconsideration on due process grounds
Ombudsman in administrative disciplinary cases should be taken to the CA under the provisions of Rule
(i.e., for the private respondent’s failure to furnish her copies of the affidavits of witnesses) and on
43.26
questions relating to the appreciation of the evidence on record.37 The Ombudsman acted on this motion
by issuing its Order of January 17, 2003 belatedly furnishing her with copies of the private respondent’s
We restated this doctrine in several cases27 and further elaborated on the recourses from Ombudsman witnesses, together with the "directive to file, within ten (10) days from receipt of this Order, such
actions in other cases we have decided since then. In Lapid v. CA, we explained that an appeal under pleading which she may deem fit under the circumstances."38
Rule 43 to the CA only applies to administrative cases where the right to appeal is granted under Section
27 of R.A. No. 6770.28 In Lopez v. CA29 and Herrera v. Bohol,30 we recognized that no appeal is allowed in
Given this opportunity to act on the belatedly-furnished affidavits, the petitioner simply chose to file a
administrative cases where the penalty of public censure, reprimand, suspension of not more than one
"Manifestation" where she took the position that "The order of the Ombudsman dated 17 January 2003
month, or a fine equivalent to one month salary, is imposed. We pointed out that decisions of
supplying her with the affidavits of the complainant does not cure the 04 November 2002 order," and on
administrative agencies that are declared by law to be final and unappealable are still subject to judicial
this basis prayed that the Ombudsman’s decision "be reconsidered and the complaint dismissed for lack
review if they fail the test of arbitrariness or upon proof of gross abuse of discretion;31 the complainant’s

of merit."39
For her part, the private respondent filed a Comment/Opposition to Motion for Reconsideration dated
27 January 2003 and prayed for the denial of the petitioner’s motion.
In the February 12, 2003 Order, the Ombudsman denied the petitioner’s motion for reconsideration
after finding no basis to alter or modify its ruling.40 Significantly, the Ombudsman fully discussed in this
Order the due process significance of the petitioner’s failure to adequately respond to the belatedly-
furnished affidavits. The Ombudsman said:
"Undoubtedly, the respondent herein has been furnished by this Office with copies of the affidavits,
which she claims she has not received. Furthermore, the respondent has been given the opportunity to
present her side relative thereto, however, she chose not to submit countervailing evidence or
argument. The respondent, therefore (sic), cannot claim denial of due process for purposes of assailing
the Decision issued in the present case. On this score, the Supreme Court held in the case of People v.
Acot, 232 SCRA 406, that "a party cannot feign denial of due process where he had the opportunity to
present his side". This becomes all the more important since, as correctly pointed out by the
complainant, the decision issued in the present case is deemed final and unappealable pursuant to
Section 27 of Republic Act 6770, and Section 7, Rule III of Administrative Order No. 07. Despite the clear
provisions of the law and the rules, the respondent herein was given the opportunity not normally
accorded, to present her side, but she opted not to do so which is evidently fatal to her cause."
[emphasis supplied].
Under these circumstances, we cannot help but recognize that the petitioner’s cause is a lost one, not
only for her failure to exhaust her available administrative remedy, but also on due process grounds. The
law can no longer help one who had been given ample opportunity to be heard but who did not take full
advantage of the proffered chance.
WHEREFORE, premises considered, we hereby DENY the petition. This denial has the effect of confirming
the finality of the Decision of the Ombudsman dated November 4, 2002 and of its Order dated February
12, 2003.
SO ORDERED.
FACTS:
Dr. Connie Bernardo is the President of the Association of Drug Testing Centers (Association) that
conducts drug testing and medical examination of applicants for driver’s license. In this capacity,
Bernardo went to the Land Transportation Office (LTO) to meet with representatives from the
Department of Transportation and Communication (DOTC) and some other errands. Before proceedings
to the office of the LTO Commissioner, Bernardo passed by the office of Rachel Beatriz Ruivivar to
conduct a follow up on the status of her company’s application for accreditation. While there, Ruivivar
shouted at her in a very arrogant and insulting manner, hurled invectives upon her person and
prevented her from entering the office of the LTO Commissioner. This prompted Bernardo to file an
Affidavit-Complaint charging Ruivivar before the Ombudsman of serious misconduct, conduct
unbecoming of a public official, abuse of authority and violations of the RPC and of the Graft and Corrupt
Practices Act. The Ombudsman rendered a Decision finding Ruivivar administratively liable for
discourtesy in the course of her official functions and imposed on her the penalty of reprimand. Ruivivar
filed a MR arguing that she was deprived of due process because she was not furnished copies of the
affidavits of Bernardo’s witnesses. The Ombudsman responded to the motion by order that Bernardo
33
furnish Ruivivar with copies and directed the latter to file, within 10 days from receipt of the Order, such
pleading which she may deem fit under the circumstances. Ruivivar, nonetheless, did not choose to
controvert the affidavits and insisted on her previous stand that she was deprived of due process. Thus,
the Ombudsman issued a ruling maintaining its findings. On petition for certiorari, the petition was
dismissed on the ground that Ruivivar used the wrong legal remedy and failed to exhaust administrative
remedies before the Ombudsman. The CA posits that the remedy should have been an appeal to the CA
by way of petition for review, citing the case of Fabian v. Desierto.
ISSUEs: (1) Whether or not Ruivivar chose the wrong remedy and (2) Whether or not Ruivivar was
deprived of due process
HELD:
The Mode of Review Issue
Petitioner contends that he ruling in Fabian is not applicable to the Ombudsman rulings under the
express provisions of Section 27 of Republic Act (R.A.) No. 6770 and Section 7, Rule III of Administrative
Order (A.O.) No. 7 since the penalty of reprimand imposed is final and unappealable. The appropriate
remedy, under the circumstances, is not the appellate remedy provided by Rule 43 of the Rules of Court
but a petition for certiorari under Rule 65 of these Rules.
The case of Fabian v. Desierto arose from the doubt created in the application of Section 27 of R.A. No.
6770 (The Ombudsmans Act) and Section 7, Rule III of A.O. No. 7 (Rules of Procedure of the Office of the
Ombudsman) on the availability of appeal before the Supreme Court to assail a decision or order of the
Ombudsman in administrative cases. In Fabian, we invalidated Section 27 of R.A. No. 6770 (and Section
7, Rule III of A.O. No. 7 and the other rules implementing the Act) insofar as it provided for appeal by
certiorari under Rule 45 from the decisions or orders of the Ombudsman in administrative cases. We
held that Section 27 of R.A. No. 6770 had the effect, not only of increasing the appellate jurisdiction of
this Court without its advice and concurrence in violation of Section 30, Article VI of the Constitution; it
was also inconsistent with Section 1, Rule 45 of the Rules of Court which provides that a petition for
review on certiorari shall apply only to a review of judgments or final orders of the Court of Appeals, the
Sandiganbayan, the Court of Tax Appeals, the Regional Trial Court, or other courts authorized by law. We
pointedly said: As a consequence of our ratiocination that Section 27 of Republic Act No. 6770 should be
struck down as unconstitutional, and in line with the regulatory philosophy adopted in appeals from
quasi-judicial agencies in the 1997 Revised Rules of Civil Procedure, appeals from decisions of the Office
of the Ombudsman in administrative disciplinary cases should be taken to the CA under the provisions of
Rule 43.
We restated this doctrine in several cases and further elaborated on the recourses from Ombudsman
actions in other cases we have decided since then. In Lapid v. CA, we explained that an appeal under
Rule 43 to the CA only applies to administrative cases where the right to appeal is granted under Section
27 of R.A. No. 6770. In Lopez v. CA and Herrera v. Bohol, we recognized that no appeal is allowed in
administrative cases where the penalty of public censure, reprimand, suspension of not more than one
month, or a fine equivalent to one month salary, is imposed. We pointed out that decisions of
administrative agencies that are declared by law to be final and unappealable are still subject to judicial
review if they fail the test of arbitrariness or upon proof of gross abuse of discretion; the complainants
legal recourse is to file a petition for certiorari under Rule 65 of the Rules of Court, applied as rules
suppletory to the Rules of Procedure of the Office of the Ombudsman. The use of this recourse should
take into account the last paragraph of Section 4, Rule 65 of the Rules of Court i.e., the petition shall be
filed in and be cognizable only by the CA if it involves the acts or omissions of a quasi-judicial agency,
unless otherwise provided by law or by the Rules. In the present case, the Ombudsmans decision and
order imposing the penalty of reprimand on the petitioner are final and unappealable. Thus, the
 34

petitioner availed of the correct remedy when she filed a petition for certiorari before the CA to question
the Ombudsmans decision to reprimand her.

The Due Process Issue

The CA Decision dismissed the petition for certiorari on the ground that the petitioner failed to exhaust
all the administrative remedies available to her before the Ombudsman. This ruling is legally correct as
exhaustion of administrative remedies is a requisite for the filing of a petition for certiorari. Other than
this legal significance, however, the ruling necessarily carries the direct and immediate implication that
the petitioner has been granted the opportunity to be heard and has refused to avail of this opportunity;
hence, she cannot claim denial of due process. In the words of the CA ruling itself: Petitioner was given
the opportunity by public respondent to rebut the affidavits submitted by private respondent. . . and had
a speedy and adequate administrative remedy but she failed to avail thereof for reasons only known to
her.

The records show that the petitioner duly filed a motion for reconsideration on due process grounds
(i.e., for the private respondents failure to furnish her copies of the affidavits of witnesses) and on
questions relating to the appreciation of the evidence on record. The Ombudsman acted on this motion
by issuing its Order of January 17, 2003 belatedly furnishing her with copies of the private respondents
witnesses, together with the directive to file, within ten (10) days from receipt of this Order, such
pleading which she may deem fit under the circumstances. Given this opportunity to act on the
belatedly-furnished affidavits, the petitioner simply chose to file a Manifestation where she took the
position that The order of the Ombudsman dated 17 January 2003 supplying her with the affidavits of
the complainant does not cure the 04 November 2002 order, and on this basis prayed that the
Ombudsman’s decision be reconsidered and the complaint dismissed for lack of merit.

THIRD DIVISION
G.R. No. 195580 April 21, 2014
NARRA NICKEL MINING AND DEVELOPMENT CORP., TESORO MINING AND DEVELOPMENT, INC., and
MCARTHUR MINING, INC., Petitioners,
vs.
REDMONT CONSOLIDATED MINES CORP., Respondent.
DECISION
VELASCO, JR., J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 filed by Narra Nickel and Mining
Development Corp. (Narra), Tesoro Mining and Development, Inc. (Tesoro), and McArthur Mining Inc.
(McArthur), which seeks to reverse the October 1, 2010 Decision1 and the February 15, 2011 Resolution
of the Court of Appeals (CA).
The Facts
Sometime in December 2006, respondent Redmont Consolidated Mines Corp. (Redmont), a domestic
corporation organized and existing under Philippine laws, took interest in mining and exploring certain
areas of the province of Palawan. After inquiring with the Department of Environment and Natural
Resources (DENR), it learned that the areas where it wanted to undertake exploration and mining
activities where already covered by Mineral Production Sharing Agreement (MPSA) applications of
petitioners Narra, Tesoro and McArthur.
Petitioner McArthur, through its predecessor-in-interest Sara Marie Mining, Inc. (SMMI), filed an
application for an MPSA and Exploration Permit (EP) with the Mines and Geo-Sciences Bureau (MGB),
Region IV-B, Office of the Department of Environment and Natural Resources (DENR).
Subsequently, SMMI was issued MPSA-AMA-IVB-153 covering an area of over 1,782 hectares in Barangay
Sumbiling, Municipality of Bataraza, Province of Palawan and EPA-IVB-44 which includes an area of 3,720
hectares in Barangay Malatagao, Bataraza, Palawan. The MPSA and EP were then transferred to
Madridejos Mining Corporation (MMC) and, on November 6, 2006, assigned to petitioner McArthur.2
Petitioner Narra acquired its MPSA from Alpha Resources and Development Corporation and Patricia
Louise Mining & Development Corporation (PLMDC) which previously filed an application for an MPSA
with the MGB, Region IV-B, DENR on January 6, 1992. Through the said application, the DENR issued
MPSA-IV-1-12 covering an area of 3.277 hectares in barangays Calategas and San Isidro, Municipality of
Narra, Palawan. Subsequently, PLMDC conveyed, transferred and/or assigned its rights and interests
over the MPSA application in favor of Narra.
Another MPSA application of SMMI was filed with the DENR Region IV-B, labeled as MPSA-AMA-IVB-154
(formerly EPA-IVB-47) over 3,402 hectares in Barangays Malinao and Princesa Urduja, Municipality of
Narra, Province of Palawan. SMMI subsequently conveyed, transferred and assigned its rights and
interest over the said MPSA application to Tesoro.
35
On January 2, 2007, Redmont filed before the Panel of Arbitrators (POA) of the DENR three (3) separate
petitions for the denial of petitioners’ applications for MPSA designated as AMA-IVB-153, AMA-IVB-154
and MPSA IV-1-12.
In the petitions, Redmont alleged that at least 60% of the capital stock of McArthur, Tesoro and Narra
are owned and controlled by MBMI Resources, Inc. (MBMI), a 100% Canadian corporation. Redmont
reasoned that since MBMI is a considerable stockholder of petitioners, it was the driving force behind
petitioners’ filing of the MPSAs over the areas covered by applications since it knows that it can only
participate in mining activities through corporations which are deemed Filipino citizens. Redmont argued
that given that petitioners’ capital stocks were mostly owned by MBMI, they were likewise disqualified
from engaging in mining activities through MPSAs, which are reserved only for Filipino citizens.
In their Answers, petitioners averred that they were qualified persons under Section 3(aq) of Republic
Act No. (RA) 7942 or the Philippine Mining Act of 1995 which provided:
Sec. 3 Definition of Terms. As used in and for purposes of this Act, the following terms, whether in
singular or plural, shall mean:
(aq) "Qualified person" means any citizen of the Philippines with capacity to contract, or a corporation,
partnership, association, or cooperative organized or authorized for the purpose of engaging in mining,
with technical and financial capability to undertake mineral resources development and duly registered
in accordance with law at least sixty per cent (60%) of the capital of which is owned by citizens of the
Philippines: Provided, That a legally organized foreign-owned corporation shall be deemed a qualified
person for purposes of granting an exploration permit, financial or technical assistance agreement or
mineral processing permit.
Additionally, they stated that their nationality as applicants is immaterial because they also applied for
Financial or Technical Assistance Agreements (FTAA) denominated as AFTA-IVB-09 for McArthur, AFTA-
IVB-08 for Tesoro and AFTA-IVB-07 for Narra, which are granted to foreign-owned corporations.
Nevertheless, they claimed that the issue on nationality should not be raised since McArthur, Tesoro and
Narra are in fact Philippine Nationals as 60% of their capital is owned by citizens of the Philippines. They
asserted that though MBMI owns 40% of the shares of PLMC (which owns 5,997 shares of Narra),3 40%
of the shares of MMC (which owns 5,997 shares of McArthur)4 and 40% of the shares of SLMC (which, in
turn, owns 5,997 shares of Tesoro),5 the shares of MBMI will not make it the owner of at least 60% of the
capital stock of each of petitioners. They added that the best tool used in determining the nationality of
a corporation is the "control test," embodied in Sec. 3 of RA 7042 or the Foreign Investments Act of
1991. They also claimed that the POA of DENR did not have jurisdiction over the issues in Redmont’s
petition since they are not enumerated in Sec. 77 of RA 7942. Finally, they stressed that Redmont has no
personality to sue them because it has no pending claim or application over the areas applied for by
petitioners.
On December 14, 2007, the POA issued a Resolution disqualifying petitioners from gaining MPSAs. It
held:
[I]t is clearly established that respondents are not qualified applicants to engage in mining activities. On
the other hand, [Redmont] having filed its own applications for an EPA over the areas earlier covered by
the MPSA application of respondents may be considered if and when they are qualified under the law.
The violation of the requirements for the issuance and/or grant of permits over mining areas is clearly

established thus, there is reason to believe that the cancellation and/or revocation of permits already
issued under the premises is in order and open the areas covered to other qualified applicants.
WHEREFORE, the Panel of Arbitrators finds the Respondents, McArthur Mining Inc., Tesoro Mining and
Development, Inc., and Narra Nickel Mining and Development Corp. as, DISQUALIFIED for being
considered as Foreign Corporations. Their Mineral Production Sharing Agreement (MPSA) are hereby x x
x DECLARED NULL AND VOID.6
The POA considered petitioners as foreign corporations being "effectively controlled" by MBMI, a 100%
Canadian company and declared their MPSAs null and void. In the same Resolution, it gave due course to
Redmont’s EPAs. Thereafter, on February 7, 2008, the POA issued an Order7 denying the Motion for
Reconsideration filed by petitioners.
Aggrieved by the Resolution and Order of the POA, McArthur and Tesoro filed a joint Notice of
Appeal8 and Memorandum of Appeal9 with the Mines Adjudication Board (MAB) while Narra separately
filed its Notice of Appeal10 and Memorandum of Appeal.11
In their respective memorandum, petitioners emphasized that they are qualified persons under the law.
Also, through a letter, they informed the MAB that they had their individual MPSA applications
converted to FTAAs. McArthur’s FTAA was denominated as AFTA-IVB-0912 on May 2007, while Tesoro’s
MPSA application was converted to AFTA-IVB-0813 on May 28, 2007, and Narra’s FTAA was converted to
AFTA-IVB-0714 on March 30, 2006.
Pending the resolution of the appeal filed by petitioners with the MAB, Redmont filed a Complaint15 with
the Securities and Exchange Commission (SEC), seeking the revocation of the certificates for registration
of petitioners on the ground that they are foreign-owned or controlled corporations engaged in mining
in violation of Philippine laws. Thereafter, Redmont filed on September 1, 2008 a Manifestation and
Motion to Suspend Proceeding before the MAB praying for the suspension of the proceedings on the
appeals filed by McArthur, Tesoro and Narra.
Subsequently, on September 8, 2008, Redmont filed before the Regional Trial Court of Quezon City,
Branch 92 (RTC) a Complaint16 for injunction with application for issuance of a temporary restraining
order (TRO) and/or writ of preliminary injunction, docketed as Civil Case No. 08-63379. Redmont prayed
for the deferral of the MAB proceedings pending the resolution of the Complaint before the SEC.
But before the RTC can resolve Redmont’s Complaint and applications for injunctive reliefs, the MAB
issued an Order on September 10, 2008, finding the appeal meritorious. It held:
WHEREFORE, in view of the foregoing, the Mines Adjudication Board hereby REVERSES and SETS ASIDE
the Resolution dated 14 December 2007 of the Panel of Arbitrators of Region IV-B (MIMAROPA) in POA-
DENR Case Nos. 2001-01, 2007-02 and 2007-03, and its Order dated 07 February 2008 denying the
Motions for Reconsideration of the Appellants. The Petition filed by Redmont Consolidated Mines
Corporation on 02 January 2007 is hereby ordered DISMISSED.17
18
Belatedly, on September 16, 2008, the RTC issued an Order granting Redmont’s application for a TRO
and setting the case for hearing the prayer for the issuance of a writ of preliminary injunction on
September 19, 2008.
36
Meanwhile, on September 22, 2008, Redmont filed a Motion for Reconsideration19 of the September 10,
2008 Order of the MAB. Subsequently, it filed a Supplemental Motion for Reconsideration20 on
September 29, 2008.
Before the MAB could resolve Redmont’s Motion for Reconsideration and Supplemental Motion for
Reconsideration, Redmont filed before the RTC a Supplemental Complaint21 in Civil Case No. 08-63379.
On October 6, 2008, the RTC issued an Order22 granting the issuance of a writ of preliminary injunction
enjoining the MAB from finally disposing of the appeals of petitioners and from resolving Redmont’s
Motion for Reconsideration and Supplement Motion for Reconsideration of the MAB’s September 10,
2008 Resolution.
On July 1, 2009, however, the MAB issued a second Order denying Redmont’s Motion for
Reconsideration and Supplemental Motion for Reconsideration and resolving the appeals filed by
petitioners.
Hence, the petition for review filed by Redmont before the CA, assailing the Orders issued by the MAB.
On October 1, 2010, the CA rendered a Decision, the dispositive of which reads:
WHEREFORE, the Petition is PARTIALLY GRANTED. The assailed Orders, dated September 10, 2008 and
July 1, 2009 of the Mining Adjudication Board are reversed and set aside. The findings of the Panel of
Arbitrators of the Department of Environment and Natural Resources that respondents McArthur,
Tesoro and Narra are foreign corporations is upheld and, therefore, the rejection of their applications for
Mineral Product Sharing Agreement should be recommended to the Secretary of the DENR.
With respect to the applications of respondents McArthur, Tesoro and Narra for Financial or Technical
Assistance Agreement (FTAA) or conversion of their MPSA applications to FTAA, the matter for its
rejection or approval is left for determination by the Secretary of the DENR and the President of the
Republic of the Philippines.
SO ORDERED.23
In a Resolution dated February 15, 2011, the CA denied the Motion for Reconsideration filed by
petitioners.
After a careful review of the records, the CA found that there was doubt as to the nationality of
petitioners when it realized that petitioners had a common major investor, MBMI, a corporation
composed of 100% Canadians. Pursuant to the first sentence of paragraph 7 of Department of Justice
(DOJ) Opinion No. 020, Series of 2005, adopting the 1967 SEC Rules which implemented the requirement
of the Constitution and other laws pertaining to the exploitation of natural resources, the CA used the
"grandfather rule" to determine the nationality of petitioners. It provided:
Shares belonging to corporations or partnerships at least 60% of the capital of which is owned by Filipino
citizens shall be considered as of Philippine nationality, but if the percentage of Filipino ownership in the
corporation or partnership is less than 60%, only the number of shares corresponding to such percentage
shall be counted as of Philippine nationality. Thus, if 100,000 shares are registered in the name of a
corporation or partnership at least 60% of the capital stock or capital, respectively, of which belong to
Filipino citizens, all of the shares shall be recorded as owned by Filipinos. But if less than 60%, or say,
 37

50% of the capital stock or capital of the corporation or partnership, respectively, belongs to Filipino
citizens, only 50,000 shares shall be recorded as belonging to aliens.24(emphasis supplied)
In determining the nationality of petitioners, the CA looked into their corporate structures and their
corresponding common shareholders. Using the grandfather rule, the CA discovered that MBMI in effect
owned majority of the common stocks of the petitioners as well as at least 60% equity interest of other
majority shareholders of petitioners through joint venture agreements. The CA found that through a
"web of corporate layering, it is clear that one common controlling investor in all mining corporations
involved x x x is MBMI."25 Thus, it concluded that petitioners McArthur, Tesoro and Narra are also in
partnership with, or privies-in-interest of, MBMI.
The Motion for Reconsideration of the Decision was further denied by the OP in a Resolution30 dated July
6, 2011. Petitioners then filed a Petition for Review on Certiorari of the OP’s Decision and Resolution
with the CA, docketed as CA-G.R. SP No. 120409. In the CA Decision dated February 29, 2012, the CA
affirmed the Decision and Resolution of the OP. Thereafter, petitioners appealed the same CA decision
to this Court which is now pending with a different division.
Thus, the instant petition for review against the October 1, 2010 Decision of the CA. Petitioners put forth
the following errors of the CA:
I.

Furthermore, the CA viewed the conversion of the MPSA applications of petitioners into FTAA
The Court of Appeals erred when it did not dismiss the case for mootness despite the fact
applications suspicious in nature and, as a consequence, it recommended the rejection of petitioners’
that the subject matter of the controversy, the MPSA Applications, have already been
MPSA applications by the Secretary of the DENR.
converted into FTAA applications and that the same have already been granted.

With regard to the settlement of disputes over rights to mining areas, the CA pointed out that the POA
II.
has jurisdiction over them and that it also has the power to determine the of nationality of petitioners as
a prerequisite of the Constitution prior the conferring of rights to "co-production, joint venture or
production-sharing agreements" of the state to mining rights. However, it also stated that the POA’s The Court of Appeals erred when it did not dismiss the case for lack of jurisdiction considering
jurisdiction is limited only to the resolution of the dispute and not on the approval or rejection of the that the Panel of Arbitrators has no jurisdiction to determine the nationality of Narra, Tesoro
MPSAs. It stipulated that only the Secretary of the DENR is vested with the power to approve or reject and McArthur.
applications for MPSA.
III.
Finally, the CA upheld the findings of the POA in its December 14, 2007 Resolution which considered
petitioners McArthur, Tesoro and Narra as foreign corporations. Nevertheless, the CA determined that The Court of Appeals erred when it did not dismiss the case on account of Redmont’s willful
the POA’s declaration that the MPSAs of McArthur, Tesoro and Narra are void is highly improper. forum shopping.

While the petition was pending with the CA, Redmont filed with the Office of the President (OP) a IV.
petition dated May 7, 2010 seeking the cancellation of petitioners’ FTAAs. The OP rendered a
Decision26 on April 6, 2011, wherein it canceled and revoked petitioners’ FTAAs for violating and
circumventing the "Constitution x x x[,] the Small Scale Mining Law and Environmental Compliance The Court of Appeals’ ruling that Narra, Tesoro and McArthur are foreign corporations based
Certificate as well as Sections 3 and 8 of the Foreign Investment Act and E.O. 584."27 The OP, in affirming on the "Grandfather Rule" is contrary to law, particularly the express mandate of the Foreign
the cancellation of the issued FTAAs, agreed with Redmont stating that petitioners committed violations Investments Act of 1991, as amended, and the FIA Rules.
against the abovementioned laws and failed to submit evidence to negate them. The Decision further
quoted the December 14, 2007 Order of the POA focusing on the alleged misrepresentation and claims V.
made by petitioners of being domestic or Filipino corporations and the admitted continued mining
operation of PMDC using their locally secured Small Scale Mining Permit inside the area earlier applied
for an MPSA application which was eventually transferred to Narra. It also agreed with the POA’s The Court of Appeals erred when it applied the exceptions to the res inter alios acta rule.
estimation that the filing of the FTAA applications by petitioners is a clear admission that they are "not
capable of conducting a large scale mining operation and that they need the financial and technical VI.
assistance of a foreign entity in their operation, that is why they sought the participation of MBMI
Resources, Inc."28 The Decision further quoted:
The Court of Appeals erred when it concluded that the conversion of the MPSA Applications
into FTAA Applications were of "suspicious nature" as the same is based on mere conjectures
The filing of the FTAA application on June 15, 2007, during the pendency of the case only demonstrate and surmises without any shred of evidence to show the same.31
the violations and lack of qualification of the respondent corporations to engage in mining. The filing of
the FTAA application conversion which is allowed foreign corporation of the earlier MPSA is an admission
We find the petition to be without merit.
that indeed the respondent is not Filipino but rather of foreign nationality who is disqualified under the
laws. Corporate documents of MBMI Resources, Inc. furnished its stockholders in their head office in
Canada suggest that they are conducting operation only through their local counterparts.29 This case not moot and academic

The claim of petitioners that the CA erred in not rendering the instant case as moot is without merit.
Basically, a case is said to be moot and/or academic when it "ceases to present a justiciable controversy
by virtue of supervening events, so that a declaration thereon would be of no practical use or
value."32 Thus, the courts "generally decline jurisdiction over the case or dismiss it on the ground of
mootness."33
The "mootness" principle, however, does accept certain exceptions and the mere raising of an issue of
"mootness" will not deter the courts from trying a case when there is a valid reason to do so. In David v.
Macapagal-Arroyo (David), the Court provided four instances where courts can decide an otherwise
moot case, thus:
1.) There is a grave violation of the Constitution;
2.) The exceptional character of the situation and paramount public interest is involved;
3.) When constitutional issue raised requires formulation of controlling principles to guide the
bench, the bar, and the public; and
4.) The case is capable of repetition yet evading review.34
All of the exceptions stated above are present in the instant case. We of this Court note that a grave
violation of the Constitution, specifically Section 2 of Article XII, is being committed by a foreign
corporation right under our country’s nose through a myriad of corporate layering under different,
allegedly, Filipino corporations. The intricate corporate layering utilized by the Canadian company,
MBMI, is of exceptional character and involves paramount public interest since it undeniably affects the
exploitation of our Country’s natural resources. The corresponding actions of petitioners during the
lifetime and existence of the instant case raise questions as what principle is to be applied to cases with
similar issues. No definite ruling on such principle has been pronounced by the Court; hence, the
disposition of the issues or errors in the instant case will serve as a guide "to the bench, the bar and the
public."35 Finally, the instant case is capable of repetition yet evading review, since the Canadian
company, MBMI, can keep on utilizing dummy Filipino corporations through various schemes of
corporate layering and conversion of applications to skirt the constitutional prohibition against foreign
mining in Philippine soil.
Conversion of MPSA applications to FTAA applications
We shall discuss the first error in conjunction with the sixth error presented by petitioners since both
involve the conversion of MPSA applications to FTAA applications. Petitioners propound that the CA
erred in ruling against them since the questioned MPSA applications were already converted into FTAA
applications; thus, the issue on the prohibition relating to MPSA applications of foreign mining
corporations is academic. Also, petitioners would want us to correct the CA’s finding which deemed the
aforementioned conversions of applications as suspicious in nature, since it is based on mere conjectures
and surmises and not supported with evidence.
We disagree.
38
The CA’s analysis of the actions of petitioners after the case was filed against them by respondent is on
point. The changing of applications by petitioners from one type to another just because a case was filed
against them, in truth, would raise not a few sceptics’ eyebrows. What is the reason for such conversion?
Did the said conversion not stem from the case challenging their citizenship and to have the case
dismissed against them for being "moot"? It is quite obvious that it is petitioners’ strategy to have the
case dismissed against them for being "moot."
Consider the history of this case and how petitioners responded to every action done by the court or
appropriate government agency: on January 2, 2007, Redmont filed three separate petitions for denial of
the MPSA applications of petitioners before the POA. On June 15, 2007, petitioners filed a conversion of
their MPSA applications to FTAAs. The POA, in its December 14, 2007 Resolution, observed this suspect
change of applications while the case was pending before it and held:
The filing of the Financial or Technical Assistance Agreement application is a clear admission that the
respondents are not capable of conducting a large scale mining operation and that they need the
financial and technical assistance of a foreign entity in their operation that is why they sought the
participation of MBMI Resources, Inc. The participation of MBMI in the corporation only proves the fact
that it is the Canadian company that will provide the finances and the resources to operate the mining
areas for the greater benefit and interest of the same and not the Filipino stockholders who only have a
less substantial financial stake in the corporation.
x x x The filing of the FTAA application on June 15, 2007, during the pendency of the case only
demonstrate the violations and lack of qualification of the respondent corporations to engage in mining.
The filing of the FTAA application conversion which is allowed foreign corporation of the earlier MPSA is
an admission that indeed the respondent is not Filipino but rather of foreign nationality who is
disqualified under the laws. Corporate documents of MBMI Resources, Inc. furnished its stockholders in
their head office in Canada suggest that they are conducting operation only through their local
counterparts.36
On October 1, 2010, the CA rendered a Decision which partially granted the petition, reversing and
setting aside the September 10, 2008 and July 1, 2009 Orders of the MAB. In the said Decision, the CA
upheld the findings of the POA of the DENR that the herein petitioners are in fact foreign corporations
thus a recommendation of the rejection of their MPSA applications were recommended to the Secretary
of the DENR. With respect to the FTAA applications or conversion of the MPSA applications to FTAAs, the
CA deferred the matter for the determination of the Secretary of the DENR and the President of the
Republic of the Philippines.37
In their Motion for Reconsideration dated October 26, 2010, petitioners prayed for the dismissal of the
petition asserting that on April 5, 2010, then President Gloria Macapagal-Arroyo signed and issued in
their favor FTAA No. 05-2010-IVB, which rendered the petition moot and academic. However, the CA, in
a Resolution dated February 15, 2011 denied their motion for being a mere "rehash of their claims and
defenses."38 Standing firm on its Decision, the CA affirmed the ruling that petitioners are, in fact, foreign
corporations. On April 5, 2011, petitioners elevated the case to us via a Petition for Review on Certiorari
under Rule 45, questioning the Decision of the CA. Interestingly, the OP rendered a Decision dated April
6, 2011, a day after this petition for review was filed, cancelling and revoking the FTAAs, quoting the
Order of the POA and stating that petitioners are foreign corporations since they needed the financial
strength of MBMI, Inc. in order to conduct large scale mining operations. The OP Decision also based the
cancellation on the misrepresentation of facts and the violation of the "Small Scale Mining Law and
Environmental Compliance Certificate as well as Sections 3 and 8 of the Foreign Investment Act and E.O.

584."39 On July 6, 2011, the OP issued a Resolution, denying the Motion for Reconsideration filed by the
petitioners.
Respondent Redmont, in its Comment dated October 10, 2011, made known to the Court the fact of the
OP’s Decision and Resolution. In their Reply, petitioners chose to ignore the OP Decision and continued
to reuse their old arguments claiming that they were granted FTAAs and, thus, the case was moot.
Petitioners filed a Manifestation and Submission dated October 19, 2012,40 wherein they asserted that
the present petition is moot since, in a remarkable turn of events, MBMI was able to sell/assign all its
shares/interest in the "holding companies" to DMCI Mining Corporation (DMCI), a Filipino corporation
and, in effect, making their respective corporations fully-Filipino owned.
Again, it is quite evident that petitioners have been trying to have this case dismissed for being "moot."
Their final act, wherein MBMI was able to allegedly sell/assign all its shares and interest in the petitioner
"holding companies" to DMCI, only proves that they were in fact not Filipino corporations from the start.
The recent divesting of interest by MBMI will not change the stand of this Court with respect to the
nationality of petitioners prior the suspicious change in their corporate structures. The new documents
filed by petitioners are factual evidence that this Court has no power to verify.
The only thing clear and proved in this Court is the fact that the OP declared that petitioner corporations
have violated several mining laws and made misrepresentations and falsehood in their applications for
FTAA which lead to the revocation of the said FTAAs, demonstrating that petitioners are not beyond
going against or around the law using shifty actions and strategies. Thus, in this instance, we can say that
their claim of mootness is moot in itself because their defense of conversion of MPSAs to FTAAs has
been discredited by the OP Decision.
Grandfather test
The main issue in this case is centered on the issue of petitioners’ nationality, whether Filipino or foreign.
In their previous petitions, they had been adamant in insisting that they were Filipino corporations, until
they submitted their Manifestation and Submission dated October 19, 2012 where they stated the
alleged change of corporate ownership to reflect their Filipino ownership. Thus, there is a need to
determine the nationality of petitioner corporations.
Basically, there are two acknowledged tests in determining the nationality of a corporation: the control
test and the grandfather rule. Paragraph 7 of DOJ Opinion No. 020, Series of 2005, adopting the 1967
SEC Rules which implemented the requirement of the Constitution and other laws pertaining to the
controlling interests in enterprises engaged in the exploitation of natural resources owned by Filipino
citizens, provides:
Shares belonging to corporations or partnerships at least 60% of the capital of which is owned by Filipino
citizens shall be considered as of Philippine nationality, but if the percentage of Filipino ownership in the
corporation or partnership is less than 60%, only the number of shares corresponding to such percentage
shall be counted as of Philippine nationality. Thus, if 100,000 shares are registered in the name of a
corporation or partnership at least 60% of the capital stock or capital, respectively, of which belong to
Filipino citizens, all of the shares shall be recorded as owned by Filipinos. But if less than 60%, or say,
50% of the capital stock or capital of the corporation or partnership, respectively, belongs to Filipino
citizens, only 50,000 shares shall be counted as owned by Filipinos and the other 50,000 shall be
recorded as belonging to aliens.
39
The first part of paragraph 7, DOJ Opinion No. 020, stating "shares belonging to corporations or
partnerships at least 60% of the capital of which is owned by Filipino citizens shall be considered as of
Philippine nationality," pertains to the control test or the liberal rule. On the other hand, the second part
of the DOJ Opinion which provides, "if the percentage of the Filipino ownership in the corporation or
partnership is less than 60%, only the number of shares corresponding to such percentage shall be
counted as Philippine nationality," pertains to the stricter, more stringent grandfather rule.
Prior to this recent change of events, petitioners were constant in advocating the application of the
"control test" under RA 7042, as amended by RA 8179, otherwise known as the Foreign Investments Act
(FIA), rather than using the stricter grandfather rule. The pertinent provision under Sec. 3 of the FIA
provides:
SECTION 3. Definitions. - As used in this Act:
a.) The term Philippine national shall mean a citizen of the Philippines; or a domestic partnership or
association wholly owned by the citizens of the Philippines; a corporation organized under the laws of
the Philippines of which at least sixty percent (60%) of the capital stock outstanding and entitled to vote
is wholly owned by Filipinos or a trustee of funds for pension or other employee retirement or
separation benefits, where the trustee is a Philippine national and at least sixty percent (60%) of the fund
will accrue to the benefit of Philippine nationals: Provided, That were a corporation and its non-Filipino
stockholders own stocks in a Securities and Exchange Commission (SEC) registered enterprise, at least
sixty percent (60%) of the capital stock outstanding and entitled to vote of each of both corporations
must be owned and held by citizens of the Philippines and at least sixty percent (60%) of the members of
the Board of Directors, in order that the corporation shall be considered a Philippine national. (emphasis
supplied)
The grandfather rule, petitioners reasoned, has no leg to stand on in the instant case since the definition
of a "Philippine National" under Sec. 3 of the FIA does not provide for it. They further claim that the
grandfather rule "has been abandoned and is no longer the applicable rule."41 They also opined that the
last portion of Sec. 3 of the FIA admits the application of a "corporate layering" scheme of corporations.
Petitioners claim that the clear and unambiguous wordings of the statute preclude the court from
construing it and prevent the court’s use of discretion in applying the law. They said that the plain, literal
meaning of the statute meant the application of the control test is obligatory.
We disagree. "Corporate layering" is admittedly allowed by the FIA; but if it is used to circumvent the
Constitution and pertinent laws, then it becomes illegal. Further, the pronouncement of petitioners that
the grandfather rule has already been abandoned must be discredited for lack of basis.
Art. XII, Sec. 2 of the Constitution provides:
Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces
of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are
owned by the State. With the exception of agricultural lands, all other natural resources shall not be
alienated. The exploration, development, and utilization of natural resources shall be under the full
control and supervision of the State. The State may directly undertake such activities, or it may enter
into co-production, joint venture or production-sharing agreements with Filipino citizens, or corporations
or associations at least sixty per centum of whose capital is owned by such citizens. Such agreements
may be for a period not exceeding twenty-five years, renewable for not more than twenty-five years,
and under such terms and conditions as may be provided by law.

The President may enter into agreements with Foreign-owned corporations involving either technical or
financial assistance for large-scale exploration, development, and utilization of minerals, petroleum, and
other mineral oils according to the general terms and conditions provided by law, based on real
contributions to the economic growth and general welfare of the country. In such agreements, the State
shall promote the development and use of local scientific and technical resources. (emphasis supplied)
The emphasized portion of Sec. 2 which focuses on the State entering into different types of agreements
for the exploration, development, and utilization of natural resources with entities who are deemed
Filipino due to 60 percent ownership of capital is pertinent to this case, since the issues are centered on
the utilization of our country’s natural resources or specifically, mining. Thus, there is a need to ascertain
the nationality of petitioners since, as the Constitution so provides, such agreements are only allowed
corporations or associations "at least 60 percent of such capital is owned by such citizens." The
deliberations in the Records of the 1986 Constitutional Commission shed light on how a citizenship of a
corporation will be determined:
Mr. BENNAGEN: Did I hear right that the Chairman’s interpretation of an independent national economy
is freedom from undue foreign control? What is the meaning of undue foreign control?
MR. VILLEGAS: Undue foreign control is foreign control which sacrifices national sovereignty and the
welfare of the Filipino in the economic sphere.
MR. BENNAGEN: Why does it have to be qualified still with the word "undue"? Why not simply freedom
from foreign control? I think that is the meaning of independence, because as phrased, it still allows for
foreign control.
MR. VILLEGAS: It will now depend on the interpretation because if, for example, we retain the 60/40
possibility in the cultivation of natural resources, 40 percent involves some control; not total control, but
some control.
MR. BENNAGEN: In any case, I think in due time we will propose some amendments.
MR. VILLEGAS: Yes. But we will be open to improvement of the phraseology.
Mr. BENNAGEN: Yes.
Thank you, Mr. Vice-President.
MR. NOLLEDO: In Sections 3, 9 and 15, the Committee stated local or Filipino equity and foreign equity;
namely, 60-40 in Section 3, 60-40 in Section 9, and 2/3-1/3 in Section 15.
MR. VILLEGAS: That is right.
MR. NOLLEDO: In teaching law, we are always faced with the question: ‘Where do we base the equity
requirement, is it on the authorized capital stock, on the subscribed capital stock, or on the paid-up
capital stock of a corporation’? Will the Committee please enlighten me on this?
40
MR. VILLEGAS: We have just had a long discussion with the members of the team from the UP Law
Center who provided us with a draft. The phrase that is contained here which we adopted from the UP
draft is ‘60 percent of the voting stock.’
MR. NOLLEDO: That must be based on the subscribed capital stock, because unless declared delinquent,
unpaid capital stock shall be entitled to vote.
MR. VILLEGAS: That is right.
MR. NOLLEDO: Thank you.
With respect to an investment by one corporation in another corporation, say, a corporation with 60-40
percent equity invests in another corporation which is permitted by the Corporation Code, does the
Committee adopt the grandfather rule?
MR. VILLEGAS: Yes, that is the understanding of the Committee.
MR. NOLLEDO: Therefore, we need additional Filipino capital?
MR. VILLEGAS: Yes.42 (emphasis supplied)
It is apparent that it is the intention of the framers of the Constitution to apply the grandfather rule in
cases where corporate layering is present.
Elementary in statutory construction is when there is conflict between the Constitution and a statute,
the Constitution will prevail. In this instance, specifically pertaining to the provisions under Art. XII of the
Constitution on National Economy and Patrimony, Sec. 3 of the FIA will have no place of application. As
decreed by the honorable framers of our Constitution, the grandfather rule prevails and must be applied.
Likewise, paragraph 7, DOJ Opinion No. 020, Series of 2005 provides:
The above-quoted SEC Rules provide for the manner of calculating the Filipino interest in a corporation
for purposes, among others, of determining compliance with nationality requirements (the ‘Investee
Corporation’). Such manner of computation is necessary since the shares in the Investee Corporation
may be owned both by individual stockholders (‘Investing Individuals’) and by corporations and
partnerships (‘Investing Corporation’). The said rules thus provide for the determination of nationality
depending on the ownership of the Investee Corporation and, in certain instances, the Investing
Corporation.
Under the above-quoted SEC Rules, there are two cases in determining the nationality of the Investee
Corporation. The first case is the ‘liberal rule’, later coined by the SEC as the Control Test in its 30 May
1990 Opinion, and pertains to the portion in said Paragraph 7 of the 1967 SEC Rules which states,
‘(s)hares belonging to corporations or partnerships at least 60% of the capital of which is owned by
Filipino citizens shall be considered as of Philippine nationality.’ Under the liberal Control Test, there is
no need to further trace the ownership of the 60% (or more) Filipino stockholdings of the Investing
Corporation since a corporation which is at least 60% Filipino-owned is considered as Filipino.
 41

The second case is the Strict Rule or the Grandfather Rule Proper and pertains to the portion in said Name Nationality Number of Shares Amount Subscribed Amount Paid
Paragraph 7 of the 1967 SEC Rules which states, "but if the percentage of Filipino ownership in the
corporation or partnership is less than 60%, only the number of shares corresponding to such percentage Madridejos Mining Filipino 5,997 PhP 5,997,000.00 PhP 825,000.00
shall be counted as of Philippine nationality." Under the Strict Rule or Grandfather Rule Proper, the Corporation
combined totals in the Investing Corporation and the Investee Corporation must be traced (i.e.,
"grandfathered") to determine the total percentage of Filipino ownership. MBMI Resources, Inc. Canadian 3,998 PhP 3,998,000.0 PhP 1,878,174.60

Lauro L. Salazar Filipino 1 PhP 1,000.00 PhP 1,000.00

Moreover, the ultimate Filipino ownership of the shares must first be traced to the level of the Investing
Corporation and added to the shares directly owned in the Investee Corporation x x x. Fernando B. Esguerra Filipino 1 PhP 1,000.00 PhP 1,000.00

Manuel A. Agcaoili Filipino 1 PhP 1,000.00 PhP 1,000.00

In other words, based on the said SEC Rule and DOJ Opinion, the Grandfather Rule or the second part of
the SEC Rule applies only when the 60-40 Filipino-foreign equity ownership is in doubt (i.e., in cases Michael T. Mason American 1 PhP 1,000.00 PhP 1,000.00
where the joint venture corporation with Filipino and foreign stockholders with less than 60% Filipino
stockholdings [or 59%] invests in other joint venture corporation which is either 60-40% Filipino-alien or Kenneth Cawkell Canadian 1 PhP 1,000.00 PhP 1,000.00
the 59% less Filipino). Stated differently, where the 60-40 Filipino- foreign equity ownership is not in
doubt, the Grandfather Rule will not apply. (emphasis supplied) Total 10,000 PhP 10,000,000.00 PhP 2,708,174.60
(emphasis supplied)

After a scrutiny of the evidence extant on record, the Court finds that this case calls for the application of
the grandfather rule since, as ruled by the POA and affirmed by the OP, doubt prevails and persists in the Interestingly, looking at the corporate structure of MMC, we take note that it has a similar structure and
corporate ownership of petitioners. Also, as found by the CA, doubt is present in the 60-40 Filipino composition as McArthur. In fact, it would seem that MBMI is also a major investor and
equity ownership of petitioners Narra, McArthur and Tesoro, since their common investor, the 100% "controls"45 MBMI and also, similar nominal shareholders were present, i.e. Fernando B. Esguerra
Canadian corporation––MBMI, funded them. However, petitioners also claim that there is "doubt" only (Esguerra), Lauro L. Salazar (Salazar), Michael T. Mason (Mason) and Kenneth Cawkell (Cawkell):
when the stockholdings of Filipinos are less than 60%.43
Madridejos Mining Corporation
The assertion of petitioners that "doubt" only exists when the stockholdings are less than 60% fails to
convince this Court. DOJ Opinion No. 20, which petitioners quoted in their petition, only made an
example of an instance where "doubt" as to the ownership of the corporation exists. It would be Name Nationality Number of Shares Amount Subscribed Amount Paid
ludicrous to limit the application of the said word only to the instances where the stockholdings of non-
Filipino stockholders are more than 40% of the total stockholdings in a corporation. The corporations Olympic Mines & Filipino 6,663 PhP 6,663,000.00 PhP 0
interested in circumventing our laws would clearly strive to have "60% Filipino Ownership" at face value.
It would be senseless for these applying corporations to state in their respective articles of incorporation Development
that they have less than 60% Filipino stockholders since the applications will be denied instantly. Thus,
various corporate schemes and layerings are utilized to circumvent the application of the Constitution.
Corp.

Obviously, the instant case presents a situation which exhibits a scheme employed by stockholders to MBMI Resources, Canadian 3,331 PhP 3,331,000.00 PhP 2,803,900.00
circumvent the law, creating a cloud of doubt in the Court’s mind. To determine, therefore, the actual
participation, direct or indirect, of MBMI, the grandfather rule must be used. Inc.

McArthur Mining, Inc. Amanti Limson Filipino 1 PhP 1,000.00 PhP 1,000.00

Fernando B. Filipino 1 PhP 1,000.00 PhP 1,000.00

To establish the actual ownership, interest or participation of MBMI in each of petitioners’ corporate
structure, they have to be "grandfathered." Esguerra

As previously discussed, McArthur acquired its MPSA application from MMC, which acquired its Lauro Salazar Filipino 1 PhP 1,000.00 PhP 1,000.00
application from SMMI. McArthur has a capital stock of ten million pesos (PhP 10,000,000) divided into
Emmanuel G. Filipino 1 PhP 1,000.00 PhP 1,000.00
10,000 common shares at one thousand pesos (PhP 1,000) per share, subscribed to by the following:44

Hernando
 42

Michael T. Mason American 1 PhP 1,000.00 PhP 1,000.00 Lauro L. Salazar Filipino 1 PhP 1,000.00 PhP 1,000.00
Kenneth Cawkell Canadian 1 PhP 1,000.00 PhP 1,000.00
Fernando B. Filipino 1 PhP 1,000.00 PhP 1,000.00
Total 10,000 PhP 10,000,000.00 PhP 2,809,900.00
Esguerra
(emphasis supplied)
Manuel A. Filipino 1 PhP 1,000.00 PhP 1,000.00

Noticeably, Olympic Mines & Development Corporation (Olympic) did not pay any amount with respect
Agcaoili
to the number of shares they subscribed to in the corporation, which is quite absurd since Olympic is the
major stockholder in MMC. MBMI’s 2006 Annual Report sheds light on why Olympic failed to pay any
amount with respect to the number of shares it subscribed to. It states that Olympic entered into joint Michael T. Mason American 1 PhP 1,000.00 PhP 1,000.00
venture agreements with several Philippine companies, wherein it holds directly and indirectly a 60%
effective equity interest in the Olympic Properties.46 Quoting the said Annual report: Kenneth Cawkell Canadian 1 PhP 1,000.00 PhP 1,000.00

Total 10,000 PhP 10,000,000.00 PhP 2,708,174.60

On September 9, 2004, the Company and Olympic Mines & Development Corporation ("Olympic")
entered into a series of agreements including a Property Purchase and Development Agreement (the
Transaction Documents) with respect to three nickel laterite properties in Palawan, Philippines (the (emphasis supplied)
"Olympic Properties"). The Transaction Documents effectively establish a joint venture between the
Company and Olympic for purposes of developing the Olympic Properties. The Company holds directly
and indirectly an initial 60% interest in the joint venture. Under certain circumstances and upon Except for the name "Sara Marie Mining, Inc.," the table above shows exactly the same figures as the
achieving certain milestones, the Company may earn up to a 100% interest, subject to a 2.5% net corporate structure of petitioner McArthur, down to the last centavo. All the other shareholders are the
revenue royalty.47 (emphasis supplied) same: MBMI, Salazar, Esguerra, Agcaoili, Mason and Cawkell. The figures under "Nationality," "Number
of Shares," "Amount Subscribed," and "Amount Paid" are exactly the same. Delving deeper, we scrutinize
Thus, as demonstrated in this first corporation, McArthur, when it is "grandfathered," company layering SMMI’s corporate structure:
was utilized by MBMI to gain control over McArthur. It is apparent that MBMI has more than 60% or
more equity interest in McArthur, making the latter a foreign corporation. Sara Marie Mining, Inc.

Tesoro Mining and Development, Inc.

Name Nationality Number of Amount Amount Paid

Tesoro, which acquired its MPSA application from SMMI, has a capital stock of ten million pesos (PhP
10,000,000) divided into ten thousand (10,000) common shares at PhP 1,000 per share, as demonstrated Shares Subscribed
below:
Olympic Mines & Filipino 6,663 PhP 6,663,000.00 PhP 0

Name Nationality Number of Amount Amount Paid Development

Shares Subscribed Corp.

Sara Marie Filipino 5,997 PhP 5,997,000.00 PhP 825,000.00 MBMI Resources, Canadian 3,331 PhP 3,331,000.00 PhP 2,794,000.00

Mining, Inc. Inc.

MBMI Canadian 3,998 PhP 3,998,000.00 PhP 1,878,174.60 Amanti Limson Filipino 1 PhP 1,000.00 PhP 1,000.00

Resources, Inc. Fernando B. Filipino 1 PhP 1,000.00 PhP 1,000.00

 43

Esguerra Mining &

Lauro Salazar Filipino 1 PhP 1,000.00 PhP 1,000.00 Development

Emmanuel G. Filipino 1 PhP 1,000.00 PhP 1,000.00

Corp.

Hernando MBMI Canadian 3,998 PhP 3,996,000.00 PhP 1,116,000.00

Michael T. Mason American 1 PhP 1,000.00 PhP 1,000.00

Resources, Inc.
Kenneth Cawkell Canadian 1 PhP 1,000.00 PhP 1,000.00
Higinio C. Filipino 1 PhP 1,000.00 PhP 1,000.00
Total 10,000 PhP 10,000,000.00 PhP 2,809,900.00
Mendoza, Jr.
(emphasis supplied)
Henry E. Filipino 1 PhP 1,000.00 PhP 1,000.00

After subsequently studying SMMI’s corporate structure, it is not farfetched for us to spot the glaring Fernandez
similarity between SMMI and MMC’s corporate structure. Again, the presence of identical stockholders,
namely: Olympic, MBMI, Amanti Limson (Limson), Esguerra, Salazar, Hernando, Mason and Cawkell. The Manuel A. Filipino 1 PhP 1,000.00 PhP 1,000.00
figures under the headings "Nationality," "Number of Shares," "Amount Subscribed," and "Amount Paid"
are exactly the same except for the amount paid by MBMI which now reflects the amount of two million
Agcaoili
seven hundred ninety four thousand pesos (PhP 2,794,000). Oddly, the total value of the amount paid is
two million eight hundred nine thousand nine hundred pesos (PhP 2,809,900).
Ma. Elena A. Filipino 1 PhP 1,000.00 PhP 1,000.00

Accordingly, after "grandfathering" petitioner Tesoro and factoring in Olympic’s participation in SMMI’s
corporate structure, it is clear that MBMI is in control of Tesoro and owns 60% or more equity interest in Bocalan
Tesoro. This makes petitioner Tesoro a non-Filipino corporation and, thus, disqualifies it to participate in
the exploitation, utilization and development of our natural resources. Bayani H. Agabin Filipino 1 PhP 1,000.00 PhP 1,000.00

Robert L. American 1 PhP 1,000.00 PhP 1,000.00

Narra Nickel Mining and Development Corporation

McCurdy
Moving on to the last petitioner, Narra, which is the transferee and assignee of PLMDC’s MPSA
application, whose corporate structure’s arrangement is similar to that of the first two petitioners
discussed. The capital stock of Narra is ten million pesos (PhP 10,000,000), which is divided into ten Kenneth Cawkell Canadian 1 PhP 1,000.00 PhP 1,000.00
thousand common shares (10,000) at one thousand pesos (PhP 1,000) per share, shown as follows:
Total 10,000 PhP 10,000,000.00 PhP 2,800,000.00
(emphasis supplied)
Name Nationality Number of Amount Amount Paid

Again, MBMI, along with other nominal stockholders, i.e., Mason, Agcaoili and Esguerra, is present in this
Shares Subscribed corporate structure.

Patricia Louise Filipino 5,997 PhP 5,997,000.00 PhP 1,677,000.00

Patricia Louise Mining & Development Corporation

Using the grandfather method, we further look and examine PLMDC’s corporate structure:
 44

Name Nationality Number of Amount Amount Paid Tesoro Mining & Development, Inc. (Tesoro) 60.0%
Shares Subscribed
Pursuant to the Olympic joint venture agreement the Company holds directly and indirectly an effective
Palawan Alpha South Resources Filipino 6,596 PhP PhP 0 equity interest in the Olympic Property of 60.0%. Pursuant to a shareholders’ agreement, the Company
Development Corporation 6,596,000.00 exercises joint control over the companies in the Olympic Group.
MBMI Resources, Canadian 3,396 PhP PhP
3,396,000.00 2,796,000.00 (b) Alpha Group
Inc.
The Philippine companies holding the Alpha Property, and the ownership interests therein, are as
Higinio C. Mendoza, Jr. Filipino 1 PhP 1,000.00 PhP 1,000.00 follows:
Fernando B. Esguerra Filipino 1 PhP 1,000.00 PhP 1,000.00
Alpha- Philippines (the "Alpha Group")
Henry E. Fernandez Filipino 1 PhP 1,000.00 PhP 1,000.00

Lauro L. Salazar Filipino 1 PhP 1,000.00 PhP 1,000.00 Patricia Louise Mining Development Inc. ("Patricia") 34.0%

Manuel A. Agcaoili Filipino 1 PhP 1,000.00 PhP 1,000.00 Narra Nickel Mining & Development Corporation (Narra) 60.4%
Bayani H. Agabin Filipino 1 PhP 1,000.00 PhP 1,000.00
Under a joint venture agreement the Company holds directly and indirectly an effective equity interest in
Michael T. Mason American 1 PhP 1,000.00 PhP 1,000.00 the Alpha Property of 60.4%. Pursuant to a shareholders’ agreement, the Company exercises joint
control over the companies in the Alpha Group.48 (emphasis supplied)
Kenneth Cawkell Canadian 1 PhP 1,000.00 PhP 1,000.00

Total 10,000 PhP PhP Concluding from the above-stated facts, it is quite safe to say that petitioners McArthur, Tesoro and
10,000,000.00 2,708,174.60 Narra are not Filipino since MBMI, a 100% Canadian corporation, owns 60% or more of their equity
(emphasis interests. Such conclusion is derived from grandfathering petitioners’ corporate owners, namely: MMI,
supplied) SMMI and PLMDC. Going further and adding to the picture, MBMI’s Summary of Significant Accounting
Policies statement– –regarding the "joint venture" agreements that it entered into with the "Olympic"
and "Alpha" groups––involves SMMI, Tesoro, PLMDC and Narra. Noticeably, the ownership of the
Yet again, the usual players in petitioners’ corporate structures are present. Similarly, the amount of "layered" corporations boils down to MBMI, Olympic or corporations under the "Alpha" group wherein
money paid by the 2nd tier majority stock holder, in this case, Palawan Alpha South Resources and MBMI has joint venture agreements with, practically exercising majority control over the corporations
Development Corp. (PASRDC), is zero. mentioned. In effect, whether looking at the capital structure or the underlying relationships between
and among the corporations, petitioners are NOT Filipino nationals and must be considered foreign since
Studying MBMI’s Summary of Significant Accounting Policies dated October 31, 2005 explains the reason 60% or more of their capital stocks or equity interests are owned by MBMI.
behind the intricate corporate layering that MBMI immersed itself in:
Application of the res inter alios acta rule
JOINT VENTURES The Company’s ownership interests in various mining ventures engaged in the
acquisition, exploration and development of mineral properties in the Philippines is described as follows: Petitioners question the CA’s use of the exception of the res inter alios acta or the "admission by co-
partner or agent" rule and "admission by privies" under the Rules of Court in the instant case, by
(a) Olympic Group pointing out that statements made by MBMI should not be admitted in this case since it is not a party to
the case and that it is not a "partner" of petitioners.
The Philippine companies holding the Olympic Property, and the ownership and interests therein, are as
follows: Secs. 29 and 31, Rule 130 of the Revised Rules of Court provide:

Olympic- Philippines (the "Olympic Group") Sec. 29. Admission by co-partner or agent.- The act or declaration of a partner or agent of the party
within the scope of his authority and during the existence of the partnership or agency, may be given in
evidence against such party after the partnership or agency is shown by evidence other than such act or
Sara Marie Mining Properties Ltd. ("Sara Marie") 33.3%
declaration itself. The same rule applies to the act or declaration of a joint owner, joint debtor, or other
person jointly interested with the party.

Sec. 31. Admission by privies.- Where one derives title to property from another, the act, declaration, or
omission of the latter, while holding the title, in relation to the property, is evidence against the former.
Petitioners claim that before the above-mentioned Rule can be applied to a case, "the partnership
relation must be shown, and that proof of the fact must be made by evidence other than the admission
itself."49 Thus, petitioners assert that the CA erred in finding that a partnership relationship exists
between them and MBMI because, in fact, no such partnership exists.
Partnerships vs. joint venture agreements
Petitioners claim that the CA erred in applying Sec. 29, Rule 130 of the Rules by stating that "by entering
into a joint venture, MBMI have a joint interest" with Narra, Tesoro and McArthur. They challenged the
conclusion of the CA which pertains to the close characteristics of
"partnerships" and "joint venture agreements." Further, they asserted that before this particular
partnership can be formed, it should have been formally reduced into writing since the capital involved is
more than three thousand pesos (PhP 3,000). Being that there is no evidence of written agreement to
form a partnership between petitioners and MBMI, no partnership was created.
We disagree.
A partnership is defined as two or more persons who bind themselves to contribute money, property, or
industry to a common fund with the intention of dividing the profits among themselves.50 On the other
hand, joint ventures have been deemed to be "akin" to partnerships since it is difficult to distinguish
between joint ventures and partnerships. Thus:
[T]he relations of the parties to a joint venture and the nature of their association are so similar and
closely akin to a partnership that it is ordinarily held that their rights, duties, and liabilities are to be
tested by rules which are closely analogous to and substantially the same, if not exactly the same, as
those which govern partnership. In fact, it has been said that the trend in the law has been to blur the
distinctions between a partnership and a joint venture, very little law being found applicable to one that
does not apply to the other.51
Though some claim that partnerships and joint ventures are totally different animals, there are very few
rules that differentiate one from the other; thus, joint ventures are deemed "akin" or similar to a
partnership. In fact, in joint venture agreements, rules and legal incidents governing partnerships are
applied.52
Accordingly, culled from the incidents and records of this case, it can be assumed that the relationships
entered between and among petitioners and MBMI are no simple "joint venture agreements." As a rule,
corporations are prohibited from entering into partnership agreements; consequently, corporations
enter into joint venture agreements with other corporations or partnerships for certain transactions in
order to form "pseudo partnerships."
Obviously, as the intricate web of "ventures" entered into by and among petitioners and MBMI was
executed to circumvent the legal prohibition against corporations entering into partnerships, then the
relationship created should be deemed as "partnerships," and the laws on partnership should be applied.
45
Thus, a joint venture agreement between and among corporations may be seen as similar to
partnerships since the elements of partnership are present.
Considering that the relationships found between petitioners and MBMI are considered to be
partnerships, then the CA is justified in applying Sec. 29, Rule 130 of the Rules by stating that "by
entering into a joint venture, MBMI have a joint interest" with Narra, Tesoro and McArthur.
Panel of Arbitrators’ jurisdiction
We affirm the ruling of the CA in declaring that the POA has jurisdiction over the instant case. The POA
has jurisdiction to settle disputes over rights to mining areas which definitely involve the petitions filed
by Redmont against petitioners Narra, McArthur and Tesoro. Redmont, by filing its petition against
petitioners, is asserting the right of Filipinos over mining areas in the Philippines against alleged foreign-
owned mining corporations. Such claim constitutes a "dispute" found in Sec. 77 of RA 7942:
Within thirty (30) days, after the submission of the case by the parties for the decision, the panel shall
have exclusive and original jurisdiction to hear and decide the following:
(a) Disputes involving rights to mining areas
(b) Disputes involving mineral agreements or permits
We held in Celestial Nickel Mining Exploration Corporation v. Macroasia Corp.:53
The phrase "disputes involving rights to mining areas" refers to any adverse claim, protest, or opposition
to an application for mineral agreement. The POA therefore has the jurisdiction to resolve any adverse
claim, protest, or opposition to a pending application for a mineral agreement filed with the concerned
Regional Office of the MGB. This is clear from Secs. 38 and 41 of the DENR AO 96-40, which provide:
Sec. 38.
Within thirty (30) calendar days from the last date of publication/posting/radio announcements, the
authorized officer(s) of the concerned office(s) shall issue a certification(s) that the
publication/posting/radio announcement have been complied with. Any adverse claim, protest,
opposition shall be filed directly, within thirty (30) calendar days from the last date of
publication/posting/radio announcement, with the concerned Regional Office or through any concerned
PENRO or CENRO for filing in the concerned Regional Office for purposes of its resolution by the Panel of
Arbitrators pursuant to the provisions of this Act and these implementing rules and regulations. Upon
final resolution of any adverse claim, protest or opposition, the Panel of Arbitrators shall likewise issue a
certification to that effect within five (5) working days from the date of finality of resolution thereof.
Where there is no adverse claim, protest or opposition, the Panel of Arbitrators shall likewise issue a
Certification to that effect within five working days therefrom.
No Mineral Agreement shall be approved unless the requirements under this Section are fully complied
with and any adverse claim/protest/opposition is finally resolved by the Panel of Arbitrators.
Sec. 41.
 46

Within fifteen (15) working days form the receipt of the Certification issued by the Panel of Arbitrators as The jurisdiction of the POA over adverse claims, protest, or oppositions to a mining right application is
provided in Section 38 hereof, the concerned Regional Director shall initially evaluate the Mineral further elucidated by Secs. 219 and 43 of DENRO AO 95-936, which reads:
Agreement applications in areas outside Mineral reservations. He/She shall thereafter endorse his/her
findings to the Bureau for further evaluation by the Director within fifteen (15) working days from
Sec. 219. Filing of Adverse Claims/Conflicts/Oppositions.- Notwithstanding the provisions of Sections 28,
receipt of forwarded documents. Thereafter, the Director shall endorse the same to the secretary for
43 and 57 above, any adverse claim, protest or opposition specified in said sections may also be filed
consideration/approval within fifteen working days from receipt of such endorsement.
directly with the Panel of Arbitrators within the concerned periods for filing such claim, protest or
opposition as specified in said Sections.
In case of Mineral Agreement applications in areas with Mineral Reservations, within fifteen (15) working
days from receipt of the Certification issued by the Panel of Arbitrators as provided for in Section 38
Sec. 43. Publication/Posting of Mineral Agreement Application.-
hereof, the same shall be evaluated and endorsed by the Director to the Secretary for
consideration/approval within fifteen days from receipt of such endorsement. (emphasis supplied)
The Regional Director or concerned Regional Director shall also cause the posting of the application on
the bulletin boards of the Bureau, concerned Regional office(s) and in the concerned province(s) and
It has been made clear from the aforecited provisions that the "disputes involving rights to mining areas"
municipality(ies), copy furnished the barangays where the proposed contract area is located once a week
under Sec. 77(a) specifically refer only to those disputes relative to the applications for a mineral
for two (2) consecutive weeks in a language generally understood in the locality. After forty-five (45)
agreement or conferment of mining rights.
days from the last date of publication/posting has been made and no adverse claim, protest or
opposition was filed within the said forty-five (45) days, the concerned offices shall issue a certification
The jurisdiction of the POA over adverse claims, protest, or oppositions to a mining right application is that publication/posting has been made and that no adverse claim, protest or opposition of whatever
further elucidated by Secs. 219 and 43 of DENR AO 95-936, which read: nature has been filed. On the other hand, if there be any adverse claim, protest or opposition, the same
shall be filed within forty-five (45) days from the last date of publication/posting, with the Regional
offices concerned, or through the Department’s Community Environment and Natural Resources Officers
Sec. 219. Filing of Adverse Claims/Conflicts/Oppositions.- Notwithstanding the provisions of Sections 28,
(CENRO) or Provincial Environment and Natural Resources Officers (PENRO), to be filed at the Regional
43 and 57 above, any adverse claim, protest or opposition specified in said sections may also be filed
Office for resolution of the Panel of Arbitrators. However, previously published valid and subsisting
directly with the Panel of Arbitrators within the concerned periods for filing such claim, protest or
mining claims are exempted from posted/posting required under this Section.
opposition as specified in said Sections.

No mineral agreement shall be approved unless the requirements under this section are fully complied
Sec. 43. Publication/Posting of Mineral Agreement.-
with and any opposition/adverse claim is dealt with in writing by the Director and resolved by the Panel
of Arbitrators. (Emphasis supplied.)
The Regional Director or concerned Regional Director shall also cause the posting of the application on
the bulletin boards of the Bureau, concerned Regional office(s) and in the concerned province(s) and
These provisions lead us to conclude that the power of the POA to resolve any adverse claim, opposition,
municipality(ies), copy furnished the barangays where the proposed contract area is located once a week
or protest relative to mining rights under Sec. 77(a) of RA 7942 is confined only to adverse claims,
for two (2) consecutive weeks in a language generally understood in the locality. After forty-five (45)
conflicts and oppositions relating to applications for the grant of mineral rights.
days from the last date of publication/posting has been made and no adverse claim, protest or
opposition was filed within the said forty-five (45) days, the concerned offices shall issue a certification
that publication/posting has been made and that no adverse claim, protest or opposition of whatever POA’s jurisdiction is confined only to resolutions of such adverse claims, conflicts and oppositions and it
nature has been filed. On the other hand, if there be any adverse claim, protest or opposition, the same has no authority to approve or reject said applications. Such power is vested in the DENR Secretary upon
shall be filed within forty-five (45) days from the last date of publication/posting, with the Regional recommendation of the MGB Director. Clearly, POA’s jurisdiction over "disputes involving rights to
Offices concerned, or through the Department’s Community Environment and Natural Resources mining areas" has nothing to do with the cancellation of existing mineral agreements. (emphasis ours)
Officers (CENRO) or Provincial Environment and Natural Resources Officers (PENRO), to be filed at the
Regional Office for resolution of the Panel of Arbitrators. However previously published valid and
Accordingly, as we enunciated in Celestial, the POA unquestionably has jurisdiction to resolve disputes
subsisting mining claims are exempted from posted/posting required under this Section.
over MPSA applications subject of Redmont’s petitions. However, said jurisdiction does not include
either the approval or rejection of the MPSA applications, which is vested only upon the Secretary of the
No mineral agreement shall be approved unless the requirements under this section are fully complied DENR. Thus, the finding of the POA, with respect to the rejection of petitioners’ MPSA applications being
with and any opposition/adverse claim is dealt with in writing by the Director and resolved by the Panel that they are foreign corporation, is valid.
of Arbitrators. (Emphasis supplied.)
Justice Marvic Mario Victor F. Leonen, in his Dissent, asserts that it is the regular courts, not the POA,
It has been made clear from the aforecited provisions that the "disputes involving rights to mining areas" that has jurisdiction over the MPSA applications of petitioners.
under Sec. 77(a) specifically refer only to those disputes relative to the applications for a mineral
agreement or conferment of mining rights.
This postulation is incorrect.

It is basic that the jurisdiction of the court is determined by the statute in force at the time of the
commencement of the action.54
Sec. 19, Batas Pambansa Blg. 129 or "The Judiciary Reorganization
Act of 1980" reads:
Sec. 19. Jurisdiction in Civil Cases.—Regional Trial Courts shall exercise exclusive original jurisdiction:
1. In all civil actions in which the subject of the litigation is incapable of pecuniary estimation.
On the other hand, the jurisdiction of POA is unequivocal from Sec. 77 of RA 7942:
Section 77. Panel of Arbitrators.—
x x x Within thirty (30) days, after the submission of the case by the parties for the decision,
the panel shall have exclusive and original jurisdiction to hear and decide the following:
(c) Disputes involving rights to mining areas
(d) Disputes involving mineral agreements or permits
It is clear that POA has exclusive and original jurisdiction over any and all disputes involving rights to
mining areas. One such dispute is an MPSA application to which an adverse claim, protest or opposition
is filed by another interested applicant.1âwphi1 In the case at bar, the dispute arose or originated from
MPSA applications where petitioners are asserting their rights to mining areas subject of their respective
MPSA applications. Since respondent filed 3 separate petitions for the denial of said applications, then a
controversy has developed between the parties and it is POA’s jurisdiction to resolve said disputes.
Moreover, the jurisdiction of the RTC involves civil actions while what petitioners filed with the DENR
Regional Office or any concerned DENRE or CENRO are MPSA applications. Thus POA has jurisdiction.
Furthermore, the POA has jurisdiction over the MPSA applications under the doctrine of primary
jurisdiction. Euro-med Laboratories v. Province of Batangas55 elucidates:
The doctrine of primary jurisdiction holds that if a case is such that its determination requires the
expertise, specialized training and knowledge of an administrative body, relief must first be obtained in
an administrative proceeding before resort to the courts is had even if the matter may well be within
their proper jurisdiction.
Whatever may be the decision of the POA will eventually reach the court system via a resort to the CA
and to this Court as a last recourse.
Selling of MBMI’s shares to DMCI
47
As stated before, petitioners’ Manifestation and Submission dated October 19, 2012 would want us to
declare the instant petition moot and academic due to the transfer and conveyance of all the
shareholdings and interests of MBMI to DMCI, a corporation duly organized and existing under Philippine
laws and is at least 60% Philippine-owned.56 Petitioners reasoned that they now cannot be considered as
foreign-owned; the transfer of their shares supposedly cured the "defect" of their previous nationality.
They claimed that their current FTAA contract with the State should stand since "even wholly-owned
foreign corporations can enter into an FTAA with the State."57Petitioners stress that there should no
longer be any issue left as regards their qualification to enter into FTAA contracts since they are qualified
to engage in mining activities in the Philippines. Thus, whether the "grandfather rule" or the "control
test" is used, the nationalities of petitioners cannot be doubted since it would pass both tests.
The sale of the MBMI shareholdings to DMCI does not have any bearing in the instant case and said fact
should be disregarded. The manifestation can no longer be considered by us since it is being tackled in
G.R. No. 202877 pending before this Court.1âwphi1 Thus, the question of whether petitioners, allegedly
a Philippine-owned corporation due to the sale of MBMI's shareholdings to DMCI, are allowed to enter
into FTAAs with the State is a non-issue in this case.
In ending, the "control test" is still the prevailing mode of determining whether or not a corporation is a
Filipino corporation, within the ambit of Sec. 2, Art. II of the 1987 Constitution, entitled to undertake the
exploration, development and utilization of the natural resources of the Philippines. When in the mind of
the Court there is doubt, based on the attendant facts and circumstances of the case, in the 60-40
Filipino-equity ownership in the corporation, then it may apply the "grandfather rule."
WHEREFORE, premises considered, the instant petition is DENIED. The assailed Court of Appeals Decision
dated October 1, 2010 and Resolution dated February 15, 2011 are hereby AFFIRMED.
SO ORDERED.
FACTS:
Redmont Consolidated Mines, Inc. (Redmont) filed before the Panel of Arbitrators (POA) of the DENR
separate petitions for denial of McArthur Mining, Inc. (McArthur), Tesoro and Mining and Development,
Inc. (Tesoro), and Narra Nickel Mining and Development Corporation (Narra) applications Mineral
Production Sharing Agreement (MPSA) on the ground that they are not “qualified persons” and thus
disqualified from engaging in mining activities through MPSAs reserved only for Filipino citizens.
McArthur Mining, Inc., is composed, among others, by Madridejos Mining Corporation (Filipino) owning
5,997 out of 10,000 shares, and MBMI Resources, Inc. (Canadian) owning 3,998 out of 10,000 shares;
MBMI also owns 3,331 out of 10,000 shares of Madridejos Mining Corporation;
Tesoro and Mining and Development, Inc., is composed, among others, by Sara Marie Mining, Inc.
(Filipino) owning 5,997 out of 10,000 shares, and MBMI Resources, Inc. (Canadian) owning 3,998 out of
10,000 shares; MBMI also owns 3,331 out of 10,000 shares of Sara Marie Mining, Inc.;
Narra Nickel Mining and Development Corporation, is composed, among others, by Patricia Louise
Mining & Development Corporation (Filipino) owning 5,997 out of 10,000 shares, and MBMI Resources,
Inc. (Canadian) owning 3,998 out of 10,000 shares; MBMI also owns 3,396 out of 10,000 shares of
Patricia Louise Mining & Development Corporation;
 48

ISSUES:

(1) Is the Grandfather Rule applicable?

(2) Whether McArthur, Tesoro and Narra are Filipino nationals.

RULINGS:

(1) YES.

The instant case presents a situation which exhibits a scheme employed by stockholders to circumvent
the law, creating a cloud of doubt in the Court’s mind. To determine, therefore, the actual participation,
direct or indirect, of MBMI, the grandfather rule must be used.

The Strict Rule or the Grandfather Rule pertains to the portion in Paragraph 7 of the 1967 SEC Rules
which states, “but if the percentage of Filipino ownership in the corporation or partnership is less than
60%, only the number of shares corresponding to such percentage shall be counted as of Philippine
nationality.” Under the Strict Rule or Grandfather Rule Proper, the combined totals in the Investing
Corporation and the Investee Corporation must be traced (i.e., “grandfathered”) to determine the total
percentage of Filipino ownership.

(2) NO.

[P]etitioners McArthur, Tesoro and Narra are not Filipino since MBMI, a 100% Canadian corporation,
owns 60% or more of their equity interests. Such conclusion is derived from grandfathering petitioners’
corporate owners. xxx Noticeably, the ownership of the “layered” corporations boils down to xxx group
wherein MBMI has joint venture agreements with, practically exercising majority control over the
corporations mentioned. In effect, whether looking at the capital structure or the underlying
relationships between and among the corporations, petitioners are NOT Filipino nationals and must be
considered foreign since 60% or more of their capital stocks or equity interests are owned by MBMI.