Urgent! Consolidated Cases for Midterms (Remedial Law)

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Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

G.R. No. 169677 February 18, 2013

METROPOLITAN BANK AND TRUST COMPANY, as successor-in-interest of ASIAN BANKCORPORATION,Petitioner,vs.HON. EDILBERTO G. SANDOVAL, HON. FRANCISCO H. VILLARUZ, JR. and HON. RODOLFOA. PONFERRADA (in their capacities as Chairman and Members, respectively, of the SecondDivision of SANDIGANBAYAN) and the REPUBLIC OF THE PHILIPPINES, Respondents.

D E C I S I O N

BERSAMIN, J.:

The court, in furtherance of convenience or to avoid prejudice, may order a separate trial of anyclaim, cross-claim, counterclaim, or third-party complaint, or of any separate issue or of any numberof claims, cross-claims, counterclaims, third-party complaints or issues.1But a separate trial may bedenied if a party is thereby deprived of his right to be heard upon an issue dealt with and determinedin the main trial.

Through this special civil action forcertiorari, Metropolitan Bank and Trust Company (Metrobank)hereby seeks to set aside and nullify the resolutions dated June 25, 20042 and July 13, 20053 issuedin Civil Case No. 0004, whereby the Sandiganbayan granted the motion for separate trial filed by theRepublic of the Philippines (Republic), and upheld its jurisdiction over the Republics claim againstthe petitioner as the successor-in-interest of Asian Bank Corporation (Asian Bank).

Antecedents

On July 17, 1987, the Republic brought a complaint for reversion, reconveyance, restitution,accounting and damages in the Sandiganbayan against Andres V. Genito, Jr., Ferdinand E. Marcos,Imelda R. Marcos and other defendants. The action was obviously to recover allegedly ill-gottenwealth of the Marcoses, their nominees, dummies and agents. Among the properties subject of theaction were two parcels of commercial land located in Tandang Sora (Old Balara), Quezon City,covered by Transfer Certificate of Title (TCT) No. 2664234and TCT No. 2665885 of the Registry ofDeeds of Quezon City registered in the names of Spouses Andres V. Genito, Jr. and Ludivina L.Genito.

On February 5, 2001, the Republic moved for the amendment of the complaint in order to impleadAsian Bank as an additional defendant. The Sandiganbayan granted the motion.6It appears thatAsian Bank claimed ownership of the two parcels of land as the registered owner by virtue of TCTNo. N-201383 and TCT No. N-201384 issued in its name by the Registry of Deeds of Quezon City.Asian Bank was also in possession of the properties by virtue of the writ of possession issued by theRegional Trial Court (RTC) in Quezon City.7
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When the Republic was about to terminate its presentation of evidence against the originaldefendants in Civil Case No. 0004, it moved to hold a separate trial against Asian Bank.8

Commenting on the motion, Asian Bank sought the deferment of any action on the motion until it wasfirst given the opportunity to test and assail the testimonial and documentary evidence the Republichad already presented against the original defendants, and contended that it would be deprived of its

day in court if a separate trial were to be held against it without having been sufficiently apprisedabout the evidence the Republic had adduced before it was brought in as an additional defendant.9

In its reply to Asian Banks comment, the Republic maintained that a separate trial for Asian Bankwas proper because its cause of action against Asian Bank was entirely distinct and independentfrom its cause of action against the original defendants; and that the issue with respect to AsianBank was whether Asian Bank had actual or constructive knowledge at the time of the issuance ofthe TCTs for the properties in its name that such properties were the subject of the complaint in CivilCase No. 0004, while the issue as to the original defendants was whether they had "committed theacts complained of as constituting illegal or unlawful accumulation of wealth which would, as aconsequence, justify forfeiture of the said properties or the satisfaction from said properties of thejudgement that may be rendered in favor of the Republic."10

Asian Banks rejoinder to the Republics reply asserted that the issue concerning its supposed actualor constructive knowledge of the properties being the subject of the complaint in Civil Case No. 0004was intimately related to the issue delving on the character of the properties as the ill-gotten wealthof the original defendants; that it thus had a right to confront the evidence presented by the Republicas to the character of the properties; and that the Sandiganbayan had no jurisdiction to decide AsianBanks ownership of the properties because the Sandiganbayan, being a special court with limitedjurisdiction, could only determine the issue of whether or not the properties were illegally acquired bythe original defendants.11

On June 25, 2004, the Sandiganbayan issued the first assailed resolution granting the Republicsmotion for separate trial, giving its reasons as follows:

x x x x

A cursory reading of the comment filed by defendant Asian Bank to plaintiffs request for a separatetrial would readily reveal that defendant is not actually opposing the conduct of a separate trialinsofar as the said bank is concerned. What it seeks is the opportunity to confront the witnesses andwhatever documentary exhibits that may have been earlier presented by plaintiff in the case beforethe Court grants a separate trial. This being the situation, we find no reason to deny the motion inlight of plaintiffs position that its claim as against Asian Bank is entirely separate and distinct from itsclaims as against the original defendants, albeit dealing with the same subject matter. In fact, asshown by the allegations of the Second Amended Complaint where Asian Bank was impleaded as aparty defendant, the action against the latter is anchored on the claim that its acquisition of thesubject properties was tainted with bad faith because of its actual or constructive knowledge that the

said properties are subject of the present recovery suit at the time it acquired the certificates of titlecovering the said properties in its name. Consequently, whether or not it is ultimately established thatthe properties are ill-gotten wealth is of no actual significance to the incident pending considerationsince the action against defendant bank is predicated not on the claim that it had knowledge of theill-gotten wealth character of the properties in question but rather on whether or not it hadknowledge, actual or constructive, of the fact that the properties it registered in its name are thesubject of the instant recovery suit. Besides, plaintiff already admits that the evidence it hadpresented as against the original defendants would not apply to defendant bank for the reason that
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there is no allegation in the second amended complaint imputing responsibility or participation on thepart of the said bank insofar as the issue of accumulation of wealth by the original defendants areconcerned. Thus, there appears no basis for defendant banks apprehension that it would bedeprived of its right to due process if its not given the opportunity to cross-examine the witnessespresented prior to its inclusion as party defendant in the case. To reiterate, the only issue insofar asdefendant bank is concerned is whether there is evidence to show that it acquired the titles to the

sequestered properties in bad faith.

Neither are we inclined to sustain defendants bank argument that the Court cannot grant a separatetrial in this case because it has no jurisdiction over the claim that defendant bank acquired theproperties in bad faith. Indeed, the issue of defendant banks acquisition of the properties in bad faithis merely incidental to the main action which is for reversion, reconveyance, restitution, accountingand damages. It is axiomatic that jurisdiction over the subject matter of a case is conferred by lawand is determined by the allegations in the complaint and the character of the relief sought,irrespective of whether the plaintiff is entitled to all or some of the claims asserted therein(Russell v.Vestil, 304 SCRA 738; Saura v. Saura, Jr., 313 SCRA 465).12

Asian Bank moved for the reconsideration of the resolution, but the Sandiganbayan denied its

motion through the second assailed resolution issued on July 13, 2005.

13

Hence, Metrobank commenced this special civil action forcertiorarias the successor-in-interest ofAsian Bank and transferee of the properties.14

Issues

Metrobank contends that the Sandiganbayan committed grave abuse of discretion in ruling that: (1)the Republic was entit led to a separate trial against Asian Bank; (2) the only issue as regards AsianBank was whether there was evidence that Asian Bank acquired the properties in bad faith; and

(3) the Sandiganbayan had jurisdiction over the issue of Asian Banks alleged bad faith in acquiring

the properties.

15

Anent the first issue, Metrobank states that the holding of a separate trial would deny it due process,because Asian Bank was entitled to contest the evidence of the Republic against the originaldefendants prior to Asian Banks inclusion as an additional defendant; that Asian Bank (Metrobank)would be deprived of its day in court if a separate trial was held against it, considering that theRepublic had already presented such evidence prior to its being impleaded as an additionaldefendant; that such evidence would be hearsay unless Asian Bank (Metrobank) was afforded theopportunity to test and to object to the admissibility of the evidence; that because Asian Bankdisputed the allegedly ill-gotten character of the properties and denied any involvement in theirallegedly unlawful acquisition or any connivance with the original defendants in their acquisition,Asian Bank should be given the opportunity to refute the Republics adverse evidence on theallegedly illgotten nature of the properties.16

With respect to the second issue, Metrobank submits thuswise:

8.02 x x x the Honorable Sandiganbayan failed to consider that Respondent Republic of thePhilippines claim for the recovery of the subject properties from Asian Bank Corporation is anchoredmainly on its allegations that: a) the subject properties constitute ill-gotten wealth of the otherdefendants in the instant civil case; and, b) Asian Bank Corporation acquired the subject propertiesin bad faith and with due notice of the pendency of the ill-gotten wealth case. In other words, the
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determination of the character of the subject properties as "ill-gotten wealth" is equally important andrelevant for Asian Bank Corporation as it is for the other defendants considering that the issue of itsalleged acquisition in bad faith of the subject properties is premised on Respondent Republic of thePhilippines claim that the subject properties form part of the ill-gotten wealth of the late PresidentMarcos and his cronies. Such being the case, Asian Bank Corporation is entitled as a matter of rightto contest whatever evidence was presented by Respondent Republic of the Philippines on these

two (2) issues, specifically the character and nature of the subject properties.

8.03 It must be stressed that the discretion of the court to order a separate trial of such issuesshould only be exercised where the issue ordered to be separately tried is so independent of theother issues that its trial will in no way involve the trial of the issues to be thereafter tried and wherethe determination of that issues will satisfactorily and with practical certainty dispose of the case, ifdecided for defendant. Considering that the issue on Asian Bank Corporations alleged acquisition inbad faith of the subject properties is intimately related to the issue on the character and nature of thesubject properties as ill-gotten wealth of the other defendants in the instant civil case, there isabsolutely no legal or factual basis for the holding of a separate trial against Asian BankCorporation.17

As to the third issue, Metrobank posits that Asian Bank acquired the properties long after they hadbeen acquired by the original defendants supposedly through unlawful means; that the Republicadmitted that the evidence adduced against the original defendants would not apply to Asian Bankbecause the amended complaint in Civil Case No. 0004 did not impute any responsibility to AsianBank for the accumulation of wealth by the original defendants, or did not allege that Asian Bank hadparticipated in such accumulation of wealth; that there was also no allegation or proof that AsianBank had been a business associate, dummy, nominee or agent of the Marcoses; that the inclusionof Asian Bank was not warranted under the law; that Asian Bank was a transferee in good faith andfor valuable consideration; that the Sandiganbayan had no jurisdiction over civil cases againstinnocent purchasers for value like Asian Bank that had no notice of the allegedly ill-gotten nature ofthe properties; and that considering the admission of the Republic that the issue on the accumulationof wealth by the original defendants did not at all concern Asian Bank, it follows that theSandiganbayan had no jurisdiction to pass judgment on the validity of Asian Banks ownership of the

properties.18

In contrast, the Republic insists that the Rules of Courtallowed separate trials if the issues or claimsagainst several defendants were entirely distinct and separate, notwithstanding that the main claimagainst the original defendants and the issue against Asian Bank involved the same properties; thatthe allegations in the case against Spouses Genito and the other original defendants pertained tothe Republics claim that the properties listed in Annex A of the original complaint constituted ill-gotten wealth, resulting in the probable forfeiture of the listed properties should the Republicestablish in the end that such original defendants had illegally or unlawfully acquired such properties;that although the Republic conceded that neither Asian Bank nor Metrobank had any participationwhatsoever in the commission of the illegal or unlawful acts, the only issue relevant to Metrobankbeing whether it had knowledge that the properties had been in custodia legis at the time of itsacquisition of them to determine its allegation of being an innocent purchaser for valuableconsideration; that because the properties were situated in the heart of Quezon City, whose landrecords had been destroyed by fire in 1998, resulting in the rampant proliferation of fake land titles,Asian Bank should have acted with extra caution in ascertaining the validity of the mortgagorscertificates of title; and that the series of transactions involving the properties was made underdubious circumstances.19
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The Republic posits that the Sandiganbayan had exclusive original jurisdiction over all casesinvolving the recovery of ill-gotten wealth pursuant to Executive Orders No. 1, No. 2, No. 14 and No.14-A issued in 1986, laws encompassing the recovery of sequestered properties disposed of by theoriginal defendants while such properties remained in custodia legis and pending the final resolutionof the suit; and that the properties pertaining to Spouses Genito were among the properties placedunder the writs of sequestration issued by the Presidential Commission on Good Government

(PCGG), thereby effectively putting such properties in custodia legis and rendering them beyonddisposition except upon the prior approval of the Sandiganbayan.20

Ruling

The petition forcertiorariis partly meritorious.

The Sandiganbayan gravely abused its discretion in granting the Republics motion for separate trial,but was correct in upholding its jurisdiction over the Republics claim against Asian Bank(Metrobank).

First and Second Issues:

Separate Trials are Improper

The first and second issues, being interrelated, are jointly discussed and resolved.

The rule on separate trials in civil actions is found in Section 2, Rule 31 of theRules of Court, whichreads:

Section 2. Separate trials. The court, in furtherance of convenience or to avoid prejudice, mayorder a separate trial of any claim, cross-claim, counterclaim, or third-party complaint, or of anyseparate issue or of any number of claims, cross-claims, counterclaims, third-party complaints orissues.

The text of the rule grants to the trial court the discretion to determine if a separate trial of any claim,cross-claim, counterclaim, or third-party complaint, or of any separate issue or of any number ofclaims, cross-claims, counterclaims, third-party complaints or issues should be held, provided thatthe exercise of such discretion is in furtherance of convenience or to avoid prejudice to any party.

The rule is almost identical with Rule 42(b) of the United States Federal Rules of CivilProcedure (Federal Rules), a provision that governs separate trials in the United States FederalCourts (US Federal Courts), viz:

Rule 42. Consolidation; Separate Trials.

x x x x

(b) Separate Trials. The court, in furtherance of convenience or to avoid prejudice, or when separatetrials will be conducive to expedition and economy, may order a separate trial of any claim,crossclaim, counterclaim, or third-party claim, or of any separate issue or of any number of claims,crossclaims, counterclaims, third-party claims, or issues, always preserving the inviolate right of trialby jury as declared by the Seventh Amendment to the Constitution or as given by a statute of theUnited States.
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The US Federal Courts have applied Rule 42(b) by using several principles and parameters whoseapplication in this jurisdiction may be warranted because our rule on separate trials has beenpatterned after the original version of Rule 42(b).21 There is no obstacle to adopting such principlesand parameters as guides in the application of our own rule on separate trials. This is because,generally speaking, the Court has randomly accepted the practices in the US Courts in theelucidation and application of our own rules of procedure that have themselves originated from or

been inspired by the practice and procedure in the Federal Courts and the various US State Courts.

In Bowers v. Navistar International Transport Corporation,22 we find the following explanation madeby the US District Court for the Southern District of New York on the objectives of having separatetrials, to wit:

The aim and purpose of the Rule is aptly summarized in C. Wright and A Millers Federal Practiceand Procedure:

The provision for separate trials in Rule 42 (b) is intended to further convenience, avoid delay andprejudice, and serve the ends of justice. It is the interest of efficient judicial administration that is tobe controlling rather than the wishes of the parties. The piecemeal trial of separate issues in a single

suit is not to be the usual course. It should be resorted to only in the exercise of informed discretionwhen the court believes that separation will achieve the purposes of the rule.

x x x x

As explained recently by the Second Circuit in United v. Alcan Aluminum Corp., Nos. 92-6158, 61601993 WL 100100, 1 (2d Cir., April 6, 1993), the purpose of separate trials underRule 42 (b) is to"isolate issues to be resolved, avoid lengthy and perhaps needless litigation . . . and to encouragesettlement discussions and speed up remedial action." (citing,Amoco Oil v. Borden, Inc., 889 F.2d664, 668 (5th Cir. 1989); Katsaros v. Cody, 744 F.2d 270, 278 (2d Cir.), cert. denied sub nom., 469U.S. 1072, 105 S. Ct. 565, 83 L. Ed. 2d 506 (1984) (separate trials are proper to further convenienceor to avoid prejudice); Ismail v. Cohen, 706 F. Supp. 243, 251 (S.D.N.Y. 1989) (quoting,UnitedStates v. International Business Machines Corp., 60 F.R.D. 654, 657 (S.D.N.Y. 1973) (separate trialsunderRule 42 (b) are appropriate, although not mandatory, to "(1) avoid prejudice; (2) provide forconvenience, or (3) expedite the proceedings and be economical.") Separate trials, however, remainthe exception rather than the rule. See, e.g., Response of Carolina, Inc. v. Leasco Response,Inc., 537 F.2d 137 (5th Cir. 1976) xxx (separation of issues is not the usual course underRule 42(b)). The moving party bears the burden of establishing that separate trials are necessary to preventprejudice or confusion and serve the ends of justice.Buscemi v. Pepsico, Inc., 736 F. Supp. 1267,1271 (S.D.N.Y. 1990).

In Divine Restoration Apostolic Church v. Nationwide Mutual Insurance Co.,23 the US District Courtfor the Southern District of Texas, Houston Division specified that separate trials remained theexception, and emphasized that the moving party had the burden to establish the necessity for theseparation of issues, viz:

Rule 42 (b) provides that a court has discretion to order separate trials of claims "in furtherance ofconvenience or to avoid prejudice, or when separate trials will be conducive to expedition andeconomy." FED. R. CIV. P.42 (b). Thus, the two primary factors to be considered in determiningwhether to order separate trials are efficient judicial administration and potential prejudice.Separation of issues for separate trials is "not the usual course that should be followed,"McDaniel v.

Anheuser-Bush, Inc., 987 F. 2d 298, 304 (5th Cir. 1993), and the burden is on the party seeking


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separate trials to prove that separation is necessary. 9A CHARLES ALAN WRIGHT, ARTHUR R.MILLER & MARY KAY KANE, FEDERAL PRACTICE AND PROCEDURE 2388 (3d ed. 2001).

x x x x

Still, in Corrigan v. Methodist Hospital,24 the US District Court for the Eastern District of Pennsylvania

has cautioned against the unfettered granting of separate trials, thusly:

Courts order separate trials only when "clearly necessary."Wetherill v. University of Chicago, 565 F.Supp. 1553, 1566-67 (N.D. Ill. 1983) (citing 5 James William Moore, Moores Federal Practice at pp.42-37 to 42-38 & n.4 (1982)). This is because a "single trial will generally lessen the delay, expense,and inconvenience to the parties and the courts." 5 James William Moore, Moores FederalPractice P. 42-03[1], at p. 42-43 (1994); Laitram Corp. v. Hewlett-Packard Co., 791 F. Supp. 113, 115(E.D. La. 1992); Willemijn Houdstermaatschaapij BV. V. Apollo Computer, 707 F. Supp. 1429, 1433(D. Del. 1989). The movant has the burden to show prejudice. Moore at p. 42-48.

x x x A Colorado District Court found three factors to weigh in determining whether to order separatetrials for separate defendants. These are 1) whether separate trials would further the convenience of

the parties; 2) whether separate trials would promote judicial economy; and 3) whether separatetrials would avoid substantial prejudice to the parties.

Tri-R Sys. V. Friedman & Son, 94 F.R.D. 726, 727 (D. Colo. 1982).

In Miller v. American Bonding Company,25 the US Supreme Court has delimited the holding ofseparate trials to only the exceptional instances where there were special and persuasive reasonsfor departing from the general practice of trying all issues in a case at only one time, stating:

In actions at law, the general practice is to try all the issues in a case at one time; and it is only inexceptional instances where there are special and persuasive reasons for departing from thispractice that distinct causes of action asserted in the same case may be made the subjects of

separate trials. Whether this reasonably may be done in any particular instance rests largely in thecourts discretion.

Further, Corpus Juris Secundum26 makes clear that neither party had an absolute right to have aseparate trial of an issue; hence, the motion to that effect should be allowed only to avoid prejudice,further convenience, promote justice, and give a fair trial to all parties, to wit:

Generally speaking, a lawsuit should not be tried piecemeal, or at least such a trial should beundertaken only with great caution and sparingly. There should be one full and comprehensive trialcovering all disputed matters, and parties cannot, as of right, have a trial divided. It is the policy ofthe law to limit the number of trials as far as possible, and

separate trials are granted only in exceptional cases. Even under a statute permitting trials ofseparate issues, neither party has an absolute right to have a separate trial of an issue involved. Thetrial of all issues together is especially appropriate in an action at law wherein the issues are notcomplicated, x x x, or where the issues are basically the same x x x

x x x Separate trials of issues should be ordered where such separation will avoid prejudice, furtherconvenience, promote justice, and give a fair trial to all parties.


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Bearing in mind the foregoing principles and parameters defined by the relevant US case law, weconclude that the Sandiganbayan committed grave abuse of its discretion in ordering a separate trialas to Asian Bank (Metrobank) on the ground that the issue against Asian Bank was distinct andseparate from that against the original defendants. Thereby, the Sandiganbayan veered away fromthe general rule of having all the issues in every case tried at one time, unreasonably shunting asidethe dictum in Corrigan, supra, that a "single trial will generally lessen the delay, expense, and

inconvenience to the parties and the courts."27

Exceptions to the general rule are permitted only when there are extraordinary grounds forconducting separate trials on different issues raised in the same case, or when separate trials of theissues will avoid prejudice, or when separate trials of the issues will further convenience, or whenseparate trials of the issues will promote justice, or when separate trials of the issues will give a fairtrial to all parties. Otherwise, the general rule must apply.

As we see it, however, the justification of the Sandiganbayan for allowing the separate trial did notconstitute a special or compelling reason like any of the exceptions. To begin with, the issue relevantto Asian Bank was not complicated. In that context, the separate trial would not be in furtherance ofconvenience. And, secondly, the cause of action against Asian Bank was necessarily connected with

the cause of action against the original defendants.1wphi1

Should the Sandiganbayan resolve the issueagainst Spouses Genito in a separate trial on the basis of the evidence adduced against the originaldefendants, the properties would be thereby adjudged as ill-gotten and liable to forfeiture in favor ofthe Republic without Metrobank being given the opportunity to rebut or explain its side. The outcomewould surely be prejudicial towards Metrobank.

The representation by the Republic in its comment to the petition of Metrobank, that the latter"merely seeks to be afforded the opportunity to confront the witnesses and documentary exhibits,"and that it will "still be granted said right during the conduct of the separate trial, if proper groundsare presented therefor,"28 unfairly dismisses the objective possibility of leaving the opportunity toconfront the witnesses and documentary exhibits to be given to Metrobank in the separate trial asalready too late. The properties, though already registered in the name of Asian Bank, would bemeanwhile declared liable to forfeiture in favor of the Republic, causing Metrobank to suffer the

deprivation of its properties without due process of law. Only a joint trial with the original defendantscould afford to Metrobank the equal and efficient opportunity to confront and to contest all theevidence bearing on its ownership of the properties. Hence, the disadvantages that a separate trialwould cause to Metrobank would far outweigh any good or benefit that the Republic wouldseemingly stand to gain from the separation of trials.

We must safeguard Metrobanks right to be heard in the defense of its registered ownership of theproperties, for that is what our Constitution requires us to do. Hence, the grant by theSandiganbayan of the Republics motion for separate trial, not being in furtherance of convenienceor would not avoid prejudice to a party, and being even contrary to the Constitution, the law andjurisprudence, was arbitrary, and, therefore, a grave abuse of discretion amounting to lack or excessof jurisdiction on the part of the Sandiganbayan.29

Third Issue:Sandiganbayan has exclusive original jurisdictionover the matter involving Metrobank

Presidential Decree No. 1606,30as amended by Republic Act No. 797531and Republic Act No.8249,32 vests the Sandiganbayan with original exclusive jurisdiction over civil and criminal cases
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instituted pursuant to and in connection with Executive Orders No. 1, No. 2, No. 14 and No. 14-A,issued in 1986 by then President Corazon C. Aquino.

Executive Order No. 1 refers to cases of recovery and sequestration of ill-gotten wealth amassed bythe Marcoses their relatives, subordinates, and close associates, directly or through nominees, bytaking undue advantage of their public office and/or by using their powers, authority, influence,

connections or relationships. Executive Order No. 2 states that the ill-gotten wealth includes assetsand properties in the form of estates and real properties in the Philippines and abroad. ExecutiveOrders No. 14 and No. 14-A pertain to the Sandiganbayans jurisdiction over criminal and civil casesrelative to the ill-gotten wealth of the Marcoses and their cronies.

The amended complaint filed by the Republic to implead Asian Bank prays for reversion,reconveyance, reconstitution, accounting and damages. In other words, the Republic would recoverill-gotten wealth, by virtue of which the properties in question came under sequestration and arenow, for that reason, in custodia legis.33

Although the Republic has not imputed any responsibility to Asian Bank for the illegal accumulationof wealth by the original defendants, or has not averred that Asian Bank was a business associate,

dummy, nominee, or agent of the Marcoses, the allegation in its amended complaint in Civil CaseNo. 0004 that Asian Bank acted with bad faith for ignoring the sequestration of the properties as ill-gotten wealth has made the cause of action against Asian Bank incidental or necessarily connectedto the cause of action against the original defendants. Consequently, the Sandiganbayan hasoriginal exclusive jurisdiction over the claim against Asian Bank, for the Court has ruledin Presidential Commission on Good Government v. Sandiganbayan,34 that "the Sandiganbayan hasoriginal and exclusive jurisdiction not only over principal causes of action involving recovery of ill-gotten wealth, but also over all incidents arising from, incidental to, or related to such cases." TheCourt made a similar pronouncement sustaining the jurisdiction of the Sandiganbayan in Republic ofthe Philippines (PCGG) v. Sandiganbayan (First Division) ,35 to wit:

We cannot possibly sustain such a puerile stand. Pea itself already dealt with the matter when itstated that under Section 2 of Executive Order No. 14, all cases of the Commission regarding

alleged illgotten properties of former President Marcos and his relatives, subordinates, cronies,nominees and so forth, whether civil or criminal, are

lodged within the exclusive and original jurisdiction of the Sandiganbayan, "and all incidents arisingfrom, incidental to, or related to such cases necessarily fall likewise under the Sandiganbayansexclusive and original jurisdiction, subject to review on certiorari exclusively by the Supreme Court."

WHEREFORE, the Court PARTIALLY GRANTS the petition forcertiorari.

Let the writ ofcertiorariissue: (a) ANNULLING AND SETTING ASIDE the Resolution dated June25, 2004 and the Resolution dated July 13, 2005 issued by the Sandiganbayan in Civil Case No.0004 granting the motion for separate trial of the Republic of the Philippines as to Metropolitan Bank

and Trust Company; and (b), DIRECTINGthe Sandiganbayan to hear Civil Case No. 0004 againstMetropolitan Bank and Trust Company in the same trial conducted against the original defendants inCivil Case No. 0004.

The Court DECLARES that the Sandiganbayan has original exclusive jurisdiction over the amendedcomplaint in Civil Case No. 0004 as against Asian Bank Corporation/Metropolitan Bank and TrustCompany.


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No pronouncements on costs of suit.

SO ORDERED.


Manila

SECOND DIVISION

G.R. No. 178952 April 10, 2013

HEIRS OF LAZARO GALLARDO, namely: PROSPERIDAD PANLAQUI-GALLARDO, MARIACARMEN P. GALLARDO-NUNAG, MARIO LAZARO P. GALLARDO, JOY CATALINA P.GALLARDO, PINKY PERPETUA P. GALLARDO and LAZARO P. GALLARDO, JR., Petitioners,vs.

PORFERIO SOLIMAN, VIVIAN VALETE, and ANTONIO SOLIMAN, Respondents.*

D E C I S I O N

DEL CASTILLO, J.:

When one party enters into a covenant with another, he must perform his obligations with fealty andgood faith. This becomes more imperative where such party has been given a grant, such as land,under the land reform laws. While the tenant is emancipated from bondage to the soil, the landowneris entitled to his just compensation for the deprivation of his land.

This Petition for Review on Certiorari1 assails the May 21 , 2007 Resolution2of the Court of Appeals

(CA) in CA-GR. SP No. 98730 as well as its July 23, 2007 Resolution3 denying petitioners Motion toReconsider.4

Factual Antecedents

Petitioners Prosperidad Panlaqui-Gallardo (Prosperidad), Maria Carmen P. Gallardo-Nunag, MarioLazaro P. Gallardo, Joy Catalina P. Gallardo, Pinky Perpetua P. Gallardo and Lazaro P. Gallardo, Jr.are the heirs of Lazaro Gallardo (Lazaro). Lazaro and Prosperidad are the registered owners of a4.3699-hectare parcel of land in Balingcanaway, Tarlac, Tarlac, covered by Transfer Certificate ofTitle No. (TCT) 976035 (the land). The land was placed under the coverage of Operation LandTransfer pursuant to Presidential Decree (PD) No. 27,6 and respondent Porferio Soliman (Porferio)was instituted as a qualified farmer tenant-transferee thereof.

On June 2, 1995, petitioners filed a Complaint7 for collection of land amortizations, dispossession,ejectment, and cancellation of Deed of Transfer8 and Emancipation Patent against respondentPorferio before the Office of the Provincial Agrarian Reform Adjudicator (PARAD), Diwa ng Tarlak,Tarlac City. The case was docketed as DARAB Case No. 898-T95.
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The Complaint was later amended9 to include, as additional respondents, Vivian Valete (Vivian),Antonio Soliman (Antonio), the Provincial Agrarian Reform Office of Tarlac (Tarlac PARO), and theRegister of Deeds of Tarlac.

It appears that a Kasunduan10 dated December 10, 1985 and a notarized Deed of Transfer11 wereexecuted by Lazaro and Porferio. Under said deeds, Porferio, as sole farmer-beneficiary and in

consideration for the transfer of the whole of the land in his favor, obliged himself to pay thepetitioners 999 cavans of palay in 15 equal yearly amortizations under the governments DirectPayment Scheme pursuant to PD 27. It was agreed that an advance payment of 66 cavans and 28kilos, representing total lease payments made by Porferio to Lazaro since 1973, shall be deductedfrom the 999 cavans, thus leaving an annual amortization to be made by Porferio of about 62 cavansor 16 cavans12 per hectare per year. However, Porferio paid only a total of 121.2 cavans or 480.9cavans short of the total amortizations due from 1986 to 1995, or 10 years into the deed. Petitionersclaimed that notwithstanding written demands13and the failure/refusal of Porferio to attend BarangayAgrarian Reform Committee (BARC) scheduled mediation14 and pay amortizations on the land tothem or to the Land Bank of the Philippines,15 the Tarlac PARO issued Emancipation Patents (EPNos. 437306 to 308)16 not only in favor of Porferio, but also of his children, herein respondents Vivianand Antonio who were not legally instituted farmer tenant-transferees of the land under PD 27.

Respondents Porferio, Vivian and Antonio alleged in their Amended Answer17 that TCT No. 97603has been cancelled and new titles have been issued in their names, specifically TCT Nos. 21512,21513, and 21514,18pursuant to EP Nos. 437306 to 308. Thus, they argued that the PARAD has nojurisdiction over the case and no authority to cancel such titles as the same pertain to the regularcourts. They further contended that between them and the petitioners, there is no tenancyrelationship; and that they have exceeded payments for the land, having paid, since 1973, a total of1,050 cavans plus P5,000.00, and an additional 187 cavans after 1985. As counterclaim, theysought reimbursement of their alleged overpayment, and the payment of actual, moral andexemplary damages, and attorneys fees.

Ruling of the PARAD

On November 24, 1999, the PARAD rendered its Decision19declaring itself clothed with jurisdictionover the controversy which partakes of an agrarian dispute.20Notwithstanding its observation that theKasunduan and the Deed of Transfer were defective for non-compliance with certain requirements ofPD 27,21 the PARAD nevertheless opined that said deeds were "within the context of PD 27".22 It alsoheld that Porferio still owes petitioners 597.8 cavans of palay.23

As regards the issue of whether Vivian and Antonio are entitled to the beneficial effects of PD 27despite the fact that they were not instituted as tenants of the land, the PARAD held that the samehas been mooted by the issuance of Emancipation Patents in their favor.24 It also opined that thejurisdiction over said issue lies not with PARAD but the Secretary of the Department of AgrarianReform (DAR). It thus upheld the validity of EP Nos. 437306 to 308 based on the presumption of theregularity in the performance of official functions.25

The PARAD also ruled that the failure of Porferio, Vivian and Antonio to pay rentals/amortizationscannot be considered as deliberate26because they "labored under the honest belief that they arenow vested with absolute ownership"27 of the land; moreover they "cannot be expected tounderstand the legal implications of the existing lien/encumbrance annotated on their respectivetitles entered in 1990 to insure payment of the land value"28 to petitioners. The PARAD thus directedPorferio, Vivian and Antonio to pay petitioners a total of about 478.24 cavans of palay, P25,000.00moral and exemplary damages, P15,000.00 attorneys fees, and costs.29
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Ruling of the Department of Agrarian Reform Adjudication Board (DARAB)

Petitioners appealed to the DARAB30 which likewise upheld the validity of the Emancipation Patentsfollowing the ratiocination of the PARAD that they have been regularly issued.

It also affirmed the PARADs finding that respondents failure to pay the rentals/amortizations was

not deliberate and willful. The DARAB further found that respondents have made a total payment of280 cavans of palay to petitioners from 1982 to 1985, and thus have religiously paid the leaserentals for four years at 70 cavans annually.31 To this should be added payments made in 1986, 1988and 1991 totaling 121.1 cavans.

Thus, on February 12, 2007, the DARAB rendered its Decision32 affirming the judgment of thePARAD, with modification that respondents were ordered to pay petitioners 448.35 cavans of palayor their money equivalent at the current market value representing the amortizations due accruingfrom 1986 up to the year 2000, and 29.89 cavans annually thereafter until the land value fixed at 999cavans is fully paid. The award of moral and exemplary damages, attorneys fees, and costs wasdeleted.

Petitioners went up to the CA by Petition for Review.33

Ruling of the Court of Appeals

Docketed as CA-G.R. SP No. 98730, the Petition for Review assailed the DARAB Decision,contending that the issuance of the Emancipation Patents in respondents name was irregular, andthat Porferios deliberate failure and refusal to pay the annual amortizations since 1986 despitedemand should result in the cancellation of his title.

On May 21, 2007, the CA issued the assailed Resolution dismissing petitioners Petition for Reviewon the ground that the verification and certification against forum shopping was signed by only fourof the six petitioners. Petitioners Mario Lazaro P. Gallardo and Lazaro P. Gallardo, Jr. did not sign,

and no special power of attorney to sign in their favor accompanied the Petition. The CA held thatthe certification against forum shopping must be executed and signed by all of the petitioners, orelse it is insufficient.

Petitioners moved to reconsider which was again rebuffed by the CA in its July 23, 2007 Resolution.

Hence, the present Petition.

Issues

I

THE HON. COURT OF APPEALS X X X ERRED IN HOLDING THAT THE SIGNING OF THEVERIFICATION AND CERTIFICATION OF NON-FORUM SHOPPING BY ONLY FOUR (4) OF THESIX (6) PETITIONERS IS INSUFFICIENT TO MEET THE REQUIREMENTS OF THE RULE.

II

THE HON. COURT OF APPEALS X X X ERRED IN OUTRIGHTLY DISMISSING THE PETITIONFOR REVIEW ON PURELY TECHNICAL GROUND.34
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Petitioners Arguments

In seeking a reversal of the assailed CA Resolutions, petitioners claim substantial compliance, citingIglesia ni Cristo v. Judge Ponferrada.35In said case, this Court applied the rule on substantialcompliance on account of the commonality of interest of all the parties in the subject of thecontroversy. Such commonality of interest clothed one of the plaintiffs-heirs/co-owners with the

authority to inform the trial court on behalf of the others that they have not commenced any action orclaim involving the same issues in another court or tribunal, and that there is no other pending actionor claim in another court or tribunal involving the same issues.

Petitioners add that the verification and certification against forum shopping in their CA Petition forReview especially states that:

That we are signing this Petition for ourselves and also in behalves [sic] of our co-Petitionersbecause we have a community of interest as we are all co-heirs of the deceased Lazaro Gallardoand who have common interest in the property subject of the case and in connection with this case,we have not commenced any other action, counterclaim or proceeding involving the same issuesraised in the above captioned case, in the Supreme Court, the Court of Appeals, or different

Divisions thereof or any other tribunal or agency.36

Petitioners further plead that their case be decided on the merits rather than on technicality. Theyadd that instead of dismissing their Petition, the CA should have granted them ample time to correctthe defective verification and certification. Finally, petitioners claim that they honestly believed thatthe signing by four of them constituted substantial compliance with the rules of procedure, and thattherefore their case be treated as a special case to compel relaxation of the rules.

Respondents Arguments

Respondents, in their Comment,37insist on the correctness of the assailed Resolutions, and that TCTNos. 21512, 21513, and 21524 issued in their names can no longer be cancelled, nor may the land

be returned to petitioners as a result of its being placed under the coverage of PD 27.

Our Ruling

We grant the Petition.

The Courts disquisitions point favorably toward the direction of petitioners argument. In Heirs ofDomingo Hernandez, Sr. v. Mingoa, Sr.,38 the Court ruled that

The general rule is that the certificate of non-forum shopping must be signed by all the plaintiffs in acase and the signature of only one of them is insufficient. However, the Court has also stressed thatthe rules on forum shopping were designed to promote and facilitate the orderly administration of

justice and thus should not be interpreted with such absolute literalness as to subvert its ownultimate and legitimate objective. The rule of substantial compliance may be availed of with respectto the contents of the certification. This is because the requirement of strict compliance with theprovisions regarding the certification of non-forum shopping merely underscores its mandatorynature in that the certification cannot be altogether dispensed with or its requirements completelydisregarded. Thus, under justifiable circumstances, the Court has relaxed the rule requiring thesubmission of such certification considering that although it is obligatory, it is not jurisdictional.
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In HLC Construction and Development Corporation v. Emily Homes Subdivision HomeownersAssociation, it was held that the signature of only one of the petitioners in the certification againstforum shopping substantially complied with rules because all the petitioners share a commoninterest and invoke a common cause of action or defense.

The same leniency was applied by the Court in Cavile v. Heirs of Cavile, because the lone petitioner

who executed the certification of non-forum shopping was a relative and co-owner of the otherpetitioners with whom he shares a common interest. x x x

x x x

In the instant case, petitioners share a common interest and defense inasmuch as they collectivelyclaim a right not to be dispossessed of the subject lot by virtue of their and their deceased parentsconstruction of a family home and occupation thereof for more than 10 years. The commonality oftheir stance to defend their alleged right over the controverted lot thus gave petitioners x x xauthority to inform the Court of Appeals in behalf of the other petitioners that they have notcommenced any action or claim involving the same issues in another court or tribunal, and that thereis no other pending action or claim in another court or tribunal involving the same issues.

Here, all the petitioners are immediate relatives who share a common interest in the land sought tobe reconveyed and a common cause of action raising the same arguments in support thereof. Therewas sufficient basis, therefore, for Domingo Hernandez, Jr. to speak for and in behalf of his co-petitioners when he certified that they had not filed any action or claim in another court or tribunalinvolving the same issue. Thus, the Verification/Certification that Hernandez, Jr. executed constitutessubstantial compliance under the Rules.39

Similarly, in Traveo v. Bobongon Banana Growers Multi-Purpose Cooperative40 the Court held that:

5) The certification against forum shopping must be signed by all the plaintiffs or petitioners in acase; otherwise, those who did not sign will be dropped as parties to the case. Under reasonable or

justifiable circumstances, however, as when all the plaintiffs or petitioners share a common interestand invoke a common cause of action or defense, the signature of only one of them in thecertification against forum shopping substantially complies with the Rule.41

The same position was taken in Medado v. Heirs of the Late Antonio Consing,42where the Court heldthat "where the petitioners are immediate relatives, who share a common interest in the propertysubject of the action, the fact that only one of the petitioners executed the verification or certificationof non forum shopping will not deter the court from proceeding with the action."

The same situation obtains in this case. Petitioners are all heirs of the deceased Lazaro. As such,they undoubtedly share a common interest in the land, as well as common claims and defenses, asagainst respondents.

In Medado, the Court held further:

Furthermore, we have consistently held that verification of a pleading is a formal, not a jurisdictional,requirement intended to secure the assurance that the matters alleged in a pleading are true andcorrect. Thus, the court may simply order the correction of unverified pleadings or act on them andwaive strict compliance with the rules. It is deemed substantially complied with when one who hasample knowledge to swear to the truth of the allegations in the complaint or petition signs the
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verification; and when matters alleged in the petition have been made in good faith or are true andcorrect x x x.43

It was therefore error for the CA to have dismissed the Petition for Review.

Aside from the fact that petitioners substantially complied with the rules, we also find it necessary for

the CA to decide the case on the merits considering the vital issues presented in the Petition. Thereis a need for the CA to resolve whether the Emancipation Patents issued in the name of Vivian andAntonio were valid, considering that by the evidence presented, they were never instituted astenants to the land. Porferio appears to be the sole tenant of the land, as can be seen from theKasunduan and notarized Deed of Transfer. It would be enlightening to know how Vivian and Antonioacquired patents and certificates of title in their name notwithstanding the fact that they were neverinstituted as tenants or beneficiaries of PD 27. This becomes more imperative considering that thePARADs pronouncement that the issue regarding the cancellation of the Emancipation Patents andcertificates of title issued to Vivian and Antonio lies within the exclusive jurisdiction of the DARSecretary does not hold water. On the contrary, the DARAB has exclusive jurisdiction over casesinvolving the cancellation of registered emancipation patents. The DAR Secretary, on the other hand,has exclusive jurisdiction over the issuance, recall or cancellation of Emancipation

Patents/Certificates of Land Ownership Awards that are not yet registered with the Register ofDeeds.44

Also, as the farmer tenant-transferee of the land under PD 27, Porferio is by law required to makeamortizations on the land until he completes payment of the fixed price thereof. Under theKasunduan and Deed of Transfer, he has to make good on his payments to the landowners. If hefails to pay, cancellation of any Certificate of Land Transfer or Emancipation Patent issued in hisname is proper, pursuant to Section 245of PD 816.46 Considering the tenor of the law, the PARADsand DARABs pronouncement that respondents cannot be faulted for they "labored under the honestbelief that they were now vested with absolute ownership"47 of the land, and that they "cannot beexpected to understand the legal implications of the existing lien/encumbrances annotated on theirrespective titles entered into in 1990 to insure payment of the land value"48 to petitioners, appears tobe anchored not on legal ground. Besides, it is common maxim that "ignorance of the law excuses

no one from compliance therewith."49 Moreover, when one party enters into a covenant with another,he must perform his obligations with fealty and good faith. This becomes more imperative wheresuch party has been given a grant, such as land, under the land reform laws. While the tenant isemancipated from bondage to the soil, the landowner is entitled to his just compensation for thedeprivation of his land.

The CA should likewise settle the issue as to whether Porferio may be said to have deliberatelyrefused to honor his obligation to pay the amortizations on the land, per the Kasunduan and Deed ofTransfer, considering that on record, written demand has been served upon him, and despite suchdemand, Porferio failed to pay the amortizations.

Finally, an issue regarding interest arises, once it is resolved whether Porferio breached his

agreement with Lazaro under the Kasunduan and Deed of Transfer. The issue of whether petit ionersare entitled to recover interest on top of damages is a valid issue that must be addressed. This couldbe done through a proper assessment of the evidence.

Thus said, a remand of the case to the CA for proper disposition on the merits is in order.
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WHEREFORE, the Petition is GRANTED. The May 21, 2007 and July 23, 2007 Resolutions of theCourt of Appeals in CA-GR. SP No. 98730 are SET ASIDE. The case is REMANDED to the Court ofAppeals for appropriate disposition.

SO ORDERED.


Manila

SECOND DIVISION

G.R. No. 173121 April 3, 2013

FRANKLlN ALEJANDRO, Petitioner,vs.

OFFICE OF THE OMBUDSMAN FACT-FINDING AND INTELLIGENCE BUREAU, represented byAtty. Maria Olivia Elena A. Roxas, Respondent.

D E C I S I O N

BRION, J.:

We resolve the petition for review on certiorari,1filed by Franklin Alejanctro (petitioneJ), assailing theFebruary 21, 2006 decision2and the June 15, 2006 resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 88544. The CA dismissed for prematurity the petitioner's appeal on the August 20, 2004decision4 of the Office of the Deputy Ombudsman in OMB-C-A-03-0310-I finding him administrativelyliable for grave misconduct.

The Factual Antecedents

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

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

During the anti-water pilferage operation, the PNP-CIDG discovered that MICOs car-wash boysindeed had been illegally getting water from an MWSI fire hydrant. The PNP-CIDG arrested the car-wash boys and confiscated the containers used in getting water. At this point, the petitioner, Alfredosfather and the Barangay Chairman or punong barangay of Barangay 293, Zone 28, Binondo, Manila,interfered with the PNP-CIDGs operation by ordering several men to unload the confiscatedcontainers. This intervention caused further commotion and created an opportunity for theapprehended car-wash boys to escape.7
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On August 5, 2003, the respondent Office of the Ombudsman Fact-Finding and Intelligence Bureau,after conducting its initial investigation, filed with the Office of the Overall Deputy Ombudsman anadministrative complaint against the petitioner for his blatant refusal to recognize a joint legitimatepolice activity, and for his unwarranted intervention.8

In its decision9 dated August 20, 2004, the Office of the Deputy Ombudsman found the petitioner

guilty of grave misconduct and ordered his dismissal from the service. The Deputy Ombudsmanruled that the petitioner cannot overextend his authority as Barangay Chairman and induce otherpeople to disrespect proper authorities. The Deputy Ombudsman also added that the petitioner hadtolerated the illegal acts of MICOs car-wash boys.10

The petitioner filed a motion for reconsideration which the Office of the Deputy Ombudsman deniedin its order11of November 2, 2004.

The petitioner appealed to the CA via a petition for review under Rule 43 of the Rules of Court. In itsdecision12dated February 21, 2006, the CA dismissed the petition for premature filing. The CA ruledthat the petitioner failed to exhaust proper administrative remedies because he did not appeal theDeputy Ombudsmans decision to the Ombudsman.

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

The Petition

The petitioner posits that the CA erred in dismissing his petition outright without considering Rule 43of the Rules of Court and Administrative Order No. 07 (otherwise known as the Rules of Procedureof the Office of the Ombudsman),14 on the belief that the filing of a motion for reconsideration of thedecision of the Office of the Overall Deputy Ombudsman can already be considered as anexhaustion of administrative remedies. The petitioner further argues that the Office of theOmbudsman has no jurisdiction to order his dismissal from the service since under Republic Act No.

(RA) 7160 (otherwise known as the Local Government Code of 1991), an elective local official maybe removed from office only by the order of a proper court. Finally, he posits that the penalty ofdismissal from the service is not warranted under the available facts.

The Office of the Deputy Ombudsman, through the Office of the Solicitor General, pointed out in itsComment15that the petitioner failed to exhaust administrative remedies since he did not appeal thedecision of the Deputy Ombudsman to the Ombudsman. The Office of the Deputy Ombudsmanmaintained that under RA 677016 (The Ombudsman Act of 1989), the Office of the Ombudsman hasdisciplinary authority over all elective and appointive officials. It also asserted that sufficient evidenceexists to justify the petitioners dismissal from the service.

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

I.

WHETHER THE PRINCIPLE OF EXHAUSTION OF ADMINISTRATIVE REMEDIESREQUIRES A REQUEST FOR RECONSIDERATION FROM THE OFFICE OF THE DEPUTYOMBUDSMAN TO THE OMBUDSMAN FOR THE PURPOSE OF A RULE 43 REVIEW.

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

III.

WHETHER PETITIONERS ACT CONSTITUTES GRAVE MISCONDUCT TO WARRANT

HIS DISMISSAL.

The Courts Ruling

We deny the petition for lack of merit.

Preliminary Issues

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

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

We disagree with the CAs application of the doctrine of exhaustion of administrative remedies whichstates that when there is "a procedure for administrative review, x x x appeal, or reconsideration, thecourts x x x will not entertain a case unless the available administrative remedies have beenresorted to and the appropriate authorities have been given an opportunity to act and correct theerrors committed in the administrative forum."17

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

Section 7. FINALITY OF DECISION. Where the respondent is absolved of the charge and in caseof conviction where the penalty imposed is public censure or reprimand, suspension of not more

than one (1) month, or a fine equivalent to one (1) month salary, the decision shall be final andunappealable. In all other cases, the decision shall become final after the expiration of ten (10) daysfrom receipt thereof by the respondent, unless a motion for reconsideration or petition for certiorarishall have been filed by him as prescribed in Section 27 of RA 6770. [italics supplied; emphasis andunderscore ours]

Administrative Order No. 07 did not provide for another appeal from the decision of the DeputyOmbudsman to the Ombudsman. It simply requires that a motion for reconsideration or a petition forcertiorari may be filed in all other cases where the penalty imposed is not one involving publiccensure or reprimand, suspension of not more than one (1) month, or a fine equivalent to one (1)month salary. This post-judgment remedy is merely an opportunity for the Office of the DeputyOmbudsman, or the Office of the Ombudsman, to correct itself in certain cases. To our mind, the

petitioner has fully exhausted all administrative remedies when he filed his motion forreconsideration on the decision of the Deputy Ombudsman. There is no further need to review thecase at the administrative level since the Deputy Ombudsman has already acted on the case andhewas acting for and in behalf of the Office of the Ombudsman.

The Ombudsman has concurrent jurisdiction over administrative cases which are within thejurisdiction of the regular courts or administrative agencies
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The Office of the Ombudsman was created by no less than the Constitution.18It is tasked to exercisedisciplinary authority over all elective and appointive officials, save only for impeachable officers.While Section 21 of The Ombudsman Act19 and the Local Government Code both provide for theprocedure to discipline elective officials, the seeming conflicts between the two laws have beenresolved in cases decided by this Court.20

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

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

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

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

The Sandiganbayans jurisdiction extends only to public officials occupying positions correspondingto salary grade 27 and higher.22

Consequently, as we held in Office of the Ombudsman v. Rodriguez,23 any act or omission of a publicofficer or employee occupying a salary grade lower than 27 is within the concurrent jurisdiction of the

Ombudsman and of the regular courts or other investigative agencies.

24

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

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

x x x x

(c) A complaint against any elective barangay official shall be f iled before the sangguniangpanlungsod or sangguniang bayan concerned whose decision shall be final and executory. [italicssupplied]
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Since the complaint against the petitioner was initially filedwith the Office of the Ombudsman, theOmbudsman's exercise of jurisdiction is to the exclusion of the sangguniang bayan whose exerciseof jurisdiction is concurrent.

The Ombudsman has the power to impose administrative sanctions

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

These powers unmistakably grant the Office of the Ombudsman the power to directly imposeadministrative sanctions; its power is not merely recommendatory. We held inOffice of theOmbudsman v. Apolonio29 that:

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

Substantive Issue

The petitioner is liable for grave misconduct

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

After the petitioner introduced himself and inquired about the operation, the police officers

immediately showed their identifications and explained to him that they were conducting an anti-water pilferage operation. However, instead of assisting the PNP-CIDG, he actually ordered severalbystanders to defy the PNP-CIDGs whole operation. The petitioners act stirred further commotionthat unfortunately led to the escape of the apprehended car-wash boys.32

The petitioner, as Barangay Chairman, is tasked to enforce all laws and ordinances which areapplicable within the barangay, in the same manner that the police is bound to maintain peace andorder within the community. While the petitioner has general charge of the affairs in the barangay,
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the maintenance of peace and order is largely a police matter, with police authority beingpredominant33especially when the police has began to act on an enforcement matter.34 Themaintenance of peace and order in the community is a general function undertaken by the punongbarangay. It is a task expressly conferred to the punong barangay under Section 389(b)(3) of RA7160.35 On the other hand, the maintenance of peace and order carries both general and specificfunctions on the part of the police. Section 24 of RA 6975 (otherwise known as "the Department of

the Interior and Local Government Act of 1990"),36

as amended,37

enumerates the powers andfunctions of the police. In addition to the maintenance of peace and order, the police has theauthority to "investigate and prevent crimes, effect the arrest of criminal offenders, bring offenders tojustice and assist in their prosecution," and are charged with the enforcement of "laws andordinances relative to the protection of lives and properties."38 Examined side by side, policeauthority is superior to the punong barangays authority in a situation where the maintenance ofpeace and order has metamorphosed into crime prevention and the arrest of criminal offenders.

In this case, a criminal act was actually taking place and the situation was already beyond thegeneral maintenance of peace and order. The police was, at that point, under the obligation toprevent the commission of a crime and to effect the arrest, as it actually did, of criminal offenders.1wphi1

From another perspective, the peace and order function of the punong barangay must also berelated to his function of assisting local executive officials (i.e., the city mayor), under Section 389(b),Chapter III of the Local Government Code.39 Local executive officials have the power to employ anddeploy police for the maintenance of peace and order, the prevention of crimes and the arrest ofcriminal offenders.40Accordingly, in the maintenance of peace and order, the petitioner is bound, atthe very least, to respect the PNP-CIDGs authority even if he is not in the direct position to give aid.By interfering with a legitimate police operation, he effectively interfered with this hierarchy ofauthority. 1wphi1 Thus, we are left with no other conclusion other than to rule that Alejandro is liable formisconduct in the performance of his duties.

Misconduct is considered grave if accompanied by corruption, a clear intent to violate the law, or aflagrant disregard of established rules, which must all be supported by substantial evidence.41 If themisconduct does not involve any of the additional elements to qualify the misconduct as grave, the

person charged may only be held liable for simple misconduct. "Grave misconduct necessarilyincludes the lesser offense of simple misconduct.''42

Sufficient records exist to justify the imposition of a higher penalty against the petitioner. His openinterference i

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