Escolar Documentos
Profissional Documentos
Cultura Documentos
Jurisdiction
G.R. No. 131282 January 4, 2002
GABRIEL L. DUERO, petitioner,
vs.
HON.COURT OF APPEALS, and BERNARDO A. ERADEL, respondents.
This petition for certiorari assails the Decisionl dated September 17, 1997,
of the Court of Appeals in CA-G.R. No. SP No.. 2340- UDK, entitled
Bernardo Eradel vs. Non. Ermelino G. Andal, setting aside all proceedings
in Civil Case No.1075, Gabriel L. Duero vs. Bernardo Eradel, before the
Branch 27 of the Regional Trial Court of Tandag, Surigao del Sur .
The pertinent facts are as follow.
Sometime in 1988, according to petitioner, private respondent Bemardo
Eradel2 entered and occupied petitioner's land covered by Tax Declaration
No. A-16-13-302, located in Baras, San Miguel, Surigao del Sur. As shown
in the tax declaration, the land had an assessed value of P5,240. When
petitioner politely informed private respondent that the land was his and
requested the latter to vacate the land, private respondent refused, but
instead threatened him with bodily harm. Despite repeated demands,
private respondent remained steadfast in his refusal to leave the land.
On June 16, 1995, petitioner filed before the RTC a complaint for Recovery
of Possession and Ownership with Damages and Attorney's Fees against
private respondent and two others, namely, Apolinario and Inocencio
Ruena. Petitioner appended to the complaint the aforementioned tax
declaration. The counsel of the Ruenas asked for extension to file their
Answer and was given until July 18, 1995. Meanwhile, petitioner and the,
Ruenas executed a compromise agreement, which became the trial
court's basis for a partial judgment rendered on January 12, 1996. In this
agreement, the Ruenas through their counsel, Atty. Eusebio Avila, entered
into a Compromise Agreement with herein petitioner, Gabriel Duero. Inter
alia, the agreement stated that the Ruenas recognized and bound
themselves to respect the ownership and possession of Duero.3 Herein
private respondent Eradel was not a party to the agreement, and he was
declared in default for failure to file his answer to the complaint.4
Petitioner presented his evidence ex parte on February 13, 1996. On May
8, 1996, judgment was rendered in his favor, and private respondent was
ordered to peacefully vacate and turn over Lot No.1065 Cad. 537-D to
petitioner; pay petitioner P2,000 annual rental from 1988 up the time he
vacates the land, and P5,000 as attorney's fees and the cost of the suit. 5
Private respondent received a copy of the decision on May 25, 1996.
On June 10, 1996, private respondent filed a Motion for New Trial, alleging
that he has been occupying the land as a tenant of Artemio Laurente, Sr.,
since 1958. He explained that he turned over the complaint and summons
to Laurente in the honest belief that as landlord, the latter had a better
right to the land and was responsible to defend any adverse claim on it.
However, the trial court denied the motion for new trial.
Meanwhile, RED Conflict Case No.1029, an administrative case between
petitioner and applicant-contestants Romeo, Artemio and Jury Laurente,
remained pending with the Office of the Regional Director of the
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Department of Environment and Natural Resources in Davao City.
Eventually, it was forwarded to the DENR Regional Office in Prosperidad,
Agusan del Sur .
On July 24, 1996, private respondent filed before the RTC a Petition for
Relief from Judgment, reiterating the same allegation in his Motion for New
Trial. He averred that unless there is a determination on who owned the
land, he could not be made to vacate the land. He also averred that the
judgment of the trial court was void inasmuch as the heirs of Artemio
Laurente, Sr., who are indispensable parties, were not impleaded.
On September 24, 1996, Josephine, Ana Soledad and Virginia, all
surnamed Laurente, grandchildren of Artemio who were claiming
ownership of the land, filed a Motion for Intervention. The RTC denied the
motion.
On October 8, 1996, the trial court issued an order denying the Petition for
Relief from Judgment. In a Motion for Reconsideration of said order,
private respondent alleged that the RTC had no jurisdiction over the case,
since the value of the land was only P5,240 and therefore it was under the
jurisdiction of the municipal trial court. On November 22, 1996, the RTC
denied the motion for reconsideration.
On January 22, 1997, petitioner filed a Motion for Execution, which the RTC
granted on January 28. On February 18, 1997, Entry of Judgment was
made of record and a writ of execution was issued by the RTC on February
27,1997. On March 12,1997, private respondent filed his petition for
certiorari before the Court of Appeals.
The Court of Appeals gave due course to the petition, maintaining that
private respondent is not estopped from assailing the jurisdiction 'of the
RTC, Branch 27 in Tandag, Surigao del Sur, when private respondent filed
with said court his Motion for Reconsideration And/Or Annulment of
Judgment. The Court of Appeals decreed as follows:
IN THE LIGHT OF ALL THE FOREGOING, the Petition is GRANTED. All
proceedings in "Gabriel L. Duero vs. Bernardo Eradel, et. al. Civil Case
1075" filed in the Court a quo, including its Decision, Annex "E" of the
petition, and its Orders and Writ of Execution and the turn over of the
property to the Private Respondent by the Sheriff of the Court a quo, are
declared null and void and hereby SET ASIDE, No pronouncement as to
costs.
SO ORDERED.6
Petitioner now comes before this Court, alleging that the Court of Appeals
acted with grave abuse of discretion amounting to lack or in excess of
jurisdiction when it held that:
1. THE LOWER COURT HAS NO JURISDICTION OVER THE SUBJECT MA
TTER OF THE CASE.
2. PRIVATE RESPONDENT WAS NOT THEREBY ESTOPPED FROM
QUESTIONING THE JURISDICTION OF THE LOWER COURT EVEN
AFTER IT SUCCESSFULLY SOUGHT AFFIRMATIVE RELIEF THEREFROM.
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3. THE FAlLURE OF PRIVATE RESPONDENT TO FILE HIS ANSWER IS
JUSTIFIED. 7
The main issue before us is whether the Court of Appeals gravely abused
its discretion when it held that the municipal trial court had jurisdiction,
and that private respondent was not estopped from assailing the
jurisdiction of the RTC after he had filed several motions before it. The
secondary issue is whether the Court of appeals erred in holding that
private respondent's failure to file an answer to the complaint was
justified.
At the outset, however, we note that petitioner through counsel submitted
to this Court pleadings that contain inaccurate statements. Thus, on page
5 of his petition,8 we find that to bolster the claim that the appellate court
erred in holding that the RTC had no jurisdiction, petitioner pointed to
Annex E9 of his petition which supposedly is the Certification issued by the
Municipal Treasurer of San Miguel, Surigao, specifically containing the
notation, "Note: Subject for General Revision Effective 1994." But it
appears that Annex E of his petition is not a Certification but a xerox copy
of a Declaration of Real Property. Nowhere does the document contain a
notation, "Note: Subject for General Revision Effective 1994." Petitioner
also asked this Court to refer to Annex F,10 where he said the zonal value
of the disputed land was P1.40 per sq.m., thus placing the computed
value of the land at the time the complaint was filed before the RTC at
P57,113.98, hence beyond the jurisdiction of the municipal court and
within the jurisdiction of the regional trial court. However, we find that
these annexes are both merely xerox copies. They are obviously without
evidentiary weight or value.
Coming now to the principal issue, petitioner contends that respondent
appellate court acted with grave abuse of discretion. By "grave abuse of
discretion" is meant such capricious and whimsical exercise of judgment
which is equivalent to an excess or a lack of jurisdiction. The abuse of
discretion must be so patent and gross as to amount to an evasion of a
positive duty or a virtual refusal to perform a duty enjoined by law, or to
act at all in contemplation of law as where the power is exercised in an
arbitrary and despotic manner by reason of passion or hostility. 11 But here
we find that in its decision holding that the municipal court has jurisdiction
over the case and that private respondent was not estopped from
questioning the jurisdiction of the RTC, respondent Court of Appeals
discussed the facts on which its decision is grounded as well as the law
and jurisprudence on the matter.12 Its action was neither whimsical nor
capricious.
Was private respondent estopped from questioning the jurisdiction of the
RTC? In this case, we are in agreement with the Court of Appeals that he
was not. While participation in all stages of a case before the trial court,
including invocation of its authority in asking for affirmative relief,
effectively bars a party by estoppel from challenging the court's
jurisdiction,13 we note that estoppel has become an equitable defense that
is both substantive and remedial and its successful invocation can bar a
right and not merely its equitable enforcement.14 Hence, estoppel ought to
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be applied with caution. For estoppel to apply, the action giving rise
thereto must be unequivocal and intentional because, if misapplied,
estoppel may become a tool of injustice.15
In the present case, private respondent questions the jurisdiction of RTC in
Tandag, Surigao del Sur, on legal grounds. Recall that it was petitioner
who filed the complaint against private respondent and two other parties
before the said court,16 believing that the RTC had jurisdiction over his
complaint. But by then, Republic Act 769117 amending BP 129 had become
effective, such that jurisdiction already belongs not to the RTC but to the
MTC pursuant to said amendment. Private respondent, an unschooled
farmer, in the mistaken belief that since he was merely a tenant of the
late Artemio Laurente Sr., his landlord, gave the summons to a Hipolito
Laurente, one of the surviving heirs of Artemio Sr., who did not do
anything about the summons. For failure to answer the complaint, private
respondent was declared in default. He then filed a Motion for New Trial in
the same court and explained that he defaulted because of his belief that
the suit ought to be answered by his landlord. In that motion he stated
that he had by then the evidence to prove that he had a better right than
petitioner over the land because of his long, continuous and uninterrupted
possession as bona-fide tenant-lessee of the land.18 But his motion was
denied. He tried an alternative recourse. He filed before the RTC a Motion
for Relief from Judgment. Again, the same court denied his motion, hence
he moved for reconsideration of the denial. In his Motion for
Reconsideration, he raised for the first time the RTC's lack of jurisdiction.
This motion was again denied. Note that private respondent raised the
issue of lack of jurisdiction, not when the case was already on appeal, but
when the case, was still before the RTC that ruled him in default, denied
his motion for new trial as well as for relief from judgment, and denied
likewise his two motions for reconsideration. After the RTC still refused to
reconsider the denial of private respondent's motion for relief from
judgment, it went on to issue the order for entry of judgment and a writ of
execution.
Under these circumstances, we could not fault the Court of Appeals in
overruling the RTC and in holding that private respondent was not
estopped from questioning the jurisdiction of the regional trial court. The
fundamental rule is that, the lack of jurisdiction of the court over an action
cannot be waived by the parties, or even cured by their silence,
acquiescence or even by their express consent.19 Further, a party may
assail the jurisdiction of the court over the action at any stage of the
proceedings and even on appeal.20 The appellate court did not err in
saying that the RTC should have declared itself barren of jurisdiction over
the action. Even if private respondent actively participated in the
proceedings before said court, the doctrine of estoppel cannot still be
properly invoked against him because the question of lack of jurisdiction
may be raised at anytime and at any stage of the action. 21 Precedents tell
us that as a general rule, the jurisdiction of a court is not a question of
acquiescence as a matter of fact, but an issue of conferment as a matter
of law.22 Also, neither waiver nor estoppel shall apply to confer jurisdiction
upon a court, barring highly meritorious and exceptional circumstances.23
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The Court of Appeals found support for its ruling in our decision in Javier
vs. Court of Appeals, thus:
x x x The point simply is that when a party commits error in filing his suit
or proceeding in a court that lacks jurisdiction to take cognizance of the
same, such act may not at once be deemed sufficient basis of estoppel. It
could have been the result of an honest mistake, or of divergent
interpretations of doubtful legal provisions. If any fault is to be
imputed to a party taking such course of action, part of the blame
should be placed on the court which shall entertain the suit,
thereby lulling the parties into believing that they pursued their
remedies in the correct forum. Under the rules, it is the duty of the
court to dismiss an action 'whenever it appears that the court has no
jurisdiction over the subject matter.' (Sec. 2, Rule 9, Rules of Court) Should
the Court render a judgment without jurisdiction, such judgment may be
impeached or annulled for lack of jurisdiction (Sec. 30, Rule 132, Ibid),
within ten (10) years from the finality of the same. [Emphasis ours.]24
Indeed, "...the trial court was duty-bound to take judicial notice of the
parameters of its jurisdiction and its failure to do so, makes its decision a
'lawless' thing."25
Since a decision of a court without jurisdiction is null and void, it could
logically never become final and executory, hence appeal therefrom by
writ of error would be out of the question. Resort by private respondent to
a petition for certiorari before the Court of Appeals was in order .
In holding that estoppel did not prevent private respondent from
questioning the RTC's jurisdiction, the appellate court reiterated the
doctrine that estoppel must be applied only in exceptional cases, as its
misapplication could result in a miscarriage of justice. Here, we find that
petitioner, who claims ownership of a parcel of land, filed his complaint
before a court without appropriate jurisdiction. Defendant, a farmer whose
tenancy status is still pending before the proper administrative agency
concerned, could have moved for dismissal of the case on jurisdictional
grounds. But the farmer as defendant therein could not be expected to
know the nuances of jurisdiction and related issues. This farmer, who is
now the private respondent, ought not to be penalized when he claims
that he made an honest mistake when he initially submitted his motions
before the RTC, before he realized that the controversy was outside the
RTC's cognizance but within the jurisdiction of the municipal trial court. To
hold him in estoppel as the RTC did would amount to foreclosing his
avenue to obtain a proper resolution of his case. Furthermore, if the RTC's
order were to be sustained, he would be evicted from the land
prematurely, while RED Conflict Case No.1029 would remain unresolved.
Such eviction on a technicality if allowed could result in an injustice, if it is
later found that he has a legal right to till the land he now occupies as
tenant-lessee.1âwphi1.nêt
Having determined that there was no grave abuse of discretion by the
appellate court in ruling that private respondent was not estopped from
questioning the jurisdiction of the RTC, we need not tarry to consider in
detail the second issue. Suffice it to say that, given the circumstances in
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this case, no error was committed on this score by respondent appellate
court. Since the RTC had no jurisdiction over the case, private respondent
had justifiable reason in law not to file an answer, aside from the fact that
he believed the suit was properly his landlord's concern.
WHEREFORE, the petition is DISMISSED. The assailed decision of the
Court of Appeals is AFFIRMED. The decision of the Regional Trial Court in
Civil Case No.1075 entitled Gabriel L. Duero vs. Bernardo Eradel, its Order
that private respondent turn over the disputed land to petitioner, and the
Writ of Execution it issued, are ANNULLED and SET ASIDE. Costs
against petitioner .
SO ORDERED.
The Case
This is an appeal via certiorari from the decision of the Court of Appeals
1 2
dismissing petitioner’s appeal from the order of the Regional Trial Court,
3
The Facts
“On March 16, 1994, plaintiff (Ceroferr Realty Corporation) filed with the
Regional Trial Court, Quezon City, Branch 93, a complaint against 7
“In his answer, defendant Santiago alleged that the vacant lot referred to
in the complaint was within Lot No. 90 of the Tala Estate Subdivision,
covered by his TCT No. RT-78 110 (3538); that he was not claiming any
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portion of Lot No. 68 claimed by Ceroferr; that he had the legal right to
fence Lot No. 90 since this belonged to him, and he had a permit for the
purpose; that Ceroferr had no color of right over Lot No. 90 and, hence,
was not entitled to an injunction to prevent Santiago from exercising acts
of ownership thereon; and that the complaint did not state a cause of
action.
“It thus became clear, at least from the viewpoint of defendant, that the
case would no longer merely involve a simple case of collection of
damages and injunction – which was the main objective of the complaint -
but a review of the title of defendant vis-à-vis that of plaintiff. At this point,
defendant filed a motion to dismiss the complaint premised primarily on
his contention that the trial court cannot adjudicate the issue of damages
without passing over the conflicting claims of ownership of the parties
over the disputed portion.
“On May 14, 1996, the trial court issued the order now subject of this
appeal which, as earlier pointed out, dismissed the case for lack of cause
of action and lack of jurisdiction. The court held that plaintiff was in effect
impugning the title of defendant which could not be done in the case for
damages and injunction before it. The court cited the hoary rule that a
Torens certificate of title cannot be the subject of collateral attack but can
only be challenged through a direct proceeding. It concluded that it could
not proceed to decide plaintiff’s claim for damages and injunction for lack
of jurisdiction because its judgment would depend upon a determination
of the validity of defendant’s title and the identity of the land covered by
it.
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“From this ruling, plaintiff appealed to this court insisting that the
complaint stated a valid cause of action which was determinable from the
face thereof, and that, in any event, the trial court could proceed to try
and decide the case before it since, under present law, there is now no
substantial distinction between the general jurisdiction vested in a
regional trial court and its limited jurisdiction when acting as a land
registration court, citing Ignacio v. Court of Appeals 246 SCRA 242
(1995).”
The Issues
The issues are: (1) whether Ceroferr’s complaint states a sufficient cause
of action and (2) whether the trial court has jurisdiction to determine the
identity and location of the vacant lot involved in the case.
The rules of procedure require that the complaint must state a concise
statement of the ultimate facts or the essential facts constituting the
plaintiff’s cause of action. A fact is essential if it cannot be stricken out
without leaving the statement of the cause of action inadequate. A
complaint states a cause of action only when it has its three indispensable
elements, namely: (1) a right in favor of the plaintiff by whatever means
and under whatever law it arises or is created; (2) an obligation on the
part of the named defendant to respect or not to violate such right; and
(3) an act or omission on the part of such defendant violative of the right
of plaintiff or constituting a breach of the obligation of defendant to the
plaintiff for which the latter may maintain an action for recovery of
damages. If these elements are not extant, the complaint becomes
12
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jeepney terminal was within Lot 90 owned by him and covered by TCT No.
RT-781 10 (3538) issued in his name.
Despite clarification from petitioner Ceroferr that the jeepney terminal was
within Lot 68 and not within Lot 90, respondent Santiago persisted in his
plans to have the area fenced. He applied for and was issued a fencing
permit by the Building Official, Quezon City. It was even alleged in the
complaint that respondent- Santiago was preventing petitioner Ceroferr
and its agents from entering the property under threats of bodily harm
and destroying existing structures thereon.
On the issue of jurisdiction, we hold that the trial court has jurisdiction to
determine the identity and location of the vacant lot in question.
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conducted. It was only when the second survey report showed results
adverse to his case that he submitted a motion to dismiss.
Both parties in this case claim that the vacant lot is within their property.
This is an issue that can be best resolved by the trial court in the exercise
of its general jurisdiction.
After the land has been originally registered, the Court of Land
Registration ceases to have jurisdiction over contests concerning the
location of boundary lines. In such case, the action in personam has to be
instituted before an ordinary court of general jurisdiction.
19
The regional trial court has jurisdiction to determine the precise identity
and location of the vacant lot used as a jeepney terminal.
The Fallo
We remand the case to the Regional Trial Court, Branch 93, Quezon City,
for further proceedings.
No costs.
SO ORDERED.
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SO ORDERED. 1
The antecedent facts, as can be gathered from the findings of the trial
court are as quoted:
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During the trial on the merits, private respondents, through Rodolfo
Rarang who is the lone witness, disputed the validity of the Special Power
of Attorney. The rest of their evidence consisted of documents.
Petitioners countered and presented the Notary Public who notarized the
Deed of Sale between Basilio Rarang and Jose Ochave. Among the
documents presented by the petitioners were the controverted Deed of
Sale and the Special Power of Attorney said to have been executed by
Rosario Fontanilla-Rarang in favor of Basilio Rarang.
In the first place, the land which defendants brought from the Rural Bank
of Urbiztondo, Inc. is Lot 5403, CAD, 325-D of Alaminos Cadastre, which
land is covered by TCT No. 5535 in the name of defendants (pp.
26-27, TSN, Oct. 2, 1987). Having knowingly bought a registered land, the
identity and metes and bounds of which are clearly set forth in detail in its
certificate of title, defendants are plainly estopped from claiming that they
acquired thereby a parcel of land (Lot 5145) which is entirely distinct and
different from the parcel of and (Lot 5303) described and identified in the
certificate of title; otherwise, the very purpose and essence of a certificate
of title under the Torrens System would thereby be impaired, if not totally
negated. Verily, the infirmity of defendants' claim that it was not Lot 5303
which they purchased from the Rural Bank of Urbiztondo is further
underscored by their own admission that they have successively
mortgaged the said land to the China Banking Corporation and thereafter
to the Pangasinan Development Bank (par. 3 of Amended Answer in
relation to par. 4 of Complaint). Accordingly, defendants' contention that
"the title (TCT No. 5535) is not a true and faithful reproduction of what
was actually applied for" and contains discrepancies due to the fault of the
Bureau of Lands (pars. 10 and 14, Amended Answer) is beside the point
and of no help to defendants' position. Suffice it to state that defendants
are deemed to know the identity of the registered land which they were
buying when they contracted with the Rural Bank of Urbiztondo.
In the second place, the Court is not convinced as to the validity of the
sale of the land in question in 1967 by Basilio Rarang in favor of Jose
Ochave (Exhibit 6). Article 1874 of the Civil Code provides that:
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appeared, signed, and acknowledged the said Power of Attorney before
the notary public was Basilio Rarang (the agent) and not Rosario Rarang
(the principal), . . . . The said Power of Attorney was purportedly
acknowledged by Basilio Rarang, the supposed attorney-in-fact, on
September 22, 1966 or five days before the said Power of Attorney was
allegedly signed by Rosario Rarang, the supposed principal. Further, the
Court takes note of the fact that the first page of the Power of Attorney,
which contains all the material allegations thereof, does not bear any
signature at all. Compounding the aforesaid discrepancies of the said
Power of Attorney, defendants also failed to present any evidence to prove
the genuineness and due execution of said instrument, particularly the
supposed signature of Rosario Rarang on the second page thereof.
Accordingly, the Court must give credence to the testimony of Rodolfo
Rarang (p. 22-28, TSN, July 13, 1987) and concludes that the signature
above the typewritten name Rosario Rarang on the second page of the
Power of Attorney (Exh.
7-A) is not the true signature of plaintiffs' mother Rosario Fontanilla
Rarang.
This decision was affirmed by the Respondent Court in toto. Hence, this
appeal.
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RODOLFO RARANG, AND WERE NEVER PRESENTED IN COURT TO DISPUTE
THE VERACITY OF SAID DOCUMENT.
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Petitioners assert that the appellate court failed to consider their long and
continuous possession over the disputed lot as equivalent to possession in
the concept of owners. This is preposterous. How can they be considered
possessors in the concept of owners when the land over which they hold
title is not the same as that which they possess? Possession, to constitute
the foundation of a prescriptive right, must be possession under a claim of
title or it must be adverse, 4 Petitioners herein cannot be said to be in
possession of the land under a claim of title, since it has been established
that petitioners' title covers a different parcel of land; more so, can it be
considered that petitioners are in adverse possession thereof.
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which they lost no time in instituting his case. Moreover, there is no
absolute rule as to what constitute laches or staleness of demand; each
case is to be determined according to its particular circumstances. In the
case of Jimenez vs. Fernandez, 9 the court declared that the question of
laches is an equitable doctrine and its application is controlled by
equitable considerations. The Court further stated that laches cannot be
worked to defeat justice or to perpetuate fraud or injustice. It would be
rank injustice and patently inequitable to deprive the lawful heirs of their
rightful inheritance.
For reasons indicated, the petition for review is hereby DISMISSED. The
decision of the respondent Court is AFFIRMED. With costs.
SO ORDERED.
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however, on September 14, 1973, plaintiff notarially rescinded and
cancelled the contract as of June 25, 1966 for defendant’s failure to
comply with the terms thereof, specifically for her failure to pay the
stipulated monthly payments; that despite receipt of said notice of
cancellation however, defendant continued in her possession and
occupation of subject parcel of land without any legal basis except by
mere tolerance of plaintiff; that defendant since and from that time of the
service of the notice of rescission and the demand to vacate on
September 14, 1973, defendant has possessed and occupied said
property without making any payment to plaintiff of such reasonable
compensation for her use and occupancy thereof; that on August 3, 1995,
plaintiff needing said property for its own use, made a final demand to
defendant, through counsel, to vacate subject property within three (3)
months from receipt thereof; that notwithstanding however her receipt of
said final demand and the lapse of the three (3) months period within
which to vacate, defendant unlawfully failed and refused to vacate the
same without legal basis.
The Honorable Supreme Court in the case of Magin vs. Avelino,4 127 SCRA
602, said:
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Under the above doctrine, the demand being that of terminating
possession allowed by tolerance of the alleged owner, this Court has no
jurisdiction to try the case.5
Aggrieved, Manotok Realty, Inc. appealed the matter before the Regional
Trial Court of Marikina, Branch 273. The RTC ruled for Manotok Realty, Inc.
holding that the MeTC had jurisdiction to hear and decide the case as "the
complaint is one for unlawful detainer" as clearly alleged in the complaint,
"and not for accion publiciana as incorrectly ruled by the lower court."6
SO ORDERED.7
The reversal of the MeTC order prompted Amparo Roxas to elevate the
matter to the Court of Appeals for review under Rule 42. However, the
appellate court affirmed the aforequoted RTC decision opining that
Amparo’s reliance on Velez vs. Avelino8 is misplaced for the latter partakes
of a different factual setting. The RTC of Marikina had found, inter alia:
In this particular case, the private respondents from the very beginning
occupied the subject premises without any contract and constructed
thereon houses sans any building permits. The Court described them as
squatters and characterized their possession as one of tolerance…in the
case at bench, the petitioner was not a squatter but a lawful possessor of
the property by virtue of a contract to sell duly entered into by the
petitioner and private respondent. Her occupation became illegal only
upon her refusal to vacate despite the cancellation of the contract to sell
and a demand letter dated August 3, 1995 for her to vacate.
While in the Velez case, supra, there was no contract, express or implied,
at the start, in the case at bench, there was such an express contract to
sell that governed the relationship between the petitioner and private
respondent… Accordingly, it is imperative in a case of unlawful detainer
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that the incipient occupancy is founded on some legal authority such as
an express or implied contract, which however, has expired. In the Velez
case supra, there was no expiration or termination to speak of because
there was really no contract in the first place, whereas, in the instant case
there was.9
Hence, this petition for review on certiorari raising the lone issue of:lawp!
1.net
While this petition for review does not assign any specific error committed
by the court a quo in affirming the decision of the RTC, what petitioner
raises is the question of jurisdiction of the regular courts of justice over
the subject matter of this case. According to her petition,11 the matter
involved in the present petition falls squarely within the jurisdiction of an
administrative agency, namely the Housing and Land Use Regulatory
Board (HLURB).12 She explains that "this is for the simple reason that the
issue between the parties is the determination of whether or not the terms
and conditions of their contract to sell are violated." She adds that she is
one of the buyers on installment of a subdivision lot in private
respondent’s subdivision. For Manotok Realty Inc. is the subdivision owner
and/or developer. Consequently, according to petitioner, any question that
may arise regarding their contract, be it for non-payment of amortization,
specific performance, or in general, violation of any term or condition
thereof, including a special instance of ejectment13 if proper, should be
resolved before the HLURB by a proper initiatory pleading filed thereat.14
Respondent Manotok Realty, Inc., maintains the contrary, to wit, that the
settled rule is that the question of jurisdiction must be raised before the
inferior court. Otherwise, petitioner is barred by estoppel or even laches.
Respondent contends that in the determination of whether or not an
inferior court has jurisdiction over ejectment suits, what determines the
nature of the action as well as the court that has jurisdiction over the case
are the allegations in the complaint. Citing Sumulong vs. CA,16 private
respondent avers that the cause of action in a complaint is not what the
designation of the complaint states, but what the allegations in the body
of the complaint define or prescribe. Private respondent claims that the
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CA correctly pointed out that the complaint expressly provides that the
case is one for unlawful detainer and not an accion publiciana.
In our view, the following issues now appear for the Court’s resolution: (1)
whether petitioner could still raise the issue of jurisdiction at this stage of
the proceedings; and (2) whether the instant case falls within the
exclusive jurisdiction of the HLURB.
On the first issue, we hold that petitioner is already estopped from raising
the issue of jurisdiction. What she raised in her position paper as a special
and affirmative defense was the purported failure of the complaint to
state a cause of action, arising from an alleged failure to exhaust
administrative remedies before the HLURB as a condition precedent to
filing a case in court. This is not an explicit attack on the court’s
jurisdiction over the subject matter of the complaint, but merely a claim
for the need to go through an alleged jurisdictional requirement, namely
exhaustion of administrative remedies.
Petitioner is bound by the theory behind her arguments before the RTC
and CA that the case is properly an accion publiciana as the cause of
action arises from the termination of possession by mere tolerance. Her
assertion now that the issue involves the determination of whether or not
the terms and conditions of the contract to sell have been violated by
private respondent, which must be decided by the HLURB, constitutes a
change of theory that could require presentation of further evidence.
Given this premise, the Court cannot countenance petitioner’s act of
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adopting inconsistent postures by attacking the jurisdiction of the regular
courts to which she has submitted, voluntarily. Estoppel bars her from
doing so.1avvphil.net
Nevertheless, to avoid further delay in this case, let us resolve the second
issue of whether the HLURB has the exclusive primary jurisdiction to try
and hear the instant case.20
Sec. 1. In the exercise of its function 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 the cases of the following nature:
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
In our view, the mere relationship between the parties, i.e., that of being
subdivision owner/developer and subdivision lot buyer, does not
automatically vest jurisdiction in the HLURB. For an action to fall within the
exclusive jurisdiction of the HLURB, the decisive element is the nature of
the action as enumerated in Section 1 of P.D. 1344. On this matter, we
have consistently held that the concerned administrative agency, the
National Housing Authority (NHA) before and now the HLURB, has
jurisdiction over complaints aimed at compelling the subdivision
developer to comply with its contractual and statutory obligations.
… the complaint against Que is distinct from the complaint against GDREC
and its officers before the HLURB. The first basically pertains to non-
performance by the buyer of her obligations to Klaver, whereas the
second deals with non-performance by the seller of its own obligations to
the buyer, such that Klaver properly sued them before different fora.
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HLURB, not the trial court that has jurisdiction over complaints for specific
performance filed against subdivision developers to compel the latter to
execute deeds of absolute sale and to deliver the certificates of titles to
buyers.
Second, the cause of action for unlawful detainer between the present
parties springs from the failure of petitioner to vacate the premises upon
lawful demand of the owner, the private respondent. For petitioner’s
possession of the land in question is allegedly by mere tolerance or
permission. Our ruling in Banco de Oro Savings and Mortgage Bank vs.
Court of Appeals29 is demonstrably applicable:
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A person who occupies the land of another at the latter’s tolerance or
permission, without any contract between them, is necessarily bound by
an implied promise that he will vacate upon demand, failing which, a
summary action for ejectment is the proper remedy against him.
SO ORDERED.
Before this Court is a petition for review on certiorari seeking the reversal
of the decision1 of the Court of Appeals dated December 29, 1999 and its
resolution dated June 1, 2000 in CA-G.R. SP No. 54587.
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and damages with the Regional Trial Court of Iloilo City, Branch 36, which
was docketed as Civil Case No. 17115.
On January 15, 1998, the trial court2 rendered its decision dismissing the
complaint for lack of merit and ordering herein petitioners to pay private
respondent the amount of P10,000 as moral damages and another
P10,000 as attorney’s fees. The pertinent conclusion of the trial court
reads as follows:
"The logic and common sense of the situation lean heavily in favor of the
defendant. It is evident that what plaintiff had bought from the defendant
is Lot 19 covered by TCT No. 28254 which parcel of land has been properly
indicated in the instruments and not Lot 18 as claimed by the plaintiff. The
contracts being clear and unmistakable, they reflect the true intention of
the parties, besides the plaintiff failed to assail the contracts on mutual
mistake, hence the same need no longer be reformed."3
On June 22, 1998, a writ of execution was issued by the trial court. Thus,
on September 17, 1998, petitioners filed an urgent motion to recall writ of
execution, alleging that the court a quo had no jurisdiction to try the case
as it was vested in the Housing and Land Use Regulatory Board (HLURB)
pursuant to PD 957 (The Subdivision and Condominium Buyers Protective
Decree). Conformably, petitioners filed a new complaint against private
respondent with the HLURB. Likewise, on June 30, 1999, petitioner-
spouses filed before the Court of Appeals a petition for annulment of
judgment, premised on the ground that the trial court had no jurisdiction
to try and decide Civil Case No. 17115.
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erred in dismissing the petition by applying the principle of estoppel, even
if the Regional Trial Court, Branch 36 of Iloilo City had no jurisdiction to
decide Civil Case No. 17115.
Petitioners claim that the recent decisions of this Court have already
abandoned the doctrine laid down in Tijam vs. Sibonghanoy.5 We do not
agree. In countless decisions, this Court has consistently held that, while
an order or decision rendered without jurisdiction is a total nullity and may
be assailed at any stage, active participation in the proceedings in the
court which rendered the order or decision will bar such party from
attacking its jurisdiction. As we held in the leading case of Tijam vs.
Sibonghanoy:6
xxx
"It has been held that a party cannot invoke the jurisdiction of a court to
secure affirmative relief against his opponent and, after obtaining or
failing to obtain such relief, repudiate, or question that same jurisdiction x
x x x [T]he question whether the court had jurisdiction either of the
subject matter of the action or of the parties was not important in such
cases because the party is barred from such conduct not because the
judgment or order of the court is valid and conclusive as an adjudication,
but for the reason that such a practice can not be tolerated –– obviously
for reasons of public policy."
Tijam has been reiterated in many succeeding cases. Thus, in Orosa vs.
Court of Appeals;7 Ang Ping vs. Court of Appeals;8 Salva vs. Court of
Appeals;9 National Steel Corporation vs. Court of Appeals;10 Province of
Bulacan vs. Court of Appeals;11 PNOC Shipping and Transport Corporation
vs. Court of Appeals,12 this Court affirmed the rule that a party’s active
participation in all stages of the case before the trial court, which includes
invoking the court’s authority to grant affirmative relief, effectively estops
such party from later challenging that same court’s jurisdiction.
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years. It was only after the trial court rendered its decision and issued a
writ of execution against them in 1998 did petitioners first raise the issue
of jurisdiction ─ and it was only because said decision was unfavorable to
them. Petitioners thus effectively waived their right to question the court’s
jurisdiction over the case they themselves filed.
Public policy dictates that this Court must strongly condemn any double-
dealing by parties who are disposed to trifle with the courts by
deliberately taking inconsistent positions, in utter disregard of the
elementary principles of justice and good faith.14 There is no denying that,
in this case, petitioners never raised the issue of jurisdiction throughout
the entire proceedings in the trial court. Instead, they voluntarily and
willingly submitted themselves to the jurisdiction of said court. It is now
too late in the day for them to repudiate the jurisdiction they were
invoking all along.
SO ORDERED.
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the Sandiganbayan of the records of Criminal Case No. 90-3184 to the
Regional Trial Court (RTC) of Naga City, Branch 21.
That on or about March 16, 1990, in the City of Naga, Philippines, and
within the jurisdiction of this Honorable Court by virtue of the Presidential
Waiver, dated June 1, 1990, with intent to kill, conspiring and
confederating together and mutually helping each other, did, then and
there, willfully, unlawfully and feloniously attack, assault and maul one
Rodney Nueca and accused 2Lt Arnel Escobal armed with a caliber .45
service pistol shoot said Rodney Nueca thereby inflicting upon him
serious, mortal and fatal wounds which caused his death, and as a
consequence thereof, complainant LUZ N. NUECA, mother of the deceased
victim, suffered actual and compensatory damages in the amount of
THREE HUNDRED SIXTY-SEVEN THOUSAND ONE HUNDRED SEVEN &
95/100 (P367,107.95) PESOS, Philippine Currency, and moral and
exemplary damages in the amount of ONE HUNDRED THIRTY-FIVE
THOUSAND (P135,000.00) PESOS, Philippine Currency.1
On March 19, 1991, the RTC issued an Order preventively suspending the
petitioner from the service under Presidential Decree No. 971, as
amended by P.D. No. 1847. When apprised of the said order, the General
Headquarters of the PNP issued on October 6, 1992 Special Order No. 91,
preventively suspending the petitioner from the service until the case was
terminated.2
The petitioner was arrested by virtue of a warrant issued by the RTC, while
accused Bombita remained at large. The petitioner posted bail and was
granted temporary liberty.
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Pending the resolution of the motion, the petitioner on June 25, 1993
requested the Chief of the PNP for his reinstatement. He alleged that
under R.A. No. 6975, his suspension should last for only 90 days, and,
having served the same, he should now be reinstated. On September 23,
1993,6 the PNP Region V Headquarters wrote Judge David C. Naval
requesting information on whether he issued an order lifting the
petitioner’s suspension. The RTC did not reply. Thus, on February 22, 1994,
the petitioner filed a motion in the RTC for the lifting of the order of
suspension. He alleged that he had served the 90-day preventive
suspension and pleaded for compassionate justice. The RTC denied the
motion on March 9, 1994.7 Trial thereafter proceeded, and the prosecution
rested its case. The petitioner commenced the presentation of his
evidence. On July 20, 1994, he filed a Motion to Dismiss 8 the case. Citing
Republic of the Philippines v. Asuncion, et al.,9 he argued that since he
committed the crime in the performance of his duties, the Sandiganbayan
had exclusive jurisdiction over the case.
On October 28, 1994, the RTC issued an Order10 denying the motion to
dismiss. It, however, ordered the conduct of a preliminary hearing to
determine whether or not the crime charged was committed by the
petitioner in relation to his office as a member of the PNP.
For his part, the petitioner testified that at about 10:00 p.m. on March 15,
1990, he was at the Sa Harong Café Bar and Restaurant at Barlin St.,
Naga City, to conduct surveillance on alleged drug trafficking, pursuant to
Mission Order No. 03-04 issued by Police Superintendent Rufo R. Pulido.
The petitioner adduced in evidence the sworn statements of Benjamin
Cariño and Roberto Fajardo who corroborated his testimony that he was
on a surveillance mission on the aforestated date.12
On July 31, 1995, the trial court issued an Order declaring that the
petitioner committed the crime charged while not in the performance of
his official function. The trial court added that upon the enactment of R.A.
No. 7975,13 the issue had become moot and academic. The amendatory
law transferred the jurisdiction over the offense charged from the
Sandiganbayan to the RTC since the petitioner did not have a salary grade
of "27" as provided for in or by Section 4(a)(1), (3) thereof. The trial court
nevertheless ordered the prosecution to amend the Information pursuant
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to the ruling in Republic v. Asuncion14 and R.A. No. 7975. The amendment
consisted in the inclusion therein of an allegation that the offense charged
was not committed by the petitioner in the performance of his
duties/functions, nor in relation to his office.lawphi1.nêt
The petitioner filed a motion for the reconsideration15 of the said order,
reiterating that based on his testimony and those of Benjamin Cariño and
Roberto Fajardo, the offense charged was committed by him in relation to
his official functions. He asserted that the trial court failed to consider the
exceptions to the prohibition. He asserted that R.A. No. 7975, which was
enacted on March 30, 1995, could not be applied retroactively.16
The petitioner further alleged that Luz Nacario Nueca, the mother of the
victim, through counsel, categorically and unequivocably admitted in her
complaint filed with the People’s Law Enforcement Board (PLEB) that he
was on an official mission when the crime was committed.
On November 24, 1995, the RTC made a volte face and issued an Order
reversing and setting aside its July 31, 1995 Order. It declared that based
on the petitioner’s evidence, he was on official mission when the shooting
occurred. It concluded that the prosecution failed to adduce controverting
evidence thereto. It likewise considered Luz Nacario Nueca’s admission in
her complaint before the PLEB that the petitioner was on official mission
when the shooting happened.
WHEREFORE, the Order dated July 31, 1995 is hereby SET ASIDE and
RECONSIDERED, and it is hereby declared that after preliminary hearing,
this Court has found that the offense charged in the Information herein
was committed by the accused in his relation to his function and duty as
member of the then Philippine Constabulary.
Conformably with R.A. No. 7975 and the ruling of the Supreme Court in
Republic v. Asuncion, et al., G.R. No. 180208, March 11, 1994:
(2) After the filing of the Re-Amended Information, the complete records of
this case, together with the transcripts of the stenographic notes taken
during the entire proceedings herein, are hereby ordered transmitted
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immediately to the Honorable Sandiganbayan, through its Clerk of Court,
Manila, for appropriate proceedings.17
Upon the remand of the records, the RTC set the case for trial on May 3,
1996, for the petitioner to continue presenting his evidence. Instead of
adducing his evidence, the petitioner filed a petition for certiorari,
assailing the Order of the Presiding Justice of the Sandiganbayan
remanding the records of the case to the RTC.
The threshold issue for resolution is whether or not the Presiding Justice of
the Sandiganbayan committed a grave abuse of his discretion amounting
to excess or lack of jurisdiction in ordering the remand of the case to the
RTC.
The petitioner contends that when the amended information was filed with
the RTC on February 6, 1991, P.D. No. 1606 was still in effect. Under
Section 4(a) of the decree, the Sandiganbayan had exclusive jurisdiction
over the case against him as he was charged with homicide with the
imposable penalty of reclusion temporal, and the crime was committed
while in the performance of his duties. He further asserts that although
P.D. No. 1606, as amended by P.D. No. 1861 and by R.A. No. 7975 provides
that crimes committed by members and officers of the PNP with a salary
grade below "27" committed in relation to office are within the exclusive
jurisdiction of the proper RTC, the amendment thus introduced by R.A. No.
7975 should not be applied retroactively. This is so, the petitioner asserts,
because under Section 7 of R.A. No. 7975, only those cases where trial has
not begun in the Sandiganbayan upon the effectivity of the law should be
referred to the proper trial court.
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The Ruling of the Court
The respondent Presiding Justice acted in accordance with law and the
rulings of this Court when he ordered the remand of the case to the RTC,
the court of origin.
Under Section 4(a) of P.D. No. 1606 as amended by P.D. No. 1861, the
Sandiganbayan had exclusive jurisdiction in all cases involving the
following:
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pursuant to their respective jurisdiction as provided in Batas Pambansa
Blg. 129.
Under the law, even if the offender committed the crime charged in
relation to his office but occupies a position corresponding to a salary
grade below "27," the proper Regional Trial Court or Municipal Trial Court,
as the case may be, shall have exclusive jurisdiction over the case. In this
case, the petitioner was a Police Senior Inspector, with salary grade "23."
He was charged with homicide punishable by reclusion temporal. Hence,
the RTC had exclusive jurisdiction over the crime charged conformably to
Sections 20 and 32 of Batas Pambansa Blg. 129, as amended by Section 2
of R.A. No. 7691.
The petitioner’s contention that R.A. No. 7975 should not be applied
retroactively has no legal basis. It bears stressing that R.A. No. 7975 is a
substantive procedural law which may be applied retroactively.23
SO ORDERED.
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INTERNATIONAL AIRPORT AUTHORITY, DEPARTMENT OF
TRANSPORTATION AND COMMUNICATIONS, DEPARTMENT OF
PUBLIC WORKS AND HIGHWAYS, SECRETARY LEANDRO M.
MENDOZA, in his capacity as Head of the Department of
Transportation and Communications, and SECRETARY SIMEON A.
DATUMANONG, in his capacity as Head of the Department of
Public Works and Highways, respondents,
JACINTO V. PARAS, RAFAEL P. NANTES, EDUARDO C. ZIALCITA,
WILLY BUYSON VILLARAMA, PROSPERO C. NOGRALES, PROSPERO
A. PICHAY, JR., HARLIN CAST ABAYON, and BENASING O.
MACARANBON, respondents-intervenors,
x---------------------------------------------------------x
G.R. No. 155661 May 5, 2003
CEFERINO C. LOPEZ, RAMON M. SALES, ALFREDO B. VALENCIA,
MA. TERESA V. GAERLAN, LEONARDO DE LA ROSA, DINA C. DE
LEON, VIRGIE CATAMIN RONALD SCHLOBOM, ANGELITO SANTOS,
MA. LUISA M. PALCON and SAMAHANG MANGGAGAWA SA
PALIPARAN NG PILIPINAS (SMPP), petitioners,
vs.
PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., MANILA
INTERNATIONAL AIRPORT AUTHORITY, DEPARTMENT OF
TRANSPORTATION AND COMMUNICATIONS, SECRETARY LEANDRO
M. MENDOZA, in his capacity as Head of the Department of
Transportation and Communications, respondents.
In August 1989, the DOTC engaged the services of Aeroport de Paris (ADP)
to conduct a comprehensive study of the Ninoy Aquino International
Airport (NAIA) and determine whether the present airport can cope with
the traffic development up to the year 2010. The study consisted of two
parts: first, traffic forecasts, capacity of existing facilities, NAIA future
requirements, proposed master plans and development plans; and
second, presentation of the preliminary design of the passenger terminal
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building. The ADP submitted a Draft Final Report to the DOTC in December
1989.
On March 27, 1995, then DOTC Secretary Jose Garcia endorsed the
proposal of AEDC to the National Economic and Development Authority
(NEDA). A revised proposal, however, was forwarded by the DOTC to NEDA
on December 13, 1995. On January 5, 1996, the NEDA Investment
Coordinating Council (NEDA ICC) – Technical Board favorably endorsed the
project to the ICC – Cabinet Committee which approved the same, subject
to certain conditions, on January 19, 1996. On February 13, 1996, the
NEDA passed Board Resolution No. 2 which approved the NAIA IPT III
project.
On June 7, 14, and 21, 1996, DOTC/MIAA caused the publication in two
daily newspapers of an invitation for competitive or comparative
proposals on AEDC's unsolicited proposal, in accordance with Sec. 4-A of
RA 6957, as amended. The alternative bidders were required to submit
three (3) sealed envelopes on or before 5:00 p.m. of September 20, 1996.
The first envelope should contain the Prequalification Documents, the
second envelope the Technical Proposal, and the third envelope the
Financial Proposal of the proponent.
On June 20, 1996, PBAC Bulletin No. 1 was issued, postponing the
availment of the Bid Documents and the submission of the comparative
bid proposals. Interested firms were permitted to obtain the Request for
Proposal Documents beginning June 28, 1996, upon submission of a
written application and payment of a non-refundable fee of P50,000.00
(US$2,000).
The Bid Documents issued by the PBAC provided among others that the
proponent must have adequate capability to sustain the financing
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requirement for the detailed engineering, design, construction, operation,
and maintenance phases of the project. The proponent would be
evaluated based on its ability to provide a minimum amount of equity to
the project, and its capacity to secure external financing for the project.
On July 23, 1996, the PBAC issued PBAC Bulletin No. 2 inviting all bidders
to a pre-bid conference on July 29, 1996.
On August 16, 1996, the PBAC issued PBAC Bulletin No. 3 amending the
Bid Documents. The following amendments were made on the Bid
Documents:
a. Aside from the fixed Annual Guaranteed Payment, the proponent shall
include in its financial proposal an additional percentage of gross revenue
share of the Government, as follows:
ii. a letter testimonial from reputable banks attesting that the project
proponent and/or the members of the consortium are banking with them,
that the project proponent and/or the members are of good financial
standing, and have adequate resources.
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On August 29, 1996, the Second Pre-Bid Conference was held where
certain clarifications were made. Upon the request of prospective bidder
People's Air Cargo & Warehousing Co., Inc (Paircargo), the PBAC warranted
that based on Sec. 11.6, Rule 11 of the Implementing Rules and
Regulations of the BOT Law, only the proposed Annual Guaranteed
Payment submitted by the challengers would be revealed to AEDC, and
that the challengers' technical and financial proposals would remain
confidential. The PBAC also clarified that the list of revenue sources
contained in Annex 4.2a of the Bid Documents was merely indicative and
that other revenue sources may be included by the proponent, subject to
approval by DOTC/MIAA. Furthermore, the PBAC clarified that only those
fees and charges denominated as Public Utility Fees would be subject to
regulation, and those charges which would be actually deemed Public
Utility Fees could still be revised, depending on the outcome of PBAC's
query on the matter with the Department of Justice.
In September 1996, the PBAC issued Bid Bulletin No. 5, entitled "Answers
to the Queries of PAIRCARGO as Per Letter Dated September 3 and 10,
1996." Paircargo's queries and the PBAC's responses were as follows:
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challengers through bid bulletins. However, a final version will be issued
before the award of contract.
The PBAC also stated that it would require AEDC to sign Supplement C of
the Bid Documents (Acceptance of Criteria and Waiver of Rights to Enjoin
Project) and to submit the same with the required Bid Security.
The PBAC gave its reply on October 2, 1996, informing AEDC that it had
considered the issues raised by the latter, and that based on the
documents submitted by Paircargo and the established prequalification
criteria, the PBAC had found that the challenger, Paircargo, had
prequalified to undertake the project. The Secretary of the DOTC approved
the finding of the PBAC.
The PBAC then proceeded with the opening of the second envelope of the
Paircargo Consortium which contained its Technical Proposal.
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On October 16, 1996, the PBAC opened the third envelope submitted by
AEDC and the Paircargo Consortium containing their respective financial
proposals. Both proponents offered to build the NAIA Passenger Terminal
III for at least $350 million at no cost to the government and to pay the
government: 5% share in gross revenues for the first five years of
operation, 7.5% share in gross revenues for the next ten years of
operation, and 10% share in gross revenues for the last ten years of
operation, in accordance with the Bid Documents. However, in addition to
the foregoing, AEDC offered to pay the government a total of P135 million
as guaranteed payment for 27 years while Paircargo Consortium offered to
pay the government a total of P17.75 billion for the same period.
Thus, the PBAC formally informed AEDC that it had accepted the price
proposal submitted by the Paircargo Consortium, and gave AEDC 30
working days or until November 28, 1996 within which to match the said
bid, otherwise, the project would be awarded to Paircargo.
As AEDC failed to match the proposal within the 30-day period, then DOTC
Secretary Amado Lagdameo, on December 11, 1996, issued a notice to
Paircargo Consortium regarding AEDC's failure to match the proposal.
On April 11, 1997, the DOTC submitted the concession agreement for the
second-pass approval of the NEDA-ICC.
On April 16, 1997, AEDC filed with the Regional Trial Court of Pasig a
Petition for Declaration of Nullity of the Proceedings, Mandamus and
Injunction against the Secretary of the DOTC, the Chairman of the PBAC,
the voting members of the PBAC and Pantaleon D. Alvarez, in his capacity
as Chairman of the PBAC Technical Committee.
On July 9, 1997, the DOTC issued the notice of award for the project to
PIATCO.
On July 12, 1997, the Government, through then DOTC Secretary Arturo T.
Enrile, and PIATCO, through its President, Henry T. Go, signed the
"Concession Agreement for the Build-Operate-and-Transfer Arrangement
of the Ninoy Aquino International Airport Passenger Terminal III" (1997
Concession Agreement). The Government granted PIATCO the franchise to
operate and maintain the said terminal during the concession period and
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to collect the fees, rentals and other charges in accordance with the rates
or schedules stipulated in the 1997 Concession Agreement. The
Agreement provided that the concession period shall be for twenty-five
(25) years commencing from the in-service date, and may be renewed at
the option of the Government for a period not exceeding twenty-five (25)
years. At the end of the concession period, PIATCO shall transfer the
development facility to MIAA.
The First Supplement to the ARCA amended Sec. 1.36 of the ARCA
defining "Revenues" or "Gross Revenues"; Sec. 2.05 (d) of the ARCA
referring to the obligation of MIAA to provide sufficient funds for the
upkeep, maintenance, repair and/or replacement of all airport facilities
and equipment which are owned or operated by MIAA; and further
providing additional special obligations on the part of GRP aside from
those already enumerated in Sec. 2.05 of the ARCA. The First Supplement
also provided a stipulation as regards the construction of a surface road to
connect NAIA Terminal II and Terminal III in lieu of the proposed access
tunnel crossing Runway 13/31; the swapping of obligations between GRP
and PIATCO regarding the improvement of Sales Road; and the changes in
the timetable. It also amended Sec. 6.01 (c) of the ARCA pertaining to the
Disposition of Terminal Fees; Sec. 6.02 of the ARCA by inserting an
introductory paragraph; and Sec. 6.02 (a) (iii) of the ARCA referring to the
Payments of Percentage Share in Gross Revenues.
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procedure for the demolition of the said structures and the consideration
for the same which the GRP shall pay PIATCO; it provided for time
extensions, incremental and consequential costs and losses consequent to
the existence of such structures; and it provided for some additional
obligations on the part of PIATCO as regards the said structures.
On October 15, 2002, the service providers, joining the cause of the
petitioning workers, filed a motion for intervention and a petition-in-
intervention.
During the pendency of the case before this Court, President Gloria
Macapagal Arroyo, on November 29, 2002, in her speech at the 2002
Golden Shell Export Awards at Malacañang Palace, stated that she will not
"honor (PIATCO) contracts which the Executive Branch's legal offices have
concluded (as) null and void."5
On December 10, 2002, the Court heard the case on oral argument. After
the oral argument, the Court then resolved in open court to require the
parties to file simultaneously their respective Memoranda in amplification
of the issues heard in the oral arguments within 30 days and to explore
the possibility of arbitration or mediation as provided in the challenged
contracts.
In the present cases, the Court is again faced with the task of resolving
complicated issues made difficult by their intersecting legal and economic
implications. The Court is aware of the far reaching fall out effects of the
ruling which it makes today. For more than a century and whenever the
exigencies of the times demand it, this Court has never shirked from its
solemn duty to dispense justice and resolve "actual controversies
involving rights which are legally demandable and enforceable, and to
determine whether or not there has been grave abuse of discretion
amounting to lack or excess of jurisdiction."6 To be sure, this Court will not
begin to do otherwise today.
Petitioners in both cases raise the argument that the PIATCO Contracts
contain stipulations which directly contravene numerous provisions of the
Constitution, specific provisions of the BOT Law and its Implementing
Rules and Regulations, and public policy. Petitioners contend that the
DOTC and the MIAA, by entering into said contracts, have committed
grave abuse of discretion amounting to lack or excess of jurisdiction which
can be remedied only by a writ of prohibition, there being no plain, speedy
or adequate remedy in the ordinary course of law.
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With respect to the petitioning service providers and their employees,
upon the commencement of operations of the NAIA IPT III, they allege that
they will be effectively barred from providing international airline airport
services at the NAIA Terminals I and II as all international airlines and
passengers will be diverted to the NAIA IPT III. The petitioning service
providers will thus be compelled to contract with PIATCO alone for such
services, with no assurance that subsisting contracts with MIAA and other
international airlines will be respected. Petitioning service providers stress
that despite the very competitive market, the substantial capital
investments required and the high rate of fees, they entered into their
respective contracts with the MIAA with the understanding that the said
contracts will be in force for the stipulated period, and thereafter, renewed
so as to allow each of the petitioning service providers to recoup their
investments and obtain a reasonable return thereon.
The question on legal standing is whether such parties have "alleged such
a personal stake in the outcome of the controversy as to assure that
concrete adverseness which sharpens the presentation of issues upon
which the court so largely depends for illumination of difficult
constitutional questions."9 Accordingly, it has been held that the interest
of a person assailing the constitutionality of a statute must be direct and
personal. He must be able to show, not only that the law or any
government act is invalid, but also that he sustained or is in imminent
danger of sustaining some direct injury as a result of its enforcement, and
not merely that he suffers thereby in some indefinite way. It must appear
that the person complaining has been or is about to be denied some right
or privilege to which he is lawfully entitled or that he is about to be
subjected to some burdens or penalties by reason of the statute or act
complained of.10
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In G.R. No. 155547, petitioners filed the petition for prohibition as
members of the House of Representatives, citizens and taxpayers. They
allege that as members of the House of Representatives, they are
especially interested in the PIATCO Contracts, because the contracts
compel the Government and/or the House of Representatives to
appropriate funds necessary to comply with the provisions therein.11 They
cite provisions of the PIATCO Contracts which require disbursement of
unappropriated amounts in compliance with the contractual obligations of
the Government. They allege that the Government obligations in the
PIATCO Contracts which compel government expenditure without
appropriation is a curtailment of their prerogatives as legislators, contrary
to the mandate of the Constitution that "[n]o money shall be paid out of
the treasury except in pursuance of an appropriation made by law."12
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After a thorough study and careful evaluation of the issues involved, this
Court is of the view that the crux of the instant controversy involves
significant legal questions. The facts necessary to resolve these legal
questions are well established and, hence, need not be determined by a
trial court.
The rule on hierarchy of courts will not also prevent this Court from
assuming jurisdiction over the cases at bar. The said rule may be relaxed
when the redress desired cannot be obtained in the appropriate courts or
where exceptional and compelling circumstances justify availment of a
remedy within and calling for the exercise of this Court's primary
jurisdiction.19
of Arbitration Proceedings by
PIATCO
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the parties on the one hand and trial for the others on the other hand
would, in effect, result in multiplicity of suits, duplicitous procedure
and unnecessary delay.22 Thus, we ruled that the interest of justice
would best be served if the trial court hears and adjudicates the case in a
single and complete proceeding.
The Bid Documents, as clarified through Bid Bulletin Nos. 3 and 5, require
that financial capability will be evaluated based on total financial
capability of all the member companies of the [Paircargo] Consortium. In
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this connection, the Challenger was found to have a combined net worth
of P3,926,421,242.00 that could support a project costing approximately
P13 Billion.
The financial statement or the net worth is not the sole basis in
establishing financial capability. As stated in Bid Bulletin No. 3, financial
capability may also be established by testimonial letters issued by
reputable banks. The Challenger has complied with this requirement.
Pursuant to this provision, the PBAC issued PBAC Bulletin No. 3 dated
August 16, 1996 amending the financial capability requirements for pre-
qualification of the project proponent as follows:
6. Basis of Pre-qualification
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The basis for the pre-qualification shall be on the compliance of the
proponent to the minimum technical and financial requirements provided
in the Bid Documents and in the IRR of the BOT Law, R.A. No. 6957, as
amended by R.A. 7718.
We agree with public respondents that with respect to Security Bank, the
entire amount of its net worth could not be invested in a single
undertaking or enterprise, whether allied or non-allied in accordance with
the provisions of R.A. No. 337, as amended or the General Banking Act:
Sec. 21-B. The provisions in this or in any other Act to the contrary
notwithstanding, the Monetary Board, whenever it shall deem appropriate
and necessary to further national development objectives or support
national priority projects, may authorize a commercial bank, a bank
authorized to provide commercial banking services, as well as a
government-owned and controlled bank, to operate under an
expanded commercial banking authority and by virtue thereof
exercise, in addition to powers authorized for commercial banks,
the powers of an Investment House as provided in Presidential
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Decree No. 129, invest in the equity of a non-allied undertaking,
or own a majority or all of the equity in a financial intermediary other than
a commercial bank or a bank authorized to provide commercial banking
services: Provided, That (a) the total investment in equities shall not
exceed fifty percent (50%) of the net worth of the bank; (b) the equity
investment in any one enterprise whether allied or non-allied
shall not exceed fifteen percent (15%) of the net worth of the
bank; (c) the equity investment of the bank, or of its wholly or majority-
owned subsidiary, in a single non-allied undertaking shall not exceed
thirty-five percent (35%) of the total equity in the enterprise nor shall it
exceed thirty-five percent (35%) of the voting stock in that enterprise; and
(d) the equity investment in other banks shall be deducted from the
investing bank's net worth for purposes of computing the prescribed ratio
of net worth to risk assets.
Thus, the maximum amount that Security Bank could validly invest in the
Paircargo Consortium is only P528,525,656.55, representing 15% of its
entire net worth. The total net worth therefore of the Paircargo
Consortium, after considering the maximum amounts that may be
validly invested by each of its members is P558,384,871.55 or only
6.08% of the project cost,29 an amount substantially less than the
prescribed minimum equity investment required for the project in the
amount of P2,755,095,000.00 or 30% of the project cost.
The PBAC has determined that any prospective bidder for the
construction, operation and maintenance of the NAIA IPT III project should
prove that it has the ability to provide equity in the minimum amount of
30% of the project cost, in accordance with the 70:30 debt-to-equity ratio
prescribed in the Bid Documents. Thus, in the case of Paircargo
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Consortium, the PBAC should determine the maximum amounts that
each member of the consortium may commit for the construction,
operation and maintenance of the NAIA IPT III project at the time of pre-
qualification. With respect to Security Bank, the maximum amount
which may be invested by it would only be 15% of its net worth in view of
the restrictions imposed by the General Banking Act. Disregarding the
investment ceilings provided by applicable law would not result in a
proper evaluation of whether or not a bidder is pre-qualified to undertake
the project as for all intents and purposes, such ceiling or legal restriction
determines the true maximum amount which a bidder may invest in the
project.
The basic rule in public bidding is that bids should be evaluated based on
the required documents submitted before and not after the opening of
bids. Otherwise, the foundation of a fair and competitive public bidding
would be defeated. Strict observance of the rules, regulations, and
guidelines of the bidding process is the only safeguard to a fair,
honest and competitive public bidding.30
Thus, if the maximum amount of equity that a bidder may invest in the
project at the time the bids are submitted falls short of the minimum
amounts required to be put up by the bidder, said bidder should be
properly disqualified. Considering that at the pre-qualification stage, the
maximum amounts which the Paircargo Consortium may invest in the
project fell short of the minimum amounts prescribed by the PBAC, we
hold that Paircargo Consortium was not a qualified bidder. Thus the award
of the contract by the PBAC to the Paircargo Consortium, a disqualified
bidder, is null and void.
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result in the nullity of all the subsequent contracts entered by it in
pursuance of the project, the Court feels that it is necessary to discuss in
full the pressing issues of the present controversy for a complete
resolution thereof.
II
By its very nature, public bidding aims to protect the public interest by
giving the public the best possible advantages through open competition.
Thus:
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favorable to it that were not previously made available to the other
bidders. Thus:
The same rule was restated by Chief Justice Stuart of the Supreme Court
of Minnesota:
The law is well settled that where, as in this case, municipal authorities
can only let a contract for public work to the lowest responsible bidder,
the proposals and specifications therefore must be so framed as to permit
free and full competition. Nor can they enter into a contract with the
best bidder containing substantial provisions beneficial to him,
not included or contemplated in the terms and specifications
upon which the bids were invited.33
In fact, in the PBAC Bid Bulletin No. 3 cited by PIATCO to support its
argument that the draft concession agreement is subject to amendment,
the pertinent portion of which was quoted above, the PBAC also clarified
that "[s]aid amendments shall only cover items that would not
materially affect the preparation of the proponent's proposal."
The Court agrees with the contention of counsel for the plaintiffs that the
due execution of a contract after public bidding is a limitation upon the
right of the contracting parties to alter or amend it without another public
bidding, for otherwise what would a public bidding be good for if
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after the execution of a contract after public bidding, the
contracting parties may alter or amend the contract, or even
cancel it, at their will? Public biddings are held for the protection of the
public, and to give the public the best possible advantages by means of
open competition between the bidders. He who bids or offers the best
terms is awarded the contract subject of the bid, and it is obvious that
such protection and best possible advantages to the public will disappear
if the parties to a contract executed after public bidding may alter or
amend it without another previous public bidding.35
Hence, the question that comes to fore is this: is the 1997 Concession
Agreement the same agreement that was offered for public bidding, i.e.,
the draft Concession Agreement attached to the Bid Documents? A close
comparison of the draft Concession Agreement attached to the Bid
Documents and the 1997 Concession Agreement reveals that the
documents differ in at least two material respects:
collected by PIATCO
The fees that may be imposed and collected by PIATCO under the draft
Concession Agreement and the 1997 Concession Agreement may be
classified into three distinct categories: (1) fees which are subject to
periodic adjustment of once every two years in accordance with a
prescribed parametric formula and adjustments are made effective only
upon written approval by MIAA; (2) fees other than those included in the
first category which maybe adjusted by PIATCO whenever it deems
necessary without need for consent of DOTC/MIAA; and (3) new fees and
charges that may be imposed by PIATCO which have not been previously
imposed or collected at the Ninoy Aquino International Airport Passenger
Terminal I, pursuant to Administrative Order No. 1, Series of 1993, as
amended. The glaring distinctions between the draft Concession
Agreement and the 1997 Concession Agreement lie in the types of fees
included in each category and the extent of the supervision and regulation
which MIAA is allowed to exercise in relation thereto.
For fees under the first category, i.e., those which are subject to periodic
adjustment in accordance with a prescribed parametric formula and
effective only upon written approval by MIAA, the draft Concession
Agreement includes the following:36
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(4) rentals and airline offices;
The implication of the reduced number of fees that are subject to MIAA
approval is best appreciated in relation to fees included in the second
category identified above. Under the 1997 Concession Agreement,
fees which PIATCO may adjust whenever it deems necessary without need
for consent of DOTC/MIAA are "Non-Public Utility Revenues" and is defined
as "all other income not classified as Public Utility Revenues derived from
operations of the Terminal and the Terminal Complex."38 Thus, under the
1997 Concession Agreement, ground handling fees, rentals from airline
offices and porterage fees are no longer subject to MIAA regulation.
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On the other hand, the equivalent provision under the 1997 Concession
Agreement reads:
(c) Concessionaire shall at all times be judicious in fixing fees and charges
constituting Non-Public Utility Revenues in order to ensure that End Users
are not unreasonably deprived of services. While the vehicular parking
fee, porterage fee and greeter/well wisher fee constitute Non-
Public Utility Revenues of Concessionaire, GRP may intervene and
require Concessionaire to explain and justify the fee it may set
from time to time, if in the reasonable opinion of GRP the said fees have
become exorbitant resulting in the unreasonable deprivation of End Users
of such services.40
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Finally, under the 1997 Concession Agreement, "Public Utility
Revenues," except terminal fees, are denominated in US Dollars44 while
payments to the Government are in Philippine Pesos. In the draft
Concession Agreement, no such stipulation was included. By stipulating
that "Public Utility Revenues" will be paid to PIATCO in US Dollars while
payments by PIATCO to the Government are in Philippine currency under
the 1997 Concession Agreement, PIATCO is able to enjoy the benefits of
depreciations of the Philippine Peso, while being effectively insulated from
the detrimental effects of exchange rate fluctuations.
b. Assumption by the
default thereof
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xxx xxx xxx
Attendant Liabilities refer to all amounts recorded and from time to time
outstanding in the books of the Concessionaire as owing to Unpaid
Creditors who have provided, loaned or advanced funds actually
used for the Project, including all interests, penalties, associated fees,
charges, surcharges, indemnities, reimbursements and other related
expenses, and further including amounts owed by Concessionaire to its
suppliers, contractors and sub-contractors.
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However, this circumstance is dependent on the existence and
availability of a qualified operator who is willing to take over the
rights and obligations of PIATCO under the contract, a
circumstance that is not entirely within the control of the
Government.
Without going into the validity of this provision at this juncture, suffice it
to state that Section 4.04 of the 1997 Concession Agreement may be
considered a form of security for the loans PIATCO has obtained to finance
the project, an option that was not made available in the draft Concession
Agreement. Section 4.04 is an important amendment to the 1997
Concession Agreement because it grants PIATCO a financial advantage
or benefit which was not previously made available during the
bidding process. This financial advantage is a significant modification
that translates to better terms and conditions for PIATCO.
We agree that it is not inconsistent with the rationale and purpose of the
BOT Law to allow the project proponent or the winning bidder to obtain
financing for the project, especially in this case which involves the
construction, operation and maintenance of the NAIA IPT III. Expectedly,
compliance by the project proponent of its undertakings therein would
involve a substantial amount of investment. It is therefore inevitable for
the awardee of the contract to seek alternate sources of funds to support
the project. Be that as it may, this Court maintains that amendments to
the contract bidded upon should always conform to the general policy on
public bidding if such procedure is to be faithful to its real nature and
purpose. By its very nature and characteristic, competitive public bidding
aims to protect the public interest by giving the public the best possible
advantages through open competition.45 It has been held that the three
principles in public bidding are (1) the offer to the public; (2) opportunity
for competition; and (3) a basis for the exact comparison of bids. A
regulation of the matter which excludes any of these factors destroys the
distinctive character of the system and thwarts the purpose of its
adoption.46 These are the basic parameters which every awardee of a
contract bidded out must conform to, requirements of financing and
borrowing notwithstanding. Thus, upon a concrete showing that, as in this
case, the contract signed by the government and the contract-awardee is
an entirely different contract from the contract bidded, courts should not
hesitate to strike down said contract in its entirety for violation of public
policy on public bidding. A strict adherence on the principles, rules and
regulations on public bidding must be sustained if only to preserve the
integrity and the faith of the general public on the procedure.
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Public bidding is a standard practice for procuring government contracts
for public service and for furnishing supplies and other materials. It aims
to secure for the government the lowest possible price under the most
favorable terms and conditions, to curtail favoritism in the award of
government contracts and avoid suspicion of anomalies and it places all
bidders in equal footing.47 Any government action which permits any
substantial variance between the conditions under which the bids
are invited and the contract executed after the award thereof is a
grave abuse of discretion amounting to lack or excess of
jurisdiction which warrants proper judicial action.
In view of the above discussion, the fact that the foregoing substantial
amendments were made on the 1997 Concession Agreement renders
the same null and void for being contrary to public policy. These
amendments convert the 1997 Concession Agreement to an entirely
different agreement from the contract bidded out or the draft
Concession Agreement. It is not difficult to see that the amendments on
(1) the types of fees or charges that are subject to MIAA regulation or
control and the extent thereof and (2) the assumption by the Government,
under certain conditions, of the liabilities of PIATCO directly translates
concrete financial advantages to PIATCO that were previously not
available during the bidding process. These amendments cannot be
taken as merely supplements to or implementing provisions of those
already existing in the draft Concession Agreement. The amendments
discussed above present new terms and conditions which provide financial
benefit to PIATCO which may have altered the technical and financial
parameters of other bidders had they known that such terms were
available.
III
Article IV, Section 4.04(b) and (c), in relation to Article 1.06, of the 1997
Concession Agreement provides:
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or designate a qualified operator acceptable to GRP to operate the
Development Facility, likewise under the terms and conditions of this
Agreement; Provided, that if at the end of the 180-day period GRP shall
not have served the Unpaid Creditors and Concessionaire written notice of
its choice, GRP shall be deemed to have elected to take over the
Development Facility with the concomitant assumption of
Attendant Liabilities.
….
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the contract. Thus, the Government's assumption of liability is
virtually out of its control. The Government under the circumstances
provided for in the 1997 Concession Agreement is at the mercy of the
existence, availability and willingness of a qualified operator. The above
contractual provisions constitute a direct government guarantee which is
prohibited by law.
One of the main impetus for the enactment of the BOT Law is the lack of
government funds to construct the infrastructure and development
projects necessary for economic growth and development. This is why
private sector resources are being tapped in order to finance these
projects. The BOT law allows the private sector to participate, and is in
fact encouraged to do so by way of incentives, such as minimizing the
unstable flow of returns,52 provided that the government would not have
to unnecessarily expend scarcely available funds for the project itself. As
such, direct guarantee, subsidy and equity by the government in these
projects are strictly prohibited.53 This is but logical for if the
government would in the end still be at a risk of paying the debts
incurred by the private entity in the BOT projects, then the
purpose of the law is subverted.
The fact that the ARCA superseded the 1997 Concession Agreement did
not cure this fatal defect. Article IV, Section 4.04(c), in relation to Article I,
Section 1.06, of the ARCA provides:
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as may be reasonably acceptable to both GRP and Senior Lenders, with
regard, inter alia, to the following parameters:
(vi) if the Senior Lenders, acting in good faith and using reasonable
efforts, are unable to designate a nominee or effect a transfer in terms
and conditions satisfactory to the Senior Lenders within one hundred
eighty (180) days after giving GRP notice as referred to respectively in (iv)
or (v) above, then GRP and the Senior Lenders shall endeavor in good
faith to enter into any other arrangement relating to the Development
Facility [NAIA Terminal 3] (other than a turnover of the Development
Facility [NAIA Terminal 3] to GRP) within the following one hundred eighty
(180) days. If no agreement relating to the Development Facility [NAIA
Terminal 3] is arrived at by GRP and the Senior Lenders within the said
180-day period, then at the end thereof the Development Facility
[NAIA Terminal 3] shall be transferred by the Concessionaire
[PIATCO] to GRP or its designee and GRP shall make a termination
payment to Concessionaire [PIATCO] equal to the Appraised Value
(as hereinafter defined) of the Development Facility [NAIA
Terminal 3] or the sum of the Attendant Liabilities, if greater.
Notwithstanding Section 8.01(c) hereof, this Agreement shall be deemed
terminated upon the transfer of the Development Facility [NAIA Terminal
3] to GRP pursuant hereto;
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related expenses (including the fees, charges and expenses of any
agents or trustees of such persons or entities), whether payable at
maturity, by acceleration or otherwise, and further including amounts
owed by Concessionaire [PIATCO] to its professional consultants and
advisers, suppliers, contractors and sub-contractors.54
It is clear from the foregoing contractual provisions that in the event that
PIATCO fails to fulfill its loan obligations to its Senior Lenders, the
Government is obligated to directly negotiate and enter into an
agreement relating to NAIA IPT III with the Senior Lenders, should the
latter fail to appoint a qualified nominee or transferee who will take the
place of PIATCO. If the Senior Lenders and the Government are unable to
enter into an agreement after the prescribed period, the Government
must then pay PIATCO, upon transfer of NAIA IPT III to the Government,
termination payment equal to the appraised value of the project or the
value of the attendant liabilities whichever is greater. Attendant
liabilities as defined in the ARCA includes all amounts owed or thereafter
may be owed by PIATCO not only to the Senior Lenders with whom PIATCO
has defaulted in its loan obligations but to all other persons who may have
loaned, advanced funds or provided any other type of financial facilities to
PIATCO for NAIA IPT III. The amount of PIATCO's debt that the Government
would have to pay as a result of PIATCO's default in its loan obligations --
in case no qualified nominee or transferee is appointed by the Senior
Lenders and no other agreement relating to NAIA IPT III has been reached
between the Government and the Senior Lenders -- includes, but is not
limited to, "all principal, interest, associated fees, charges,
reimbursements, and other related expenses . . . whether payable at
maturity, by acceleration or otherwise."55
It is clear from the foregoing that the ARCA provides for a direct
guarantee by the government to pay PIATCO's loans not only to
its Senior Lenders but all other entities who provided PIATCO
funds or services upon PIATCO's default in its loan obligation with
its Senior Lenders. The fact that the Government's obligation to pay
PIATCO's lenders for the latter's obligation would only arise after the
Senior Lenders fail to appoint a qualified nominee or transferee does not
detract from the fact that, should the conditions as stated in the contract
occur, the ARCA still obligates the Government to pay any and all
amounts owed by PIATCO to its lenders in connection with NAIA IPT III.
Worse, the conditions that would make the Government liable for PIATCO's
debts is triggered by PIATCO's own default of its loan obligations to its
Senior Lenders to which loan contracts the Government was never a party
to. The Government was not even given an option as to what course of
action it should take in case PIATCO defaulted in the payment of its senior
loans. The Government, upon PIATCO's default, would be merely notified
by the Senior Lenders of the same and it is the Senior Lenders who are
authorized to appoint a qualified nominee or transferee. Should the Senior
Lenders fail to make such an appointment, the Government is then
automatically obligated to "directly deal and negotiate" with the Senior
Lenders regarding NAIA IPT III. The only way the Government would not be
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liable for PIATCO's debt is for a qualified nominee or transferee to be
appointed in place of PIATCO to continue the construction, operation and
maintenance of NAIA IPT III. This "pre-condition", however, will not take
the contract out of the ambit of a direct guarantee by the government as
the existence, availability and willingness of a qualified nominee or
transferee is totally out of the government's control. As such the
Government is virtually at the mercy of PIATCO (that it would not
default on its loan obligations to its Senior Lenders), the Senior Lenders
(that they would appoint a qualified nominee or transferee or agree to
some other arrangement with the Government) and the existence of a
qualified nominee or transferee who is able and willing to take the place of
PIATCO in NAIA IPT III.
The BOT Law and its implementing rules provide that in order for an
unsolicited proposal for a BOT project may be accepted, the following
conditions must first be met: (1) the project involves a new concept in
technology and/or is not part of the list of priority projects, (2) no direct
government guarantee, subsidy or equity is required, and (3) the
government agency or local government unit has invited by publication
other interested parties to a public bidding and conducted the same. 56 The
failure to meet any of the above conditions will result in the denial of the
proposal. It is further provided that the presence of direct government
guarantee, subsidy or equity will "necessarily disqualify a proposal from
being treated and accepted as an unsolicited proposal."57 The BOT Law
clearly and strictly prohibits direct government guarantee, subsidy and
equity in unsolicited proposals that the mere inclusion of a provision to
that effect is fatal and is sufficient to deny the proposal. It stands to
reason therefore that if a proposal can be denied by reason of the
existence of direct government guarantee, then its inclusion in the
contract executed after the said proposal has been accepted is likewise
sufficient to invalidate the contract itself. A prohibited provision, the
inclusion of which would result in the denial of a proposal cannot, and
should not, be allowed to later on be inserted in the contract resulting
from the said proposal. The basic rules of justice and fair play alone
militate against such an occurrence and must not, therefore, be
countenanced particularly in this instance where the government is
exposed to the risk of shouldering hundreds of million of dollars in debt.
This Court has long and consistently adhered to the legal maxim that
those that cannot be done directly cannot be done indirectly. 58 To declare
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the PIATCO contracts valid despite the clear statutory prohibition
against a direct government guarantee would not only make a
mockery of what the BOT Law seeks to prevent -- which is to
expose the government to the risk of incurring a monetary
obligation resulting from a contract of loan between the project
proponent and its lenders and to which the Government is not a
party to -- but would also render the BOT Law useless for what it
seeks to achieve –- to make use of the resources of the private
sector in the "financing, operation and maintenance of
infrastructure and development projects"59 which are necessary
for national growth and development but which the government,
unfortunately, could ill-afford to finance at this point in time.
IV
The above provision pertains to the right of the State in times of national
emergency, and in the exercise of its police power, to temporarily take
over the operation of any business affected with public interest. In the
1986 Constitutional Commission, the term "national emergency" was
defined to include threat from external aggression, calamities or national
disasters, but not strikes "unless it is of such proportion that would
paralyze government service."60 The duration of the emergency itself is
the determining factor as to how long the temporary takeover by the
government would last.61 The temporary takeover by the government
extends only to the operation of the business and not to the ownership
thereof. As such the government is not required to compensate the
private entity-owner of the said business as there is no transfer
of ownership, whether permanent or temporary. The private entity-
owner affected by the temporary takeover cannot, likewise, claim just
compensation for the use of the said business and its properties as the
temporary takeover by the government is in exercise of its police power
and not of its power of eminent domain.
….
(c) In the event the development Facility or any part thereof and/or the
operations of Concessionaire or any part thereof, become the subject
matter of or be included in any notice, notification, or declaration
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concerning or relating to acquisition, seizure or appropriation by GRP in
times of war or national emergency, GRP shall, by written notice to
Concessionaire, immediately take over the operations of the Terminal
and/or the Terminal Complex. During such take over by GRP, the
Concession Period shall be suspended; provided, that upon termination of
war, hostilities or national emergency, the operations shall be returned to
Concessionaire, at which time, the Concession period shall commence to
run again. Concessionaire shall be entitled to reasonable
compensation for the duration of the temporary take over by GRP,
which compensation shall take into account the reasonable cost
for the use of the Terminal and/or Terminal Complex, (which is in
the amount at least equal to the debt service requirements of
Concessionaire, if the temporary take over should occur at the time
when Concessionaire is still servicing debts owed to project lenders), any
loss or damage to the Development Facility, and other consequential
damages. If the parties cannot agree on the reasonable compensation of
Concessionaire, or on the liability of GRP as aforesaid, the matter shall be
resolved in accordance with Section 10.01 [Arbitration]. Any amount
determined to be payable by GRP to Concessionaire shall be offset from
the amount next payable by Concessionaire to GRP.62
Regulation of Monopolies
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Sec. 19. The state shall regulate or prohibit monopolies when the public
interest so requires. No combinations in restraint of trade or unfair
competition shall be allowed.
Clearly, monopolies are not per se prohibited by the Constitution but may
be permitted to exist to aid the government in carrying on an enterprise
or to aid in the performance of various services and functions in the
interest of the public.67 Nonetheless, a determination must first be
made as to whether public interest requires a monopoly. As monopolies
are subject to abuses that can inflict severe prejudice to the public, they
are subject to a higher level of State regulation than an ordinary business
undertaking.
In the cases at bar, PIATCO, under the 1997 Concession Agreement and
the ARCA, is granted the "exclusive right to operate a commercial
international passenger terminal within the Island of Luzon" at the NAIA
IPT III.68 This is with the exception of already existing international airports
in Luzon such as those located in the Subic Bay Freeport Special Economic
Zone ("SBFSEZ"), Clark Special Economic Zone ("CSEZ") and in Laoag
City.69 As such, upon commencement of PIATCO's operation of NAIA IPT III,
Terminals 1 and 2 of NAIA would cease to function as international
passenger terminals. This, however, does not prevent MIAA to use
Terminals 1 and 2 as domestic passenger terminals or in any other
manner as it may deem appropriate except those activities that would
compete with NAIA IPT III in the latter's operation as an international
passenger terminal.70 The right granted to PIATCO to exclusively
operate NAIA IPT III would be for a period of twenty-five (25) years from
the In-Service Date71 and renewable for another twenty-five (25) years at
the option of the government.72 Both the 1997 Concession Agreement
and the ARCA further provide that, in view of the exclusive right
granted to PIATCO, the concession contracts of the service
providers currently servicing Terminals 1 and 2 would no longer
be renewed and those concession contracts whose expiration are
subsequent to the In-Service Date would cease to be effective on
the said date.73
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BOT Law to encourage private sector participation by "providing a climate
of minimum government regulations,"76 the same does not mean that
Government must completely surrender its sovereign power to protect
public interest in the operation of a public utility as a monopoly. The
operation of said public utility can not be done in an arbitrary manner to
the detriment of the public which it seeks to serve. The right granted to
the public utility may be exclusive but the exercise of the right cannot run
riot. Thus, while PIATCO may be authorized to exclusively operate NAIA IPT
III as an international passenger terminal, the Government, through the
MIAA, has the right and the duty to ensure that it is done in accord with
public interest. PIATCO's right to operate NAIA IPT III cannot also violate
the rights of third parties.
Section 3.01(e) of the 1997 Concession Agreement and the ARCA provide:
During the oral arguments on December 10, 2002, the counsel for the
petitioners-in-intervention for G.R. No. 155001 stated that there are two
service providers whose contracts are still existing and whose validity
extends beyond the In-Service Date. One contract remains valid until 2008
and the other until 2010.77
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In contrast to the arrastre and stevedoring service providers in the case of
Anglo-Fil Trading Corporation v. Lazaro78 whose contracts consist of
temporary hold-over permits, the affected service providers in the cases
at bar, have a valid and binding contract with the Government, through
MIAA, whose period of effectivity, as well as the other terms and
conditions thereof, cannot be violated.
In fine, the efficient functioning of NAIA IPT III is imbued with public
interest. The provisions of the 1997 Concession Agreement and the ARCA
did not strip government, thru the MIAA, of its right to supervise the
operation of the whole NAIA complex, including NAIA IPT III. As the primary
government agency tasked with the job,79 it is MIAA's responsibility to
ensure that whoever by contract is given the right to operate NAIA IPT III
will do so within the bounds of the law and with due regard to the rights of
third parties and above all, the interest of the public.
VI
CONCLUSION
In sum, this Court rules that in view of the absence of the requisite
financial capacity of the Paircargo Consortium, predecessor of respondent
PIATCO, the award by the PBAC of the contract for the construction,
operation and maintenance of the NAIA IPT III is null and void. Further,
considering that the 1997 Concession Agreement contains material and
substantial amendments, which amendments had the effect of converting
the 1997 Concession Agreement into an entirely different agreement from
the contract bidded upon, the 1997 Concession Agreement is similarly null
and void for being contrary to public policy. The provisions under Sections
4.04(b) and (c) in relation to Section 1.06 of the 1997 Concession
Agreement and Section 4.04(c) in relation to Section 1.06 of the ARCA,
which constitute a direct government guarantee expressly prohibited by,
among others, the BOT Law and its Implementing Rules and Regulations
are also null and void. The Supplements, being accessory contracts to the
ARCA, are likewise null and void.
SO ORDERED.
SEPARATE OPINIONS
VITUG, J.:
The petitions, in effect, are in the nature of actions for declaratory relief
under Rule 63 of the Rules of Court. The Rules provide that any person
interested under a contract may, before breach or violation thereof, 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.4 The Supreme Court assumes no jurisdiction
over petitions for declaratory relief which are cognizable by regional trial
courts.5
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Accordingly, I vote for the dismissal of the petition.
PANGANIBAN, J.:
The five contracts for the construction and the operation of Ninoy Aquino
International Airport (NAIA) Terminal III, the subject of the consolidated
Petitions before the Court, are replete with outright violations of law,
public policy and the Constitution. The only proper thing to do is declare
them all null and void ab initio and let the chips fall where they may. Fiat
iustitia ruat coelum.
The facts leading to this controversy are already well presented in the
ponencia. I shall not burden the readers with a retelling thereof. Instead, I
will cut to the chase and directly address the two sets of gut issues:
1. The first issue is procedural: Does the Supreme Court have original
jurisdiction to hear and decide the Petitions? Corollarily, do petitioners
have locus standi and should this Court decide the cases without any
mandatory referral to arbitration?
Definitely and surely, the issues involved in these Petitions are clearly of
transcendental importance and of national interest. The subject contracts
pertain to the construction and the operation of the country's premiere
international airport terminal - an ultramodern world-class public utility
that will play a major role in the country's economic development and
serve to project a positive image of our country abroad. The five build-
operate-&-transfer (BOT) contracts, while entailing the investment of
billions of pesos in capital and the availment of several hundred millions of
dollars in loans, contain provisions that tend to establish a monopoly,
require the disbursements of public funds sans appropriations, and
provide government guarantees in violation of statutory prohibitions, as
well as other provisions equally offensive to law, public policy and the
Constitution. Public interest will inevitably be affected thereby.
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past cases. This Court must be permitted to perform its constitutional duty
of determining whether the other agencies of government have acted
within the limits of the Constitution and the laws, or if they have gravely
abused the discretion entrusted to them.1
Hierarchy of Courts
The Court has, in the past, held that questions relating to gargantuan
government contracts ought to be settled without delay.2 This holding
applies with greater force to the instant cases. Respondent Piatco is partly
correct in averring that petitioners can obtain relief from the regional trial
courts via an action to annul the contracts.
Arbitration
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As will be discussed at length later, the Piatco contracts are indeed void in
their entirety; thus, a resort to the aforesaid provision on arbitration is
unavailing. Besides, petitioners and petitioners-in-intervention have
pointed out that, even granting arguendo that the arbitration clause
remained a valid provision, it still cannot bind them inasmuch as they are
not parties to the Piatco contracts. And in the final analysis, it is
unarguable that the arbitration process provided for under Section 10.02
of the ARCA, to be undertaken by a panel of three (3) arbitrators
appointed in accordance with the Rules of Arbitration of the International
Chamber of Commerce, will not be able to address, determine and
definitively resolve the constitutional and legal questions that have been
raised in the Petitions before us.
Locus Standi
Given this Court's previous decisions in cases of similar import, no one will
seriously doubt that, being taxpayers and members of the House of
Representatives, Petitioners Baterina et al. have locus standi to bring the
Petition in GR No. 155547. In Albano v. Reyes,7 this Court held that the
petitioner therein, suing as a citizen, taxpayer and member of the House
of Representatives, was sufficiently clothed with standing to bring the suit
questioning the validity of the assailed contract. The Court cited the fact
that public interest was involved, in view of the important role of the
Manila International Container Terminal (MICT) in the country's economic
development and the magnitude of the financial consideration. This,
notwithstanding the fact that expenditure of public funds was not required
under the assailed contract.
Petitioners thus correctly assert that the injury to them has a twofold
aspect: (1) they are adversely affected as taxpayers on account of the
illegal disbursement of public funds; and (2) they are prejudiced qua
legislators, since the contractual provisions requiring the government to
incur expenditures without appropriations also operate as limitations upon
the exclusive power and prerogative of Congress over the public purse. As
members of the House of Representatives, they are actually deprived of
discretion insofar as the inclusion of those items of expenditure in the
budget is concerned. To prevent such encroachment upon the legislative
privilege and obviate injury to the institution of which they are members,
petitioners-legislators have locus standi to bring suit.
Messrs. Agan et al. and Lopez et al., are likewise taxpayers and thus
possessed of standing to challenge the illegal disbursement of public
funds. Messrs. Agan et al., in particular, are employees (or representatives
of employees) of various service providers that have (1) existing
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concession agreements with the MIAA to provide airport services
necessary to the operation of the NAIA and (2) service agreements to
furnish essential support services to the international airlines operating at
the NAIA.
On the other hand, Messrs. Lopez et al. are employees of the MIAA. These
petitioners (Messrs. Agan et al. and Messrs. Lopez et al.) are confronted
with the prospect of being laid off from their jobs and losing their means
of livelihood when their employer-companies are forced to shut down or
otherwise retrench and cut back on manpower. Such development would
result from the imminent implementation of certain provisions in the
contracts that tend toward the creation of a monopoly in favor of Piatco,
its subsidiaries and related companies.
From the Outset, the Bidding Process Was Flawed and Tainted
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(AEDC) to the Department of Transportation and Communications (DOTC)
and the Manila International Airport Authority (MIAA), which reviewed and
approved the proposal.
At this point, I must emphasize that the law requires the award of a BOT
project to the bidder that has satisfied the minimum requirements; and
met the technical, financial, organizational and legal standards provided in
the BOT Law. Section 5 of this statute states:
The same provision requires that the price challenge via public bidding
"must be conducted under a two-envelope/two-stage system: the first
envelope to contain the technical proposal and the second envelope to
contain the financial proposal." Moreover, the 1994 Implementing Rules
and Regulations (IRR) provide that only those bidders that have passed
the prequalification stage are permitted to have their two envelopes
reviewed.
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Aside from complying with the legal and technical requirements (track
record or experience of the firm and its key personnel), a project
proponent desiring to prequalify must also demonstrate its financial
capacity to undertake the project. To establish such capability, a
proponent must prove that it is able to raise the minimum amount of
equity required for the project and to procure the loans or financing
needed for it. Section 5.4(c) of the 1994 IRR provides:
Since the minimum amount of equity for the project was set at 30
percent12 of the minimum project cost of US$350 million, the minimum
amount of equity required of any proponent stood at US$105 million.
Converted to pesos at the exchange rate then of P26.239 to US$1.00 (as
quoted by the Bangko Sentral ng Pilipinas), the peso equivalent of the
minimum equity was P2,755,095,000.
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He further opined, "(T)he networth reflected in the Financial Statement
should not be taken as the amount of money to be used to answer the
required thirty (30%) percent equity of the challenger but rather to be
used in establishing if there is enough basis to believe that the challenger
can comply with the required 30% equity. In fact, proof of sufficient equity
is required as one of the conditions for award of contract (Sec. 12.1 of IRR
of the BOT Law) but not for prequalification (Sec. 5.4 of same document)."
As there was effectively no public bidding to speak of, the entire bidding
process having been flawed and tainted from the very outset, therefore,
the award of the concession to Paircargo's successor Piatco was void, and
the Concession Agreement executed with the latter was likewise void ab
initio. For this reason, Piatco cannot and should not be allowed to benefit
from that Agreement.17
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AEDC Was Deprived of the Right to Match PIATCO's Price
Challenge
In DOTC PBAC Bid Bulletin No. 4 (par. 3), Undersecretary Cal declared that,
for purposes of matching the price challenge of Piatco, AEDC as originator
of the unsolicited proposal would be permitted access only to the schedule
of proposed Annual Guaranteed Payments submitted by Piatco, and not to
the latter's financial and technical proposals that constituted the basis for
the price challenge in the first place. This was supposedly in keeping with
Section 11.6 of the 1994 IRR, which provides that proprietary information
is to be respected, protected and treated with utmost confidentiality, and
is therefore not to form part of the bidding/tender and related documents.
A competing bid is never just any figure conjured from out of the blue; it is
arrived at after studying economic, financial, technical and other, factors;
it is likewise based on certain assumptions as to the nature of the
business, the market potentials, the probable demand for the product or
service, the future behavior of cost items, political and other risks, and so
on. It is thus self-evident that in order to be able to intelligently match a
bid or price challenge, a bidder must be given access to the assumptions
and the calculations that went into crafting the competing bid.
In this instance, the financial and technical proposals of Piatco would have
provided AEDC with the necessary information to enable it to make a
reasonably informed matching bid. To put it more simply, a bidder unable
to access the competitor's assumptions will never figure out how the
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competing bid came about; requiring him to "counter-propose" is like
having him shoot at a target in the dark while blindfolded.
At the end of the day, the bottom line is that the validity and the propriety
of the award to Piatco had been irreparably impaired.
Section 9.5 of the IRR requires that the Notice of Award must indicate the
time frame within which the winner of the bidding (and therefore the
prospective awardee) shall submit the prescribed performance security,
proof of commitment of equity contributions, and indications of sources of
financing (loans); and, in the case of joint ventures, an agreement
showing that the members are jointly and severally responsible for the
obligations of the project proponent under the contract.
The purpose of having a definite and firm timetable for the submission of
the aforementioned requirements is not only to prevent delays in the
project implementation, but also to expose and weed out unqualified
proponents, who might have unceremoniously slipped through the earlier
prequalification process, by compelling them to put their money where
their mouths are, so to speak.
Section 9.2 of the IRR set the procedure applicable to projects involving
substantial government undertakings as follows: Within 7 days after the
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decision to award is made, the draft contract shall be submitted to the ICC
for clearance on a no-objection basis. If the draft contract includes
government undertakings already previously approved, then the
submission shall be for information only.
Despite the clear timetables set out in the IRR, several lengthy and still-
unexplained delays occurred in the award process, as can be observed
from the presentation made by the counsel for public respondents,19
quoted hereinbelow:
"11 Dec. 1996 - The Paircargo Joint Venture was informed by the PBAC
that AEDC failed to match and that negotiations preparatory to Notice of
Award should be commenced. This was the decision to award that
should have commenced the running of the 7-day period to approve the
Notice of Award, as per Section 9.1 of the IRR, or to submit the draft
contract to the ICC for approval conformably with Section 9.2.
"01 April 1997 - The PBAC resolved that a copy of the final draft of the
Concession Agreement be submitted to the NEDA for clearance on a no-
objection basis. This resolution came more than 3 months too late as it
should have been made on the 20th of December 1996 at the latest.
"16 April 1997 - The PBAC resolved that the period of signing the
Concession Agreement be extended by 15 days.
"18 April 1997 - NEDA approved the Concession Agreement. Again this is
more than 3 months too late as the NEDA's decision should have been
released on the 16th of January 1997 or fifteen days after it should have
been submitted to it for review.
"09 July 1997 - The Notice of Award was issued to PIATCO. Following the
provisions of the IRR, the Notice of Award should have been issued
fourteen days after NEDA's approval, or the 28th of January 1997. In any
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case, even if it were to be assumed that the release of NEDA's approval on
the 18th of April was timely, the Notice of Award should have been issued
on the 9th of May 1997. In both cases, therefore, the release of the Notice
of Award occurred in a decidedly less than timely fashion."
From the foregoing, the only conclusion that can possibly be drawn is that
the BOT law and its IRR were repeatedly violated with unmitigated
impunity - and by agents of government, no less! On account of such
violation, the award of the contract to Piatco, which undoubtedly gained
time and benefited from the delays, must be deemed null and void from
the beginning.
But the violations and desecrations did not stop there. After the PBAC
made its decision on December 11, 1996 to award the contract to Piatco,
the latter negotiated changes to the Contract bidded out and ended up
with what amounts to a substantially new contract without any public
bidding. This Contract was subsequently further amended four more times
through negotiation and without any bidding. Thus, the contract actually
executed between Piatco and DOTC/MIAA on July 12, 1997 (the Concession
Agreement or "CA") differed from the contract bidded out (the draft
concession agreement or "DCA") in the following very significant respects:
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5. Where Section 3.02 of the DCA requires government to refrain from
competing with the contractor with respect to the operation of NAIA
Terminal III, Section 3.02(b) of the CA excludes and prohibits everyone,
including government, from directly or indirectly competing with Piatco,
with respect to the operation of, as well as operations in, NAIA Terminal III.
Operations in is sufficiently broad to encompass all retail and other
commercial business enterprises operating within Terminal III, inclusive of
the businesses of providing various airport-related services to
international airlines, within the scope of the prohibition.
6. Under Section 6.01 of the DCA, the following fees are subject to the
written approval of MIAA: lease/rental charges, concession privilege fees
for passenger services, food services, transportation utility concessions,
groundhandling, catering and miscellaneous concession fees, porterage
fees, greeter/well-wisher fees, carpark fees, advertising fees, VIP facilities
fees and others. Moreover, adjustments to the groundhandling fees,
rentals and porterage fees are permitted only once every two years and in
accordance with a parametric formula, per DCA Section 6.03. However,
the CA as executed with Piatco provides in Section 6.06 that all the
aforesaid fees, rentals and charges may be adjusted without MIAA's
approval or intervention. Neither are the adjustments to these fees and
charges subject to or limited by any parametric formula.25
7. Section 1.29 of the DCA provides that the terminal fees, aircraft
tacking fees, aircraft parking fees, check-in counter fees and other fees
are to be quoted and paid in Philippine pesos. But per Section 1.33 of the
CA, all the aforesaid fees save the terminal fee are denominated in US
Dollars.
8. Under Section 8.07 of the DCA, the term attendant liabilities refers
to liabilities pertinent to NAIA Terminal III, such as payment of lease
rentals and performance of other obligations under the Land Lease
Agreement; the obligations under the Tenant Agreements; and payment of
all taxes, fees, charges and assessments of whatever kind that may be
imposed on NAIA Terminal III or parts thereof. But in Section 1.06 of the
CA, Attendant Liabilities refers to unpaid debts of Piatco: "All amounts
recorded and from time to time outstanding in the books of (Piatco) as
owing to Unpaid Creditors who have provided, loaned or advanced funds
actually used for the Project, including all interests, penalties, associated
fees, charges, surcharges, indemnities, reimbursements and other related
expenses, and further including amounts owed by [Piatco] to its suppliers,
contractors and subcontractors."
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the option selected, government may take immediate possession and
control of the terminal and its operations. Government will be obligated to
compensate the contractor for the "equivalent or proportionate contract
costs actually disbursed," but only where government is the one in breach
of the contract. But under Section 8.06(a) of the CA, whether on account
of Piatco's breach of contract or its inability to pay its creditors,
government is obliged to either (a) take over Terminal III and assume all of
Piatco's debts or (b) permit the qualified unpaid creditors to be substituted
in place of Piatco or to designate a new operator. And in the event of
government's breach of contract, Piatco may compel it to purchase the
terminal at fair market value, per Section 8.06(b) of the CA.
10. Under the DCA, any delay by Piatco in the payment of the amounts
due the government constitutes breach of contract. However, under the
CA, such delay does not necessarily constitute breach of contract, since
Piatco is permitted to suspend payments to the government in order to
first satisfy the claims of its secured creditors, per Section 8.04(d) of the
CA.
It goes without saying that the amendment of the Contract bidded out
(the DCA or draft concession agreement) - in such substantial manner,
without any public bidding, and after the bidding process had been
concluded on December 11, 1996 - is violative of public policy on public
biddings, as well as the spirit and intent of the BOT Law. The whole point
of going through the public bidding exercise was completely lost. Its very
rationale was totally subverted by permitting Piatco to amend the
contract for which public bidding had already been concluded.
Competitive bidding aims to obtain the best deal possible by fostering
transparency and preventing favoritism, collusion and fraud in the
awarding of contracts. That is the reason why procedural rules pertaining
to public bidding demand strict observance.26
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The aforementioned case dealt with the unauthorized amendment of a
contract executed after public bidding; in the situation before us, the
amendments were made also after the bidding, but prior to execution. Be
that as it may, the same rationale underlying Caltex applies to the present
situation with equal force. Allowing the winning bidder to renegotiate the
contract for which the bidding process has ended is tantamount to
permitting it to put in anything it wants. Here, the winning bidder (Piatco)
did not even bother to wait until after actual execution of the contract
before rushing to amend it. Perhaps it believed that if the changes were
made to a contract already won through bidding (DCA) instead of waiting
until it is executed, the amendments would not be noticed or discovered
by the public.
In a later case, Mata v. San Diego,29 this Court reiterated its ruling as
follows:
"It is true that modification of government contracts, after the same had
been awarded after a public bidding, is not allowed because such
modification serves to nullify the effects of the bidding and whatever
advantages the Government had secured thereby and may also result in
manifest injustice to the other bidders. This prohibition, however, refers to
a change in vital and essential particulars of the agreement which results
in a substantially new contract."
I submit that accepting such warped argument will result in perverting the
policy underlying public bidding. The BOT Law cannot be said to allow the
negotiation of contractual stipulations resulting in a substantially new
contract after the bidding process and price challenge had been
concluded. In fact, the BOT Law, in recognition of the time, money and
effort invested in an unsolicited proposal, accords its originator the
privilege of matching the challenger's bid.
Section 4-A of the BOT Law specifically refers to a "lower price proposal"
by a competing bidder; and to the right of the original proponent "to
match the price" of the challenger. Thus, only the price proposals are in
play. The terms, conditions and stipulations in the contract for which
public bidding has been concluded are understood to remain intact and
not be subject to further negotiation. Otherwise, the very essence of
public bidding will be destroyed - there will be no basis for an exact
comparison between bids.
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Moreover, Piatco misinterpreted the meaning behind PBAC Bid Bulletin No.
3. The phrase amendments . . . from time to time refers only to those
amendments to the draft concession agreement issued by the PBAC prior
to the submission of the price challenge; it certainly does not include or
permit amendments negotiated for and introduced after the bidding
process, has been terminated.
Not satisfied with the Concession Agreement, Piatco - once more without
bothering with public bidding - negotiated with government for still more
substantial changes. The result was the Amended and Restated
Concession Agreement (ARCA) executed on November 26, 1998. The
following changes were introduced:
7. Government bound itself to set the initial rate of the terminal fee, to
be charged when Terminal III begins operations, at an amount higher than
US$20.36
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9. Even though government may be entitled to terminate the ARCA on
account of breach by Piatco, government is still liable to pay Piatco the
appraised value of Terminal III or the Attendant Liabilities, if the
termination occurs before the In-Service Date.38 This condition
contravenes the BOT Law provision on termination compensation.
13. The illegality and unenforceability of the ARCA or any of its material
provisions was made an event of default on the part of government only,
thus constituting a ground for Piatco to terminate the ARCA.42
14. Amounts due from and payable by government under the contract
were made payable on demand - net of taxes, levies, imposts, duties,
charges or fees of any kind except as required by law.43
In any event, it is quite patent that the sum total of the aforementioned
changes resulted in drastically weakening the position of government to a
degree that seems quite excessive, even from the standpoint of a
businessperson who regularly transacts with banks and foreign lenders, is
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familiar with their mind-set, and understands what motivates them. On
the other hand, whatever it was that impelled government officials
concerned to accede to those grossly disadvantageous changes, I can only
hazard a guess.
In the First Supplement ("FS") executed on August 27, 1999, the following
changes were made to the ARCA:
(a) Working for the removal of the general aviation traffic from the NAIA
airport complex48
(b) Providing through MIAA the land required by Piatco for the taxilane
and one taxiway at no cost to Piatco49
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(d) Coordinating with DPWH the financing, the implementation and the
completion of the following works before the In-Service Date: three left-
turning overpasses (EDSA to Tramo St., Tramo to Andrews Ave., and
Manlunas Road to Sales Ave.);51 and a road upgrade and improvement
program involving widening, repair and resurfacing of Sales Road,
Andrews Avenue and Manlunas Road; improvement of Nichols
Interchange; and removal of squatters along Andrews Avenue.52
(e) Dealing directly with BCDA and the Phil. Air Force in acquiring
additional land or right of way for the road upgrade and improvement
program.53
I must emphasize that the First Supplement is void in two respects. First, it
is merely an amendment to the ARCA, upon which it is wholly dependent;
therefore, since the ARCA is void, inexistent and not capable of being
ratified or amended, it follows that the FS too is void, inexistent and
inoperative. Second, even assuming arguendo that the ARCA is somehow
remotely valid, nonetheless the FS, in imposing significant new obligations
upon government, altered the fundamental terms and stipulations of the
ARCA, thus necessitating a public bidding all over again. That the FS was
entered into sans public bidding renders it utterly void and inoperative.
The scope of the works, the procedures involved, and the obligations of
the contractor are provided for in Parts II and III of the SS. Section 4.1 sets
out the compensation to be paid, listing specific rates per cubic meter of
materials for each phase of the work - excavation, leveling, removal and
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disposal, backfilling and dewatering. The amounts collectible by Piatco are
to be offset against the Annual Guaranteed Payments it must pay
government.
Yet, the Third Supplement, while confirming that Piatco would construct
the T2-T3 Road, nevertheless shifted to government some of the
obligations pertaining to the former, as follows:
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terms and conditions (including compensation payments) contained in the
Second Supplement.59
3. MIAA will answer for the operation, maintenance and repair of the
T2-T3 Road.60
Section 4-A of the BOT Law as amended states that unsolicited proposals,
such as the NAIA Terminal III Project, may be accepted by government
provided inter alia that no direct government guarantee, subsidy or equity
is required. In short, such guarantee is prohibited in unsolicited proposals.
Section 2(n) of the same legislation defines direct government guarantee
as "an agreement whereby the government or any of its agencies or local
government units (will) assume responsibility for the repayment of debt
directly incurred by the project proponent in implementing the project in
case of a loan default."
Both the CA and the ARCA have provisions that undeniably create such
prohibited government guarantee. Section 4.04 (c)(iv) to (vi) of the ARCA,
which is similar to Section 4.04 of the CA, provides thus:
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mere refusal or inability to agree upon "a transferee" or "any other
arrangement" regarding the terminal facility - to push the process forward
to the ultimate contractual cul-de-sac, wherein government will be
compelled to abjectly surrender and make good on its guarantee of
payment.
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This point brings us back to the guarantee itself. In Section 4.04(c)(vi) of
ARCA, the amount which government has guaranteed to pay as
termination payment is the greater of either (i) the Appraised Value of
the terminal facility or (ii) the aggregate of the Attendant Liabilities. Given
that the Attendant Liabilities may include practically any Piatco debt under
the sun, it is highly conceivable that their sum may greatly exceed the
appraised value of the facility, and government may end up paying very
much more than the real worth of Terminal III. (So why did government
have to bother with public bidding anyway?)
To the extent that the project proponent is able to obtain loans to fund the
project, those risks are shared between the project proponent on the one
hand, and its banks and other lenders on the other. But where the
proponent or its lenders manage to cajol or coerce the government into
extending a guarantee of payment of the loan obligations, the risks
assumed by the lenders are passed right back to government. I cannot
understand why, in the instant case, government cheerfully assented to
re-assuming the risks of the project when it gave the prohibited guarantee
and thus simply negated the very purpose of the BOT Law and the
protection it gives the government.
"In the event that the government defaults on certain major obligations in
the contract and such failure is not remediable or if remediable shall
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remain unremedied for an unreasonable length of time, the project
proponent/contractor may, by prior notice to the concerned national
government agency or local government unit specifying the turn-over
date, terminate the contract. The project proponent/contractor shall be
reasonably compensated by the Government for equivalent or
proportionate contract cost as defined in the contract."
To emphasize, the law does not permit compensation for the project
proponent when contract termination is due to the proponent's own fault
or breach of contract.
This principle was clearly violated in the Piatco Contracts. The ARCA
stipulates that government is to pay termination compensation to Piatco
even when termination is initiated by government for the following
causes:
As if that were not bad enough, the ARCA also inserted into Section 8.01
the phrase "Subject to Section 4.04." The effect of this insertion is that in
those instances where government may terminate the contract on
account of Piatco's breach, and it is nevertheless required under the ARCA
to make termination compensation to Piatco even though unauthorized by
law, such compensation is to be equivalent to the payment amount
guaranteed by government - either a) the Appraised Value of the terminal
facility or (b) the aggregate of the Attendant Liabilities, whichever amount
is greater!
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Clearly, this condition is not in line with Section 7 of the BOT Law. That
provision permits a project proponent to recover the actual expenses it
incurred in the prosecution of the project plus a reasonable rate of return
not in excess of that provided in the contract; or to be compensated for
the equivalent or proportionate contract cost as defined in the contract, in
case the government is in default on certain major contractual obligations.
It will be recalled that Section 4-A of the BOT Law as amended prohibits
not only direct government guarantees, but likewise a direct government
subsidy for unsolicited proposals. Section 13.2. b. iii. of the 1999 IRR
defines a direct government subsidy as encompassing "an agreement
whereby the Government . . . will . . . postpone any payments due from
the proponent."
Despite the statutory ban, Section 8.01 (d) of the ARCA provides thus:
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average 91-day Treasury Bill Rate as of the auction date immediately
preceding the relevant due date. If payment is not effected by
Concessionaire within the grace period, then a spread of five (5%) percent
over the applicable 91-day Treasury Bill Rate shall be added on the unpaid
amount commencing on the expiry of the grace period up to the day of
full payment. When the temporary illiquidity of Concessionaire shall have
been corrected and the cash position of Concessionaire should indicate its
ability to meet its maturing obligations, then the provisions set forth under
this Section 8.01(d) shall cease to apply. The foregoing remedial measures
shall be applicable only while there remains unpaid and outstanding
amounts owed to the Senior Lenders." (Emphasis supplied)
But beyond the clear violations of law, there are larger issues involved in
the ARCA. Earlier, I mentioned that Section 8.01(d) of the ARCA
completely eliminated the proviso in Section 8.04(d) of the CA which gave
government the right to appoint a financial controller to manage the cash
position of Piatco during situations of financial distress. Not only has
government been deprived of any means of monitoring and managing the
situation; worse, as can be seen from Section 8.01(d) above-quoted, the
Senior Lenders have effectively locked in on the right to exercise financial
controllership over Piatco and to allocate its cash resources to the
payment of all amounts owed to the Senior Lenders before allowing any
payment to be made to government.
In brief, this particular provision of the ARCA has placed in the hands of
foreign lenders the power and the authority to determine how much (if at
all) and when the Philippine government (as grantor of the franchise) may
be allowed to receive from Piatco. In that situation, government will be at
the mercy of the foreign lenders. This is a situation completely contrary to
the rationale of the BOT Law and to public policy.
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I will now discuss the manner in which the Piatco Contracts offended the
Constitution.
While Section 2.02 of the ARCA spoke of granting to Piatco "a franchise to
operate and maintain the Terminal Complex," Section 3.02(a) of the same
ARCA granted to Piatco, for the entire term of the concession agreement,
"the exclusive right to operate a commercial international passenger
terminal within the Island of Luzon" with the exception of those three
terminals already existing63 at the time of execution of the ARCA.
In its Opinion No. 078, Series of 1995, the Department of justice held that
"the NAIA Terminal III which . . . is a 'terminal for public use' is a public
utility." Consequently, the constitutional prohibition against the exclusivity
of a franchise applies to the franchise for the operation of NAIA Terminal III
as well.
What was granted to Piatco was not merely a franchise, but an "exclusive
right" to operate an international passenger terminal within the "Island of
Luzon." What this grant effectively means is that the government is now
estopped from exercising its inherent power to award any other person
another franchise or a right to operate such a public utility, in the event
public interest in Luzon requires it. This restriction is highly detrimental to
government and to the public interest. Former Secretary of Justice
Hernando B. Perez expressed this point well in his Memorandum for the
President dated 21 May 2002:
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necessary in carrying out any future plan for an inter-modal transportation
system in Luzon.
Actually, the aforementioned Section 3.02 of the ARCA more than just
guaranteed exclusivity; it also guaranteed that the government will not
improve or expand the facilities at Clark - and in fact is required to put a
cap on the latter's operations - until after Terminal III shall have been
operated at or beyond its peak capacity for three consecutive years.65 As
counsel for public respondents pointed out, in the real world where the
rate of influx of international passengers can fluctuate substantially from
year to year, it may take many years before Terminal III sees three
consecutive years' operations at peak capacity. The Diosdado Macapagal
International Airport may thus end up stagnating for a long time. Indeed,
in order to ensure greater profits for Piatco, the economic progress of a
region has had to be sacrificed.
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"Sec. 8.03. Termination Procedure and Consequences of Termination. -
a) x x x xxx xxx
The aforesaid easy payment scheme is less beneficial than it first appears.
Although it enables government to avoid having to make outright
payment of an obligation that will likely run into billions of pesos, this easy
payment plan will nevertheless cost government considerable loss of
income, which it would earn if it were to operate Terminal III by itself.
Inasmuch as payments to the concessionaire (Piatco) will be on
"installment basis," interest charges on the remaining unpaid balance
would undoubtedly cause the total outstanding balance to swell. Piatco
would thus be entitled to remain in the driver's seat and keep operating
the terminal for an indefinite length of time.
There was however another monopoly within the NAIA created by the
subject contracts for Piatco - in the business of providing international
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airlines with the following: groundhandling, in-flight catering, cargo
handling, and aircraft repair and maintenance services. These are lines of
business activity in which are engaged many service providers (including
the petitioners-in-intervention), who will be adversely affected upon full
implementation of the Piatco Contracts, particularly Sections 3.01(d)69 and
(e)70 of both the ARCA and the CA.
On the one hand, Section 3.02(a) of the ARCA makes Terminal III the only
international passenger terminal at the NAIA, and therefore the only place
within the NAIA Complex where the business of providing airport-related
services to international airlines may be conducted. On the other hand,
Section 3.01(d) of the ARCA requires government, through the MIAA, not
to allow service providers with expired MIAA contracts to renew or extend
their contracts to render airport-related services to airlines. Meanwhile,
Section 3.01(e) of the ARCA requires government, through the DOTC and
MIAA, not to allow service providers - those with subsisting concession
agreements for services and operations being conducted at Terminal I - to
carry over their concession agreements, services and operations to
Terminal III, unless they first enter into a separate agreement with Piatco.
Worse, there is nothing whatsoever in the Piatco Contracts that can serve
to restrict, control or regulate the concessionaire's discretion and power to
reject any service provider and/or impose any term or condition it may see
fit in any contract it enters into with a service provider. In brief, there is no
safeguard whatsoever to ensure free and fair competition in the service-
provider sector.
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Such entry into and domination of the airport-related services sector
appear to be very much in line with the following provisions contained in
the First Addendum to the Piatco Shareholders Agreement,79 executed on
July 6, 1999, which appear to constitute a sort of master plan to create a
monopoly and combinations in restraint of trade:
a. x x x xxx x x x.;
b. That (Phil. Airport and Ground Services, Inc.) PAGS and/or its designated
Affiliates shall, at all times during the Concession Period, be exclusively
authorized by (PIATCO) to engage in the provision of ground-handling,
catering and fueling services within the Terminal Complex.
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unmitigated monopolies. Competition is thus the underlying principle of
[S]ection 19, Article XII of our Constitution, . . ."81
Aside from creating a monopoly, the Piatco contracts also give the
concessionaire virtually limitless power over the charging of fees, rentals
and so forth. What little "oversight function" the government might be
able and minded to exercise is less than sufficient to protect the public
interest, as can be gleaned from the following provisions:
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Earlier, I discussed how Section 3.01(e)84 of both the CA and the ARCA
requires government, through DOTC/MIAA, not to permit the carry-over to
Terminal III of the services and operations of certain service providers
currently operating at Terminal I with subsisting contracts.
By the In-Service Date, Terminal III shall be the only facility to be operated
as an international passenger terminal at the NAIA;85 thus, Terminals I and
II shall no longer operate as such,86 and no one shall be allowed to
compete with Piatco in the operation of an international passenger
terminal in the NAIA.87 The bottom line is that, as of the In-Service Date,
Terminal III will be the only terminal where the business of providing
airport-related services to international airlines and passengers may be
conducted at all.
In short, the CA and the ARCA obligate and constrain government to break
its existing contracts with these service providers.
True, doing business at the NAIA may be viewed more as a privilege than
as a right. Nonetheless, where that privilege has been availed of by the
petitioners-in-intervention service providers for years on end, a situation
arises, similar to that in American Inter-fashion v. GTEB.89 We held therein
that a privilege enjoyed for seven years "evolved into some form of
property right which should not be removed x x x arbitrarily and without
due process." Said pronouncement is particularly relevant and applicable
to the situation at bar because the livelihood of the employees of
petitioners-intervenors are at stake.
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The Piatco Contracts Violate Constitutional Prohibition
Against Deprivation of Liberty Without Due Process
The Piatco Contracts by locking out existing service providers from entry
into Terminal III and restricting entry of future service providers, thereby
infringed upon the freedom - guaranteed to and heretofore enjoyed by
international airlines - to contract with local service providers of their
choice, and vice versa.
Both the service providers and their client airlines will be deprived of the
right to liberty, which includes the right to enter into all contracts,90 and/or
the right to make a contract in relation to one's business.91
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Referring to the aforequoted provisions, this Court has held that "(I)t is
quite evident from the tenor of the language of the law that the existence
of appropriations and the availability of funds are indispensable pre-
requisites to or conditions sine qua non for the execution of government
contracts. The obvious intent is to impose such conditions as a priori
requisites to the validity of the proposed contract."93
In the First Supplement ("FS") dated August 27, 1999, the following
requirements were imposed on the government:
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○ Dealing directly with BCDA and the Philippine Air Force in
acquiring additional land or right of way for the road upgrade
and improvement program
On the other hand, the Third Supplement ("TS") obligates the government
to deliver, within 120 days from date thereof, clean possession of the land
on which the T2-T3 Road is to be constructed.
Viewed in this light, the "Additional Special Obligations" set out in Section
4 of the FS take on a different aspect. In particular, each of the following
may all be deemed to play a major role in the successful and timely
prosecution of the Terminal III Project: the obtention of land required by
PIATCO for the taxilane and taxiway; the implementation of government's
existing storm drainage master plan; and coordination with DPWH for the
completion of the three left-turning overpasses before the In-Service Date,
as well as acquisition and delivery of additional land for the construction
of the T2-T3 access road.
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accordance with Section 8.02(a) of the ARCA; or the concessionaire may
instead require government to pay the Incremental and Consequential
Losses under Section 1.23 of the ARCA.94 The logical conclusion then is
that the obligations in the Supplements are not to be performed on a best-
efforts basis only, but are unarguably mandatory in character.
Regarding MIAA's obligation to coordinate with the DPWH for the complete
implementation of the road upgrading and improvement program for
Sales, Andrews and Manlunas Roads (which provide access to the Terminal
III site) prior to the In-Service Date, it is essential to take note of the fact
that there was a pressing need to complete the program before the
opening of Terminal III.95 For that reason, the MIAA was compelled to enter
into a memorandum of agreement with the DPWH in order to ensure the
timely completion of the road widening and improvement program. MIAA
agreed to advance the total amount of P410.11 million to DPWH for the
works, while the latter was committed to do the following:
It can be easily inferred, then, that DPWH did not set aside enough funds
to be able to complete the upgrading program for the crucially situated
access roads prior to the targeted opening date of Terminal III; and that,
had MIAA not agreed to lend the P410 Million, DPWH would not have been
able to complete the program on time. As a consequence, government
would have been in breach of a material obligation. Hence, this particular
undertaking of government may likewise not be construed as being for
best-efforts compliance only.
But the particularly sad thing about this transaction between MIAA and
DPWH is the fact that both agencies were maneuvered into (or allowed
themselves to be maneuvered into) an agreement that would ensure
delivery of upgraded roads for Piatco's benefit, using funds not allocated
for that purpose. The agreement would then be presented to Congress as
a done deal. Congress would thus be obliged to uphold the agreement and
support it with the necessary allocations and appropriations for three
years, in order to enable DPWH to deliver on its committed repayments to
MIAA. The net result is an infringement on the legislative power over the
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public purse and a diminution of Congress' control over expenditures of
public funds - a development that would not have come about, were it not
for the Supplements. Very clever but very illegal!
EPILOGUE
What Do We Do Now?
In the final analysis, there remains but one ultimate question, which I
raised during the Oral Argument on December 10, 2002: What do we do
with the Piatco Contracts and Terminal III?96 (Feeding directly into the
resolution of the decisive question is the other nagging issue: Why should
we bother with determining the legality and validity of these contracts,
when the Terminal itself has already been built and is practically
complete?)
Prescinding from all the foregoing disquisition, I find that all the Piatco
contracts, without exception, are void ab initio, and therefore inoperative.
Even the very process by which the contracts came into being - the
bidding and the award - has been riddled with irregularities galore and
blatant violations of law and public policy, far too many to ignore. There is
thus no conceivable way, as proposed by some, of saving one (the original
Concession Agreement) while junking all the rest.
Despite all the insidious contraventions of the Constitution, law and public
policy Piatco perpetrated, keeping Piatco on as concessionaire and even
rewarding it by allowing it to operate and profit from Terminal III - instead
of imposing upon it the stiffest sanctions permissible under the laws - is
unconscionable.
It is no exaggeration to say that Piatco may not really mind which contract
we decide to keep in place. For all it may care, we can do just as well
without one, if we only let it continue and operate the facility. After all, the
real money will come not from building the Terminal, but from actually
operating it for fifty or more years and charging whatever it feels like,
without any competition at all. This scenario must not be allowed to
happen.
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If the Piatco contracts are junked altogether as I think they should be,
should not AEDC automatically be considered the winning bidder and
therefore allowed to operate the facility? My answer is a stone-cold 'No'.
AEDC never won the bidding, never signed any contract, and never built
any facility. Why should it be allowed to automatically step in and benefit
from the greed of another?
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HON. COURT OF APPEALS (Special Twelfth Division) and GEORGE I.
LAGOS, Respondents.
a) In an order, dated May 28, 1999, the presiding judge summarily denied
respondent’s motion: 1) to defer issuance of the warrant of arrest; and 2)
to order reinvestigation.
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It appears that on January 7, 1999, private respondent filed SEC Case No.
01-99-6185 for the declaration of nullity of the respective appointments of
Alex Y. Tan and petitioner as President Ad Interim and Operations Manager
Ad Interim of Saag Phils., Inc., declaration of dividends, recovery of share
in the profits, involuntary dissolution and the appointment of a receiver,
recovery of damages and an application for a temporary restraining order
(TRO) and injunction against Saag (S) Pte. Ltd., Nicholas Ng, Janifer Yeo,
Tan and petitioner. 3
In the action before the SEC, private respondent averred that Saag (S) Pte.
Ltd. is a foreign corporation organized and existing under the laws of
Singapore, and is fully owned by Saag Corporation (Bhd). On July 1, 1994,
he was appointed as Area Sales Manager in the Philippines by Thiang
Shiang Hiang, Manager of Saag (S) Pte. Ltd. Pursuant to his appointment,
respondent was authorized to organize a local joint venture corporation to
be known as Saag Philippines, Inc. for the wholesale trade and service of
industrial products for oil, gas and power industries in the Philippines.
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Citing as a reason the absence of a board resolution authorizing the
continued operations of Saag Phils., Inc., private respondent retained his
possession of the office equipment of the company in a fiduciary capacity
as director of the corporation pending its dissolution and/or the resolution
of the intra-corporate dispute. He likewise changed the locks of the offices
of the company allegedly to prevent Tan and petitioner from seizing
company property.
His motion for reconsideration having been denied by the trial court in its
order issued on October 29, 1999, respondent filed with the CA the
petition for certiorari[6] assailing the aforesaid orders.
On June 30, 2000, the CA rendered its challenged decision. The pertinent
portion reads:
If the SEC should rule that the dissolution of Saag Phils. is proper, or that
the appointments of private respondents are invalid, the criminal case will
eventually be dismissed due to the absence of one of the essential
elements of the crime of estafa.
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SO ORDERED.7
Incidentally, on January 18, 2001, the SEC case8 was transferred to the
Regional Trial Court (RTC) of Mandaluyong City, Branch 214, pursuant to
A.M. No. 00-11-03-SC9 implementing the Securities and Regulation Code
(Republic Act No. 8799)10 enacted on July 19, 2000, vesting in the RTCs
jurisdiction over intra-corporate disputes.11
Considering that the petition for review on certiorari of the 30 June 2000
decision of this Court, filed by the Office of the Solicitor General before the
Supreme Court has already TERMINATED on November 20, 2000 and a
corresponding entry of judgment has already been issued by the High
Court, that the same is final and executory, the private respondent’s
motion for reconsideration of the decision 30 June 2000 before this Court
is NOTED for being moot and academic.
SO ORDERED.12
II
1. The action before the SEC and the criminal case before the trial court
do not involve any prejudicial question.13 SEC Case No. 01-99-6185
mainly involves the dissolution of Saag (S) Pte. Ltd., the appointment of a
receiver, the distribution of profits, and the authority of petitioner and Tan
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to represent Saag Phils., Inc. The entity which is being sued is Saag (S)
Pte. Ltd., a foreign corporation over which the SEC has yet to acquire
jurisdiction. Hence, any decision that may be rendered in the SEC case will
neither be determinative of the innocence or guilt of the accused nor bind
Saag Phils., Inc. because the same was not made a party to the action
even if the former is its holding corporation;
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1. That money, goods, or other personal property be received by the
offender in trust, or on commission, or for administration, or under any
other obligation involving the duty to make delivery of, or to return the
same;
The crime of estafa is not committed by the failure to return the things
received for sale on commission, or to deliver their value, but, as this class
of crime is defined by law, by misappropriating or converting the money
or goods received on commission. Delay in the fulfillment of a commission
or in the delivery of the sum on such account received only involves civil
liability. So long as the money that a person is under obligation to deliver
is not demanded of him, and he fails to deliver it for having wrongfully
disposed of it, there is no estafa, whatever be the cause of the debt.
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Strictly speaking, the objective of the doctrine of primary jurisdiction is to
guide a court in determining whether it should refrain from exercising its
jurisdiction until after an administrative agency has determined some
question or some aspect of some question arising in the proceeding
before the court.17 The court cannot or will not determine a controversy
involving a question which is within the jurisdiction of the administrative
tribunal prior to resolving the same, where the question demands the
exercise of sound administrative discretion requiring special knowledge,
experience and services in determining technical and intricate matters of
fact.18
No costs.
SO ORDERED.
This petition for certiorari under Rule 65 of the Rules of Court seeks the
nullification of Manila City Ordinance No. 8039, Series of 2002,1 and
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respondent City Mayor’s Executive Order No. 011, Series of 2002,2 dated
15 August 2002 , for being patently contrary to law.
Petitioner Liga ng mga Barangay National (Liga for brevity) is the national
organization of all the barangays in the Philippines, which pursuant to
Section 492 of Republic Act No. 7160, otherwise known as The Local
Government Code of 1991, constitutes the duly elected presidents of
highly-urbanized cities, provincial chapters, the metropolitan Manila
Chapter, and metropolitan political subdivision chapters.
Section 493 of that law provides that "[t]he liga at the municipal, city,
provincial, metropolitan political subdivision, and national levels directly
elect a president, a vice-president, and five (5) members of the board of
directors." All other matters not provided for in the law affecting the
internal organization of the leagues of local government units shall be
governed by their respective constitution and by-laws, which must always
conform to the provisions of the Constitution and existing laws.3
On 16 March 2000, the Liga adopted and ratified its own Constitution and
By-laws to govern its internal organization.4 Section 1, third paragraph,
Article XI of said Constitution and By-Laws states:
All other election matters not covered in this Article shall be governed by
the "Liga Election Code" or such other rules as may be promulgated by
the National Liga Executive Board in conformity with the provisions of
existing laws.
By virtue of the above-cited provision, the Liga adopted and ratified its
own Election Code.5 Section 1.2, Article I of the Liga Election Code states:
The Liga thereafter came out with its Calendar of Activities and Guidelines
in the Implementation of the Liga Election Code of 2002,6 setting on 21
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October 2002 the synchronized elections for highly urbanized city
chapters, such as the Liga Chapter of Manila, together with independent
component city, provincial, and metropolitan chapters.lawphi1.net
A. District Chapter
All elected Barangay Chairman in each District shall elect from among
themselves the President, Vice-President and five (5) members of the
Board….
B. City Chapter
On 16 July 2002, upon being informed that the ordinance had been
forwarded to the Office of the City Mayor, still unnumbered and yet to be
officially released, the Liga sent respondent Mayor of Manila a letter
requesting him that said ordinance be vetoed considering that it
encroached upon, or even assumed, the functions of the Liga through
legislation, a function which was clearly beyond the ambit of the powers of
the City Council.7
Hence, on 27 August 2002, the Liga filed the instant petition raising the
following issues:
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8039 S. 2002 PURPOSELY TO GOVERN THE ELECTIONS OF THE MANILA
CHAPTER OF THE LIGA NG MGA BARANGAYS AND WHICH PROVIDES A
DIFFERENT MANNER OF ELECTING ITS OFFICERS, DESPITE THE FACT THAT
SAID CHAPTER’S ELECTIONS, AND THE ELECTIONS OF ALL OTHER
CHAPTERS OF THE LIGA NG MGA BARANGAYS FOR THAT MATTER, ARE BY
LAW MANDATED TO BE GOVERNED BY THE LIGA CONSTITUTION AND BY-
LAWS AND THE LIGA ELECTION CODE.
II
In support of its petition, the Liga argues that City Ordinance No. 8039,
Series of 2002, and Executive Order No. 011, Series of 2002, contradict
the Liga Election Code and are therefore invalid. There exists neither
rhyme nor reason, not to mention the absence of legal basis, for the
Manila City Council to encroach upon, or even assume, the functions of
the Liga by prescribing, through legislation, the manner of conducting the
Liga elections other than what has been provided for by the Liga
Constitution and By-laws and the Liga Election Code. Accordingly, the
subject ordinance is an ultra vires act of the respondents and, as such,
should be declared null and void.
As for its prayer for the issuance of a temporary restraining order, the
petitioner cites as reason therefor the fact that under Section 5 of the
assailed city ordinance, the Manila District Chapter elections would be
held thirty days after the regular barangay elections. Hence, it argued that
the issuance of a temporary restraining order and/or preliminary
injunction would be imperative to prevent the implementation of the
ordinance and executive order.
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arguing that the assailed city ordinance and executive order are clearly
inconsistent with the express public policy enunciated in R.A. No. 7160.
Local political subdivisions are able to legislate only by virtue of a valid
delegation of legislative power from the national legislature. They are
mere agents vested with what is called the power of subordinate
legislation. Thus, the enactments in question, which are local in origin,
cannot prevail against the decree, which has the force and effect of law.
On the other hand, the respondents defend the validity of the assailed
ordinance and executive order and pray for the dismissal of the present
petition on the following grounds: (1) certiorari under Rule 65 of the Rules
of Court is unavailing; (2) the petition should not be entertained by this
Court in view of the pendency before the Regional Trial Court of Manila of
two actions or petitions questioning the subject ordinance and executive
order; (3) the petitioner is guilty of forum shopping; and (4) the act sought
to be enjoined is fait accompli.
The respondents also asseverate that the petitioner cannot claim that it
has no other recourse in addressing its grievance other than this petition
for certiorari. As a matter of fact, there are two cases pending before
Branches 33 and 51 of the RTC of Manila (one is for mandamus; the other,
for declaratory relief) and three in the Court of Appeals (one is for
prohibition; the two other cases, for quo warranto), which are all akin to
the present petition in the sense that the relief being sought therein is the
declaration of the invalidity of the subject ordinance. Clearly, the
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petitioner may ask the RTC or the Court of Appeals the relief being prayed
for before this Court. Moreover, the petitioner failed to prove discernible
compelling reasons attending the present petition that would warrant
cognizance of the present petition by this Court.
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A respondent is said to be exercising judicial function where he has the
power to determine what the law is and what the legal rights of the
parties are, and then undertakes to determine these questions and
adjudicate upon the rights of the parties.11
Quasi-judicial function, on the other hand, is "a term which applies to the
actions, discretion, etc., of public administrative officers or bodies …
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."12
The respondents do not fall within the ambit of tribunal, board, or officer
exercising judicial or quasi-judicial functions. As correctly pointed out by
the respondents, the enactment by the City Council of Manila of the
assailed ordinance and the issuance by respondent Mayor of the
questioned executive order were done in the exercise of legislative and
executive functions, respectively, and not of judicial or quasi-judicial
functions. On this score alone, certiorari will not lie.
As such, this petition must necessary fail, as this Court does not have
original jurisdiction over a petition for declaratory relief even if only
questions of law are involved.15
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Third, even granting arguendo that the present petition is ripe for the
extraordinary writ of certiorari, there is here a clear disregard of the
hierarchy of courts. No special and important reason or exceptional and
compelling circumstance has been adduced by the petitioner or the
intervenor why direct recourse to this Court should be allowed.
Thus, we shall reaffirm the judicial policy that this Court will not entertain
direct resort to it unless the redress desired cannot be obtained in the
appropriate courts, and exceptional and compelling circumstances justify
the availment of the extraordinary remedy of writ of certiorari, calling for
the exercise of its primary jurisdiction.18
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therein that when an act of the legislative department is seriously alleged
to have infringed the Constitution, settling the controversy becomes the
duty of this Court. The same is true when what is seriously alleged to be
unconstitutional is an act of the President, who in our constitutional
scheme is coequal with Congress.
We hesitate to rule that the petitioner and the intervenor are guilty of
forum-shopping. Forum-shopping exists where the elements of litis
pendentia are present or when a final judgment in one case will amount to
res judicata in the other. For litis pendentia to exist, the following
requisites must be present: (1) identity of parties, or at least such parties
as are representing the same interests in both actions; (2) identity of
rights asserted and reliefs prayed for, the reliefs being founded on the
same facts; and (3) identity with respect to the two preceding particulars
in the two cases, such that any judgment that may be rendered in the
pending case, regardless of which party is successful, would amount to
res judicata in the other case.20
SO ORDERED.
In a letter dated April 5, 1990, petitioner, through its Senior Assistant Vice-
President, Mr. Mario G. Zavalla, informed respondent of the substantial
completion of his condominium unit, however, due to various
uncontrollable forces (such as coup d‘ etat attempts, typhoon and steel
and cement shortage), the final turnover is reset to May 31, 1990.
On December 18, 1992, the trial court rendered a Decision3 finding the
petitioner liable for payment of damages due to the delay in the
performance of its obligation to the respondent. The dispositive portion
reads:
Cost of suit.
“SO ORDERED.”
Hence, this petition for review on certiorari. Petitioner contends that the
trial court has no jurisdiction over the instant case; and that the Court of
Appeals erred in affirming the trial court’s finding that petitioner incurred
unreasonable delay in the delivery of the condominium unit to
respondent.
On petitioner’s contention that the trial court has no jurisdiction over the
instant case, Section 1 (c) of Presidential Decree No. 1344, as amended,
provides:
xxx
While it may be true that the trial court is without jurisdiction over the
case, petitioner’s active participation in the proceedings estopped it from
assailing such lack of it. We have held that it is an undesirable practice of
a party participating in the proceedings and submitting its case for
decision and then accepting the judgment, only if favorable, and attacking
it for lack of jurisdiction, when adverse.6
Here, petitioner failed to raise the question of jurisdiction before the trial
court and the Appellate Court. In effect, petitioner confirmed and ratified
the trial court’s jurisdiction over this case. Certainly, it is now in estoppel
and can no longer question the trial court’s jurisdiction.
On petitioner’s claim that it did not incur delay, suffice it to say that this is
a factual issue. Time and again, we have ruled that “the factual findings
of the trial court are given weight when supported by substantial evidence
and carries more weight when affirmed by the Court of Appeals.” 7
Whether or not petitioner incurred delay and thus, liable to pay
damages as a result thereof, are indeed factual questions.
5 See Solid Homes, Inc. vs. Payawal, G.R. No. 84811, August 29, 1989, 177
SCRA 72; C.T. Torres Enterprises, Inc. vs. Hibionada, G.R. No. 80916,
November 9, 1990, 191 SCRA 268; Tejada vs. Homestead Property
Corporation, G.R. No. 79622, September 29, 1989, 178 SCRA 164; Alcasid
vs. Court of Appeals, G.R. No. 94927, January 22, 1993, 217 SCRA 437;
Fajardo vs. Bautista, G.R. Nos. 102193-97, May 10, 1994, 232 SCRA 291.
6 See Producers Bank of the Philippines vs. NLRC, et al, G.R. No. 118069,
November 16, 1998, 298 SCRA 517; TCL Sales Corporation vs. Court of Appeals,
G.R. No. 129777, January 5, 2001, 349 SCRA 35; Alday vs. FGU Insurance
Corporation, G.R. No. 138822, January 23, 2001, 350 SCRA 113.
7 Lim vs. Chan, G.R. No. 127227, February 28, 2001, 353 SCRA 55, 59, citing
Valgoson’s Realty, Inc. vs. Court of Appeals, 295 SCRA 449 (1998).
8 Cosmos Bottling Corporation vs. NLRC, G.R. No. 146397, July 1, 2003, citing De
Rama vs. Court of Appeals, 351 SCRA 94 (2001).
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WHEREFORE, the petition is DENIED. The assailed Decision dated March
26, 1999 and Resolution dated August 5, 1999 of the Court of Appeals are
hereby AFFIRMED IN TOTO.
SO ORDERED.
SO ORDERED. 3
The facts as gleaned from the records of the case are as follows:
MAY GOD GIVE YOU COURAGE AND STRENGTH TO BEAR YOUR LOSS. OUR
DEEPEST SYMPATHY TO YOU AND MEMBERS OF THE FAMILY.
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MINER & FLORY. 5
The parties stipulated at the pre-trial that the issue to be resolved by the
trial court was:
II
III
IV
The four assigned errors are going to be discussed jointly because they
are all based on the same findings of fact.
We fully agree with the appellate court's endorsement of the trial court's
conclusion that RCPI, a corporation dealing in telecommunications and
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offering its services to the public, is engaged in a business affected with
public interest. As such, it is bound to exercise that degree of diligence
expected of it in the performance of its obligation. 9
One of RCPI's main arguments is that it still correctly transmitted the text
of the telegram and was received by the addressees on time despite the
fact that there was "error" in the social form and envelope used. 10 RCPI
asserts that there was no showing that it has any motive to cause harm or
damage on private respondents:
Petitioner humbly submits that the "error" in the social form used does not
come within the ambit of fraud, malice or bad faith as understood/defined
under the law. 11
We do not agree.
In a distinctly similar case, 12 and oddly also involving the herein petitioner
as the same culprit, we held:
Anyone who avails of the facilities of a telegram company like RCPI can
choose to send his message in the ordinary form or in a social form. In the
ordinary form, the text of the message is typed on plain newsprint paper.
On the other hand, a social telegram is placed in a special form with the
proper decorations and embellishments to suit the occasion and the
message and delivered in an envelope matching the purpose of the
occasion and the words and intent of the message. The sender pays a
higher amount for the social telegram than for one in the ordinary form. It
is clear, therefore, that when RCPI typed the private respondents'
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message of condolence in a birthday card and delivered the same in a
colorful Christmasgram envelope, it committed a breach of contract as
well as gross negligence. Its excuse that it had run out of social
condolence cards and envelopes 14 is flimsy and unacceptable. It could not
have been faulted had it delivered the message in the ordinary form and
reimbursed the difference in the cost to the private respondents. But by
transmitting it unfittingly—through other special forms clearly, albeit
outwardly, portraying the opposite feelings of joy and happiness and
thanksgiving—RCPI only exacerbated the sorrowful situation of the
addressees and the senders. It bears stress that this botchery exposed not
only the petitioner's gross negligence but also its callousness and
disregard for the sentiments of its clientele, which tantamount to wanton
misconduct, for which it must be held liable for damages.
The petitioner argues that "a court cannot rely on speculation, conjectures
or guess work as to the fact and amount of damages, but must depend on
the actual proof that damages had been suffered and evidence of the
actual
amount. 16 In other words, RCPI insists that there is no causal relation of
the illness suffered by Mr. Timan with the foul-up caused by the petitioner.
But that is a question of fact. The findings of fact of the trial court and the
respondent court concur in favor of the private respondents. We are
bound by such findings—that is the general rule well-established by a long
line of cases. Nothing has been shown to convince us to justify the
relaxation of this rule in the petitioner's favor. On the contrary, these
factual findings are supported by substantial evidence on record.
Anent the award of moral and exemplary damages assigned as errors, the
findings of the respondent court are persuasive.
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exhaustion of social condolence forms. Gross negligence or carelessness
can be attributed to defendant-appellant in not supplying its various
stations with such sufficient and adequate social condolence forms when
it held out to the public sometime in January, 1983, the availability of such
social condolence forms and accepted for a fee the transmission of
messages on said forms. Knowing that there are no such forms as testified
to by its Material Control Manager Mateo Atienza, and entering into a
contract for the transmission of messages in such forms, defendant-
appellant committed acts of bad faith, fraud or malice. . . . 17
RCPI's argument that it can not be held liable for exemplary damages,
being penal or punitive in character, 18 is without merit. We have so held
in many cases, and oddly, quite a number of them likewise involved the
herein petitioner as the transgressor.
SO ORDERED.
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G.R. No. 151149 September 7, 2004
GEORGE KATON, petitioner,
vs.
MANUEL PALANCA JR., LORENZO AGUSTIN, JESUS GAPILANGO and
JUAN FRESNILLO, respondents.
The Case
The assailed Resolution, on the other hand, denied the Motion for
Reconsideration filed by petitioner. It affirmed the RTC’s dismissal of his
Complaint in Civil Case No. 3231, not on the grounds relied upon by the
trial court, but because of prescription and lack of jurisdiction.
"On August 2, 1963, herein [P]etitioner [George Katon] filed a request with
the District Office of the Bureau of Forestry in Puerto Princesa, Palawan,
for the re-classification of a piece of real property known as Sombrero
Island, located in Tagpait, Aborlan, Palawan, which consists of
approximately 18 hectares. Said property is within Timberland Block of LC
Project No. 10-C of Aborlan, Palawan, per BF Map LC No. 1582.
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"Thereafter, the Bureau of Forestry District Office, Puerto Princesa,
Palawan, ordered the inspection, investigation and survey of the land
subject of the petitioner’s request for eventual conversion or re-
classification from forest to agricultural land, and thereafter for George
Katon to apply for a homestead patent.
"In a letter dated September 23, 1965, then Asst. Director of Forestry
R.J.L. Utleg informed the Director of Lands, Manila, that since the subject
land was no longer needed for forest purposes, the same is therefore
certified and released as agricultural land for disposition under the Public
Land Act.
"Petitioner contends that the whole area known as Sombrero Island had
been classified from forest land to agricultural land and certified available
for disposition upon his request and at his instance. However, Mr. Lucio
Valera, then [l]and investigator of the District Land Office, Puerto Princesa,
Palawan, favorably endorsed the request of [R]espondents Manuel Palanca
Jr. and Lorenzo Agustin, for authority to survey on November 15, 1965. On
November 22, a second endorsement was issued by Palawan District
Officer Diomedes De Guzman with specific instruction to survey vacant
portions of Sombrero Island for the respondents consisting of five (5)
hectares each. On December 10, 1965, Survey Authority No. R III-342-65
was issued authorizing Deputy Public Land Surveyor Eduardo Salvador to
survey ten (10) hectares of Sombrero Island for the respondents. On
December 23, 1990, [R]espondent Lorenzo Agustin filed a homestead
patent application for a portion of the subject island consisting of an area
of 4.3 hectares.
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"Petitioner assails the validity of the homestead patents and original
certificates of title covering certain portions of Sombrero Island issued in
favor of respondents on the ground that the same were obtained through
fraud. Petitioner prays for the reconveyance of the whole island in his
favor.
"On the other hand, [R]espondent Manuel Palanca, Jr. claims that he
himself requested for the reclassification of the island in dispute and that
on or about the time of such request, [R]espondents Fresnillo, Palanca and
Gapilango already occupied their respective areas and introduced
numerous improvements. In addition, Palanca said that petitioner never
filed any homestead application for the island. Respondents deny that
Gabriel Mandocdoc undertook the inspection and survey of the island.
"Respondents aver that they are all bona fide and lawful possessors of
their respective portions and have declared said portions for taxation
purposes and that they have been faithfully paying taxes thereon for
twenty years.
"In the instant case, petitioner seeks to nullify the homestead patents and
original certificates of title issued in favor of the respondents covering
certain portions of the Sombrero Island as well as the reconveyance of the
whole island in his favor. The petitioner claims that he has the exclusive
right to file an application for homestead patent over the whole island
since it was he who requested for its conversion from forest land to
agricultural land."6
Petitioner’s Motion for Reconsideration of the July 29, 1999 Order was
denied by the trial court in its Resolution dated December 17, 1999, for
being a third and prohibited motion. In his Petition for Certiorari before the
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CA, petitioner charged the trial court with grave abuse of discretion on the
ground that the denied Motion was his first and only Motion for
Reconsideration of the aforesaid Order.
Finally, granting arguendo that petitioner had the exclusive right to apply
for a patent to the land in question, he was already barred by laches for
having slept on his right for almost 23 years from the time Respondent
Palanca’s title had been issued.
From the allegations of the Complaint, the appellate court opined that
petitioner clearly had no standing to seek reconveyance of the disputed
land, because he neither held title to it nor even applied for a homestead
patent. It reiterated that only the State could sue for cancellation of the
title issued upon a homestead patent, and for reversion of the land to the
public domain.
Finally, it ruled that prescription had already barred the action for
reconveyance. First, petitioner’s action was brought 24 years after the
issuance of Palanca’s homestead patent. Under the Public Land Act, such
action should have been taken within ten years from the issuance of the
homestead certificate of title. Second, it appears from the submission
(Annex "F" of the Complaint) of petitioner himself that Respondents
Fresnillo and Palanca had been occupying six hectares of the island since
1965, or 33 years before he took legal steps to assert his right to the
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property. His action was filed beyond the 30-year prescriptive period under
Articles 1141 and 1137 of the Civil Code.
Issues
"1. Is the Court of Appeals correct in resolving the Petition for Certiorari
based on an issue not raised (the merits of the case) in the Petition?
First Issue:
This is not the first time that petitioner has taken issue with the propriety
of the CA’s ruling on the merits. He raised it with the appellate court when
he moved for reconsideration of its December 8, 2000 Decision. The CA
even corrected itself in its November 20, 2001 Resolution, as follows:
"Upon another review of the case, the Court concedes that it may indeed
have lost its way and been waylaid by the variety, complexity and
seeming importance of the interests and issues involved in the case
below, the apparent reluctance of the judges, five in all, to hear the case,
and the volume of the conflicting, often confusing, submissions bearing on
incidental matters. We stand corrected."9
That explanation should have been enough to settle the issue. The CA’s
Resolution on this point has rendered petitioner’s issue moot. Hence,
there is no need to discuss it further. Suffice it to say that the appellate
court indeed acted ultra jurisdictio in ruling on the merits of the case when
the only issue that could have been, and was in fact, raised was the
alleged grave abuse of discretion committed by the trial court in denying
petitioner’s Motion for Reconsideration. Settled is the doctrine that the
sole office of a writ of certiorari is the correction of errors of jurisdiction.
Such writ does not include a review of the evidence,10 more so when no
determination of the merits has yet been made by the trial court, as in
this case.
Second Issue:
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Petitioner next submits that the CA erroneously invoked its "residual
prerogatives" under Section 1 of Rule 9 of the Rules of Court when it motu
proprio dismissed the Petition for lack of jurisdiction and prescription.
According to him, residual prerogative refers to the power that the trial
court, in the exercise of its original jurisdiction, may still validly exercise
even after perfection of an appeal. It follows that such powers are not
possessed by an appellate court.
"In appeals by notice of appeal, the court loses jurisdiction over the case
upon the perfection of the appeals filed in due time and the expiration of
the time to appeal of the other parties.
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"In appeals by record on appeal, the court loses jurisdiction only over the
subject matter thereof upon the approval of the records on appeal filed in
due time and the expiration of the time to appeal of the other parties.
"In either case, prior to the transmittal of the original record or the record
on appeal, the court may issue orders for the protection and preservation
of the rights of the parties which do not involve any matter litigated by
the appeal, approve compromises, permit appeals of indigent litigants,
order execution pending appeal in accordance with Section 2 of Rule 39,
and allow withdrawal of the appeal." (Italics supplied)
The CA’s motu proprio dismissal of petitioner’s Complaint could not have
been based, therefore, on residual jurisdiction under Rule 41. Undeniably,
such order of dismissal was not one for the protection and preservation of
the rights of the parties, pending the disposition of the case on appeal.
What the CA referred to as residual prerogatives were the general residual
powers of the courts to dismiss an action motu proprio upon the grounds
mentioned in Section 1 of Rule 9 of the Rules of Court and under authority
of Section 2 of Rule 114 of the same rules.
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certification of the same land from forest land to agricultural land which
request was favorably acted upon and approved as mentioned earlier; a
clear case of intrinsic fraud and misrepresentation;
"3. That the issuance of Homestead Patent No. 145927 and OCT No. G-
7089 in the name of [Respondent] Manuel Palanca Jr. and the filing of
Homestead Patent Applications in the names of [respondents], Lorenzo
Agustin, Jesus Gapilango and Juan Fresnillo[,] having been done
fraudulently and in bad faith, are ipso facto null and void and of no effect
whatsoever."19
The question is, did the Complaint sufficiently allege an action for
declaration of nullity of the free patent and certificate of title or,
alternatively, for reconveyance? Or did it plead merely for reversion?
The Complaint did not sufficiently make a case for any of such actions,
over which the trial court could have exercised jurisdiction.
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thereto is sought to be nullified on the ground that it was wrongfully or
erroneously registered in the defendant’s name.24 As with an annulment of
title, a complaint must allege two facts that, if admitted, would entitle the
plaintiff to recover title to the disputed land: (1) that the plaintiff was the
owner of the land, and (2) that the defendant illegally dispossessed the
plaintiff of the property.25 Therefore, the defendant who acquired the
property through mistake or fraud is bound to hold and reconvey to the
plaintiff the property or the title thereto.26
In the present case, nowhere in the Complaint did petitioner allege that he
had previously held title to the land in question. On the contrary, he
acknowledged that the disputed island was public land,27 that it had never
been privately titled in his name, and that he had not applied for a
homestead under the provisions of the Public Land Act.28 This Court has
held that a complaint by a private party who alleges that a homestead
patent was obtained by fraudulent means, and who consequently prays
for its annulment, does not state a cause of action; hence, such complaint
must be dismissed.29
Neither can petitioner’s case be one for reversion. Section 101 of the
Public Land Act categorically declares that only the solicitor general or the
officer in his stead may institute such an action. 30 A private person may
not bring an action for reversion or any other action that would have the
effect of canceling a free patent and its derivative title, with the result
that the land thereby covered would again form part of the public
domain.31
Thus, when the plaintiff admits in the complaint that the disputed land will
revert to the public domain even if the title is canceled or amended, the
action is for reversion; and the proper party who may bring action is the
government, to which the property will revert.32 A mere homestead
applicant, not being the real party in interest, has no cause of action in a
suit for reconveyance.33 As it is, vested rights over the land applied for
under a homestead may be validly claimed only by the applicant, after
approval by the director of the Land Management Bureau of the former’s
final proof of homestead patent.34
Finally, assuming that petitioner is the proper party to bring the action for
annulment of title or its reconveyance, the case should still be dismissed
for being time-barred.39 It is not disputed that a homestead patent and an
Original Certificate of Title was issued to Palanca on February 21, 1977,40
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while the Complaint was filed only on October 6, 1998. Clearly, the suit
was brought way past ten years from the date of the issuance of the
Certificate, the prescriptive period for reconveyance of fraudulently
registered real property.41
In Aldovino v. Alunan,43 the Court has held that when the plaintiff’s own
complaint shows clearly that the action has prescribed, such action may
be dismissed even if the defense of prescription has not been invoked by
the defendant. In Gicano v. Gegato,44 we also explained thus:
Clearly then, the CA did not err in dismissing the present case. After all, if
and when they are able to do so, courts must endeavor to settle entire
controversies before them to prevent future litigations.46
SO ORDERED.
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Under the terms of the trust receipt agreements, Proton would receive
imported passenger motor vehicles and hold them in trust for BNP. Proton
would be free to sell the vehicles subject to the condition that it would
deliver the proceeds of the sale to BNP, to be applied to its obligations to
it. In case the vehicles are not sold, Proton would return them to BNP,
together with all the accompanying documents of title.
Allegedly, Proton failed to deliver the proceeds of the sale and return the
unsold motor vehicles.
The Makati RTC Clerk of Court assessed the docket fees which BNP paid at
P352,116.307 which was computed as follows:8
Second Cause of
171,120.53
Action
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Third Cause of
529,189.80
Action
$1,544,984.4
0
5% as Attorney's
$ 77,249.22
Fees
$1,622,233.6
TOTAL …………..
2
Conversion rate to
x 43_
peso
COURT JDF
P 69,756,000.00 P 69.606.000.00
- 150,000.00 x .003
69,606,000.00 208,818.00
x .002 + 450.00
139,212.00 P 209,268.00
+ 150.00
P 139,362.00
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LEGAL P139,362.0
: 0
+
209,268.00
P348,630.0
x 1% = P3,486.30
0
P
139,362.00
+
209,268.00
3,486.00
Resolving the first ground relied upon by the defendant, this court
believes and so hold that the docket fees were properly paid. It is the
Office of the Clerk of Court of this station that computes the correct
docket fees, and it is their duty to assess the docket fees correctly, which
they did.1avvphi1.zw+
Even granting arguendo that the docket fees were not properly paid, the
court cannot just dismiss the case. The Court has not yet ordered (and it
will not in this case) to pay the correct docket fees, thus the Motion to
dismiss is premature, aside from being without any legal basis.
As held in the case of National Steel Corporation vs. CA, G.R. No. 123215,
February 2, 1999, the Supreme Court said:
xxx
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same within a reasonable time within the expiration of applicable
prescription or reglementary period. If the plaintiff fails to comply with this
requirement, the defendant should timely raise the issue of jurisdiction or
else he would be considered in estoppel. In the latter case, the balance
between appropriate docket fees and the amount actually paid by the
plaintiff will be considered a lien or (sic) any award he may obtain in his
favor.
xxx
… Section 7(a) of Rule 141 of the Rules of Court excludes interest accruing
from the principal amount being claimed in the pleading in the
computation of the prescribed filing fees. The complaint was submitted for
the computation of the filing fee to the Office of the Clerk of Court of the
Regional Trial Court of Makati City which made an assessment that
respondent paid accordingly. What the Office of the Clerk of Court did and
the ruling of the respondent Judge find support in the decisions of the
Supreme Court in Ng Soon vs. Alday and Tacay vs. RTC of Tagum, Davao
del Norte. In the latter case, the Supreme Court explicitly ruled that
"where the action is purely for recovery of money or damages, the docket
fees are assessed on the basis of the aggregate amount claimed,
exclusive only of interests and costs."
Assuming arguendo that the correct filing fees was not made, the rule is
that the court may allow a reasonable time for the payment of the
prescribed fees, or the balance thereof, and upon such payment, the
defect is cured and the court may properly take cognizance of the action
unless in the meantime prescription has set in and consequently barred
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the right of action. Here respondent Judge did not make any finding, and
rightly so, that the filing fee paid by private respondent was insufficient.
On the issue of the correct dollar-peso rate of exchange, the Office of the
Clerk of Court of the RTC of Makati pegged it at P 43.21 to US$1. In the
absence of any office guide of the rate of exchange which said court
functionary was duty bound to follow, the rate he applied is presumptively
correct.
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Additionally, petitioners point out that the clerk of court, in converting
BNP's claims from US dollars to Philippine pesos, applied the wrong
exchange rate of US $1 = P43.00, the exchange rate on September 7,
1998 when the complaint was filed having been pegged at US $1 =
P43.21. Thus, by petitioners' computation, BNP's claim as of August 15,
1998 was actually P70,096,714.72,24 not P69,756,045.66.
For the guidance of all concerned, the WARNING given by the court in the
afore-cited case is reproduced hereunder:
"The Court serves warning that it will take drastic action upon a repetition
of this unethical practice.
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The Court acquires jurisdiction over any case only upon the payment of
the prescribed docket fee. An amendment of the complaint or similar
pleading will not thereby vest jurisdiction in the Court, much less the
payment of the docket fee based on the amount sought in the amended
pleading. The ruling in the Magaspi case (115 SCRA 193) in so far as it is
inconsistent with this pronouncement is overturned and reversed."
Let this be circularized to all the courts hereinabove named and to the
President and Board of Governors of the Integrated Bar of the Philippines,
which is hereby directed to disseminate this Circular to all its members.
Chief Justice
On the other hand, respondent maintains that it had paid the filing fee
which was assessed by the clerk of court, and that there was no violation
of Supreme Court Circular No. 7 because the amount of damages was
clearly specified in the prayer, to wit:
(d) Defendant PROTON be ordered to pay the sum of (i) US DOLLARS ONE
HUNDRED TWENTY AND FIFTY THREE CENTS (US$171,120.53), plus
accrued interests and other related charges thereon subsequent to August
15, 1998 until fully paid; and (ii) an amount equivalent to 5% of all sums
due from said Defendant, as and for attorney's fees;
(e) Defendant PROTON be ordered to pay the sum of (i) US DOLLARS FIVE
HUNDRED TWENTY NINE THOUSAND ONE HUNDRED EIGHTY NINE AND
EIGHTY CENTS (US$529,189.80), plus accrued interests and other related
charges thereon subsequent to August 15, 1998 until fully paid; and (ii) an
amount equivalent to 5% or all sums due from said Defendant, as and for
attorney's fees;
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5. On ALL THE CAUSES OF ACTION -
Where the action is purely for the recovery of money or damages, the
docket fees are assessed on the basis of the aggregate amount
claimed, exclusive only of interests and costs.28 (Emphasis and
underscoring supplied),
it made an overpayment.
When Tacay was decided in 1989, the pertinent rule applicable was
Section 5 (a) of Rule 141 which provided for the following:
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60,000.00 ……….. 0
If the case concerns real estate, the assessed value thereof shall be
considered in computing the fees.
In case the value of the property or estate or the sum claim is less or more
in accordance with the appraisal of the court, the difference of fees shall
be refunded or paid as the case may be.
When the complaint in this case was filed in 1998, however, as correctly
pointed out by petitioners, Rule 141 had been amended by Administrative
Circular No. 11-9429 which provides:
RULE 141
LEGAL FEES
xxx
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third-party, fourth-party, etc. complaint, or a complaint in intervention,
and for all clerical services in the same, if the total sum claimed,
inclusive of interest, damages of whatever kind, attorney's fees,
litigation expenses, and costs, or the stated value of the property
in litigation, is:
xxx
(a) For each civil action or proceeding, where the value of the subject
matter involved, or the amount of the demand, inclusive of
interest, damages or whatever kind, attorney's fees, litigation
expenses, and costs, is:
The clerk of court should thus have assessed the filing fee by taking into
consideration "the total sum claimed, inclusive of interest, damages of
whatever kind, attorney's fees, litigation expenses, and costs, or the
stated value of the property in litigation." Respondent's and the Court of
Appeals' reliance then on Tacay was not in order.
Neither was, for the same reason, the Court of Appeals' reliance on the
1989 case of Ng Soon v. Alday,30 where this Court held:
…The failure to state the rate of interest demanded was not fatal
not only because it is the Courts which ultimately fix the same, but also
because Rule 141, Section 5(a) of the Rules of Court, itemizing
the filing fees, speaks of "the sum claimed, exclusive of interest."
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This clearly implies that the specification of the interest rate is
not that indispensable.
"In case the value of the property or estate or the sum claimed is less or
more in accordance with the appraisal of the court, the difference of fee
shall be refunded or paid as the case may be."
". . . there is merit in petitioner's claim that the third paragraph of Rule
141, Section 5(a) clearly contemplates a situation where an amount is
alleged or claimed in the complaint but is less or more than what is later
proved. If what is proved is less than what was claimed, then a refund will
be made; if more, additional fees will be exacted. Otherwise stated, what
is subject to adjustment is the difference in the fee and not the whole
amount" (Pilipinas Shell Petroleum Corp., et als., vs. Court of Appeals, et
als., G.R. No. 76119, April 10, 1989).32 (Emphasis and underscoring
supplied)
Respecting the Court of Appeals' conclusion that the clerk of court did not
err when he applied the exchange rate of US $1 = P43.00 "[i]n the
absence of any office guide of the rate of exchange which said court
functionary was duty bound to follow,[hence,] the rate he applied is
presumptively correct," the same does not lie. The presumption of
regularity of the clerk of court's application of the exchange rate is not
conclusive.33 It is disputable.34 As such, the presumption may be
overturned by the requisite rebutting evidence.35 In the case at bar,
petitioners have adequately proven with documentary evidence36 that
the exchange rate when the complaint was filed on September 7, 1998
was US $1 = P43.21.
With respect to petitioner's argument that the trial court did not acquire
jurisdiction over the case in light of the insufficient docket fees, the same
does not lie.
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True, in Manchester Development Corporation v. Court of Appeals,37 this
Court held that the court acquires jurisdiction over any case only upon the
payment of the prescribed docket fees,38 hence, it concluded that the
trial court did not acquire jurisdiction over the case.
The principle in Manchester could very well be applied in the present case.
The pattern and the intent to defraud the government of the docket fee
due it is obvious not only in the filing of the original complaint but also in
the filing of the second amended complaint.
However, in Manchester, petitioner did not pay any additional docket fee
until the case was decided by this Court on May 7, 1987. Thus, in
Manchester, due to the fraud committed on the government, this
Court held that the court a quo did not acquire jurisdiction over
the case and that the amended complaint could not have been
admitted inasmuch as the original complaint was null and void.
Nevertheless, petitioners contend that the docket fee that was paid is still
insufficient considering the total amount of the claim. This is a matter
which the clerk of court of the lower court and/or his duly authorized
docket clerk or clerk in charge should determine and, thereafter, if any
amount is found due, he must require the private respondent to pay the
same.
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2. The same rule applies to permissive counterclaims, third-party claims
and similar pleadings, which shall not be considered filed until and unless
the filing fee prescribed therefor is paid. The court may also allow
payment of said fee within a reasonable time but also in no case beyond
its applicable prescriptive or reglementary period.
3. Where the trial court acquires jurisdiction over a claim by the filing of
the appropriate pleading and payment of the prescribed filing fee but,
subsequently, the judgment awards a claim not specified in the pleading,
or if specified the same has been left for determination by the court, the
additional filing fee therefor shall constitute a lien on the judgment. It
shall be the responsibility of the Clerk of Court or his duly authorized
deputy to enforce said lien and assess and collect the additional fee.40
(Emphasis and underscoring supplied)
The ruling in Sun Insurance Office was echoed in the 2005 case of Heirs of
Bertuldo Hinog v. Hon. Achilles Melicor:41
Respondent did not, however, pay the filing fee corresponding to its claim
for interest from August 16, 1998 until the filing of the complaint on
September 7, 1998. As priorly discussed, this is required under Rule 141,
as amended by Administrative Circular No. 11-94, which was the rule
applicable at the time. Thus, as the complaint currently stands,
respondent cannot claim the interest from August 16, 1998 until
September 7, 1998, unless respondent is allowed by motion to amend its
complaint within a reasonable time and specify the precise amount of
interest petitioners owe from August 16, 1998 to September 7, 199842
and pay the corresponding docket fee therefor.
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With respect to the interest accruing after the filing of the complaint, the
same can only be determined after a final judgment has been handed
down. Respondent cannot thus be made to pay the corresponding docket
fee therefor. Pursuant, however, to Section 2, Rule 141, as amended by
Administrative Circular No. 11-94, respondent should be made to pay
additional fees which shall constitute a lien in the event the trial court
adjudges that it is entitled to interest accruing after the filing of the
complaint.
Sec. 2. Fees as lien. - Where the court in its final judgment awards a claim
not alleged, or a relief different or more than that claimed in the pleading,
the party concerned shall pay the additional fees which shall constitute a
lien on the judgment in satisfaction of said lien. The clerk of court shall
assess and collect the corresponding fees.
WHEREFORE, the petition is GRANTED in part. The July 25, 2001 Decision
and the December 18, 2001 Resolution of the Court Appeals are hereby
MODIFIED. The Clerk of Court of the Regional Trial Court of Makati City is
ordered to reassess and determine the docket fees that should be paid by
respondent, BNP, in accordance with the Decision of this Court, and direct
respondent to pay the same within fifteen (15) days, provided the
applicable prescriptive or reglementary period has not yet expired.
Thereafter, the trial court is ordered to proceed with the case with utmost
dispatch.
SO ORDERED.
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A.M. No. MTJ-02-1391 June 7, 2004
(Formerly A.M. OCA IPI No. 00-936-MTJ)
RODOLFO RAMA RIÑO, complainant,
vs.
JUDGE ALFONSO R. CAWALING, MUNICIPAL CIRCUIT TRIAL COURT,
CAJIDIOCAN, ROMBLON, respondent.
The complainant alleged that he was the accused in the said case, and
that the respondent judge conducted a preliminary investigation2 on
October 27, 1999 without due notice to him. According to the
complainant, the respondent, prematurely and with undue haste, issued a
warrant3 for his arrest on October 28, 1999, considering that there was no
necessity in placing him (the complainant) in police custody.
The respondent also averred that Criminal Case No. 4511 was not covered
by the Rules on Summary Procedure, the imposable penalty being higher
than six months. As such, he had no alternative but to issue the warrant
of arrest against the complainant.
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The case was then referred to Judge Vedasto B. Marco, Executive Judge,
Regional Trial Court, Romblon, for investigation, report and
recommendation.7 In his Report and Recommendation dated January 15,
2004, the Executive Judge made the following findings:
From the foregoing, and the evidence submitted specifically the records of
Criminal Case No. 4511, it appear (sic) that respondent judge did not
violate the Rules of Procedure when he conducted the preliminary
investigation of the case against Rodolfo Riño nor did he show biased (sic)
and partiality against the latter. The complainant was afforded all the
rights to preliminary investigation and the warrant was issued more than a
year after it was in Court.8
We do not agree.
It is clear then that the respondent judge ought to be sanctioned for his
failure to apply the proper procedure. A judge should be the epitome of
competence, integrity and independence to be able to render justice and
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uphold public confidence in the legal system.13 He must be conversant
with basic legal principles and well-settled doctrines. He should strive for
excellence and seek the truth with passion.14 The respondent failed in this
regard and, by his actuations, exhibited gross ignorance of the law.
SO ORDERED.
[159]
1 Under Rule 45, Revised Rules of Court.
2 In CA-G. R. CV No. 54413, promulgated on March 26, 1999, Petition, Annex
“A”, Rollo, pp. 25-30. Oswaldo D. Agcaoili, J., ponente, Corona Ibay-Somera and
Eloy R. Bello, Jr., JJ., concurring.
3 In Civil Case No. 94-19833, dated May 14, 1996, Petition, Annex “H”, Rollo,
pp. 63-64. Judge Demetrio B. Macapagal, Sr., presiding.
4 Dated July 29, 1999, Petition, Annex “B”, Rollo, p. 31.
5 Motion for Reconsideration, CA Rollo, pp. 134-139.
6 With editorial changes.
7 Petition, Annex “C”, Rollo, pp. 32-41.
8 Petition, Annex “A”, Rollo, pp. 25-30.
9 CA Rollo, pp. 134-139.
10 Petition, Annex “B”, Rollo, p. 31.
11 Filed on September 24, 1999. Rollo, pp. 8-21. On January 17, 2000, we
resolved to give due course to the petition (Rollo, pp. 94-95).
12 Uy v. Evangelista, G. R. No. 140365, July 11, 2001, citing Parañaque Kings
Enterprises, Inc. v. Court of Appeals, 268 SCRA 727 (1997).
13 Uy v. Evangelista, G. R. No. 140365, July 11, 2001, citing San Lorenzo Village
Association, Inc. v. Court of Appeals, 288 SCRA 115 (1998).
14 Petition, Annex “C”, Rollo, pp. 32-41.
15 Fil-Estate Golf and Development, Inc. v. Court of Appeals, 333 Phil. 465, 490-
491 (1996).
16 Saura v. Saura, Jr., 313 SCRA 465, 472 (1999).
17 Torres v. Court of Appeals, 363 Phil. 539, 547 (1999), citing Ganadin v.
Ramos, 99 SCRA, 613, 621-622 (1980).
18 National Steel Corporation v. Court of Appeals, 362 Phil. 150, 160 (1999),
citing Martinez v. De la Merced, 174 SCRA 182 (1989).
19 Peña, Narciso, et al., Registration of Land Titles and Deeds (1994 Revised
Edition), p. 439, citing Aguilar v. Chiu, 195 Phil. 613 (1981).
20 In CA-G. R. CV No. 54413.
21 In Civil Case No. 94-19833.